Whether you're an individual contractor, accountant, freelancer, or business owner, time tracking will improve your billing accuracy and make your interactions with them more transparent. The key is trust and transparency. If your client ever doubts your integrity, it will be challenging to gain their confidence in the future. And when it comes to billing clients, inaccurate time tracking can be a significant red flag.
You can improve billing accuracy by using a time tracking app to produce the correct hours worked for each client. In addition, tracking time will increase productivity and bring more profit. If you're not sure about the benefits of using a time tracking app, keep reading.
Facts About Time Tracking
Let’s begin by reviewing some facts about time tracking that might surprise you.
Time tracking is an essential practice that allows employers to manage their teams, employees to prove their efficiency, and freelancers or in-house workers to bill their clients accurately. But, here’s something you probably didn’t know about time tracking:
- 30% of professionals claim that manual time entry and data adaptations are the utmost time-consuming processes (Deloitte)
- Time theft affects 75% of businesses (The American Payroll Association)
- People spend nearly four hours a week performing unproductive tasks (Workpuls)
- About 28% of the day reading emails and texting/receiving messages US employees spend every day (Harvard Business Review)
These statistics and numbers clearly show the importance of accurate time tracking in any professional relationship. Without it, the companies and clients are losing money, while the employees lose their productivity and credibility.
Benefits of Time Tracking When Billing Clients
As a professional trying to impress and retain your clients, you need to show your credibility when billing clients. You can achieve this by improving the accuracy of your billing system by using time tracking software. Everyone should know how much time they spent on a task or an entire project to receive the appropriate compensation. Also, clients and customers do not want to spend an unjustified amount of work confirming the accuracy of their bill from their contractor is accurate.
Here’s how properly tracked time data can improve accuracy when billing clients:
Maintain the profitability of projects
Regardless of whether you take an hourly payment or agree on a set amount of time invested into a project, you need to understand how profitable the project is to take on based on hours worked. When calculating the total time to complete the project, your hourly rate or set cost should reflect the time it takes to complete the task. Many professionals risk overbilling a client or not receiving the proper compensation without time tracking.
Remove errors from invoicing
Anything done manually is prone to errors. The human error percentage in work hours measured by hand is high. This is especially the case for those people who don't track their hours but try to memorize the time spent working on a project. But, if you use time tracking software, you're removing all the guessing, estimating, and as a result - all the errors. Instead, you get an accurate and detailed report on how much work you've done, when, and doing what. This improves the accuracy of your billing process significantly.
Improve project management
When you're involved in more than one project, you can easily get lost in the process of keeping track of your work hours and separating them for each client. Most people who start freelancing tend to accept more than one project at a time. The same goes for people who handle multiple clients and address all their needs.
A modern time tracking solution will improve project management by providing the following:
- Precisely recording your hours worked
- Separate one project from the other
- Create individual billing information based on time
Improve relationships with clients
When a client sees that you’re being transparent and honest with them, you’ll gain their trust and have them collaborate with you for the long run.
Time tracking data, once shared with a client, has the following positive effects on them:
- They see you as someone professional and trustworthy
- Clients respect your effort to be transparent
- They trust you would never try to bill for hours not worked
- They want to continue their working relationship with you
Clients who trust you are the clients who will stay loyal.
Time tracking saves time
Manual calculations and the formation of ready-made invoices are long routine work. Small companies spend an average of 25 days compiling them from receipt to payment. And if you make mistakes, you often have to start all over again. An automated system will simplify and speed up the process while making invoicing accurate the first time.
You may notice that much of your time is spent manually calculating your time. This may result in having to pay additional finances by hiring a dissertation service, an accountant firm, or even an additional employee because you simply do not have the time to handle this on your own.
How Inaccurate Time Tracking Ruins Billing
Errors are a common billing problem. An incorrectly placed decimal point can be enough to break off your relationship with a client. If you’re lucky enough to spot the error before submitting your invoice, you'll still have to spend time redoing the paperwork. Only an automated time tracking system will solve this problem.
*Below is an example of an invoice breakdown when you overbill:
Your hourly rate: $50/hour
Hours you actually work per week: 40
Hours billed: 42
Overbilled hours: 2
Amount overbilled in a year:
2 hours of overbilled time (per week) x 52 (weeks per year) = 104 overbilled hours
104 (overbilled hours) x $50 (hourly rate) = $5,200 overbilled
Based on the example above, your client will be overbilled by $5,200 over a year. If your client notices this error on your end, you may ruin the relationship and no longer have their contract.
*Below is an example of an invoice breakdown when you underbill:
Your hourly rate: $45/hour
Hours you actually work per week: 45
Hours billed: 42
Underbilled hours: 3
Amount overbilled in a year:
3 hours of underbilled time (per week) x 52 (weeks per year) = 156 underbilled hours
156 (underbilled hours) x $45 (hourly rate) = $7,020 underbilled
As you can see, it’s just not your client(s) that you could be harming. You may be losing out on a significant amount of money and not realizing it.
What to Use When Accurately Billing Clients
Today, there are many time tracking tools for billing clients. It can be either an application or ready-made software. Each has its own set of features and a unique user interface.
When making a choice, one should start from the scope of work, the number of employees, the budget, and the project's complexity. For example, OnTheClock is a powerful time tracking tool that is easy to use and generates accurate hours worked based on the time you clock in and out. Users can choose to use it from the mobile app or desktop version. The software integrates with various payroll providers to help automate the billing process if you choose. Whether you’re an accountant looking to streamline your billing process or a freelance essay writer, tracking hours worked with a reliable time tracking tool is crucial.
Conclusion to Improving Accuracy & Tracking Hours When Billing Clients
Tracking time when billing customers is an important part of any professional's work. It not only improves accuracy but also allows both parties to have transparent conditions for cooperation. Freelancers and individual contractors can calculate an honest salary for the work performed, and you do not need to be overwhelmed with manual time tracking. Find the right software or application and improve the terms of cooperation with any client.
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