Boosting Accuracy and Compliance: Solving Time Tracking Woes in Agencies

In my countless discussions with agency owners and operations managers, the issue of time tracking has persistently taken center stage over the past few months. While each situation possesses its own distinct qualities, a handful of common themes continue to afflict nearly everyone involved.

Related: Master Agency Time Tracking: Optimize Without Timesheets

Missing data

The dreaded absence of data. Now, what could possibly be worse than incomplete data? Yes, inaccurate data takes the crown, but we’ll dive into that later. When confronted with only fragments of timesheet compliance, one finds it difficult to repose trust in the numbers or make sound, decisions.

So, how do we transition from the haphazard state where many agencies find themselves to a state of impeccable compliance? Let me draw upon the wisdom of Simon Sinek: “Start with why.” It is imperative to ensure that your team comprehends the underlying purpose of time tracking and, more importantly, embraces it wholeheartedly. Here are a few compelling reasons that should resonate with your esteemed colleagues:

1. Invoicing

Accurate time tracking becomes indispensable for invoicing clients if you engage in billing based on time and materials. Without proper time entries and corresponding charges, compensating the hardworking individuals responsible for the work becomes an uphill battle.

2. Tracking performance

You will need timesheet data to answer basic questions about how projects (or the company as a whole) are doing. Are you on a budget? Will you make a profit? Again, if there are no profits, people can’t get paid (or get other fun perks).

3. Improving estimation

Humans are notoriously bad at estimating. Without time tracking data to validate against, you will continue to make the same mistakes over and over, and each time, the team will feel the pressure of those bad estimates.

Achieving compliance becomes considerably more likely once your team wholeheartedly grasps these compelling reasons. However, it is prudent to anticipate the need for some degree of enforcement. Clearly communicate the expectations regarding what needs to be tracked and when. Moreover, be consistent in following up when individuals fall short, making it a habitual practice for all. If you’re looking for ways to make time tracking fun for your team, check this out.

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Inaccurate data

Inaccurate data is worse than missing data because it’s harder to spot. Everything can look just dandy, but if the data is actually bad, any decision you make based on it will also be bad. Examples of this include “guesstimated” time entries, time logged to the wrong place, or time sheets manipulated to meet certain expectations.

How does inaccurate data get into our system, and how can we avoid it? There are four main sources that we see over and over:

1. Timeliness

When people don’t record their time promptly, they forget stuff. As a result, time sheets end up either as a set of guesses or eerily similar to the budgeted amounts. Either way, accuracy goes out the window. Time tracking should be done daily, preferably with timers, to combat this issue. Another option is to let AI-based tools like TimeBro or Timely help fill any gaps.

2. Clarity

There should be no confusion about where to put each time entry; options should be obvious and unique. If there’s a possibility that an entry could go in more than one category, simplify your categories. Otherwise, you will inevitably end up with time in all sorts of unexpected places. There’s a good chance you don’t need that level of granularity anyway.

3. “Admin” bucket

If you have a catch-all bucket like “Internal” or “Admin,” don’t be surprised if it’s your most popular option. PMs especially love using this one for things like resourcing, emails, documentation, etc. All that work is client delivery time and needs tracking accordingly. If necessary, set up a “Non-billable” option for each project, then review it at invoicing time to decide if it really is.

4. Manipulation

I once worked with a guy who just straight up asked what metrics he was being evaluated on so that he could go ahead and game the system. I also had a PM who always came in on budget, often to the penny. Data needs to be truthful to be useful, so make sure that the team isn’t motivated to meet certain targets (utilization, budgets, etc.). (Note: this is why we always look at utilization rate and average billable rate together; you can’t make one look better than it is without hurting the other.)

You’ll need some processes to check for data accuracy and correct errors. This can be time-consuming and mind-numbing, though, so automate wherever you can.

Unused data

The third major issue with time-tracking data is its ineffective use. What’s the point in painfully gathering all this information if you’re not going to get proper value from it? Here are a few ways to put those time sheets to work:

1. Close the feedback loop on your estimates

To do this properly, your estimation breakdowns must match your time-tracking buckets. This allows you to compare estimates to actuals and, therefore, to improve future estimates.

2. Measure Average Billable Rate (ABR)

You know the rate you’re supposed to get for your work, but what are you actually getting? To figure out your ABR, divide the revenue from the work by the number of hours that went into generating it. You may have quoted a project as 100 hours x $150 per hour = $15,000, but if you really spent 150 hours (due to under-estimating, over-servicing, scope creep, etc.), your ABR is only $100 per hour. You need time-tracking data for this.

3. Utilization

Do you have an over-utilized area of your business, and you need to do some hiring? Or an area that is under-utilized where some targeted selling is in order? Utilization rates can help here.

Time tracking information can and should be one of the main drivers in your agency – but only if the data is complete, accurate, and used effectively. Put processes in place to ensure you’re getting good data, then use the insights gathered to improve your business. Finally, don’t underestimate the value of involving the broader team in conversations informed by this data. It’s truly the best way to have them see firsthand the importance of good time tracking and the impacts it has on the resulting decisions.