— Marty Rubin, Author of Boiled Frog Syndrome
We’ve talked about the importance of time tracking and how you can always improve what you measure. Everything runs smoothly until it is measured and what gets measured gets improved.
Time tracking is useful in helping you plan your hours and days. It also assists in planning how to invest your time both at work and in your personal life. But there is more than meets the eye.
Unless you work within a barter system that is solely based on beneficial return on investment and does not involve the transaction of money, time tracking is also vital in providing ample data for accurate invoicing.
After all, transparency breeds honesty — the key to building a long and trusting relationship with your customers.
How do time tracking and invoicing go hand-in-hand?
Behind every invoice is an extensive, justifiable amount of data that leads to the sum stated on the invoice. Many of our users use timesheet data to prepare invoices for both external and internal customers.
Let’s take a software development team as an example.
Let’s assume your team have recently received a request from your customer to take upon an urgent ad-hoc project in addition to your daily responsibilities. As a project manager, you are responsible for leading a project and delivering the desired objectives within a given set of constraints: scope, schedule, and cost.
Upon evaluation with your team and your customer, the deliverables of this ad-hoc project are still well within the means of the estimated time and cost. Therefore, you accepted the project.
Again, unless you operate within a barter system, the only fair and accurate way to generate an invoice is to track time spent on the project, tasks, meetings, etc., and bill your customer accordingly.
Once the project begins, your role as a project manager is to keep track of any deviation from the plan that was agreed upon at the beginning.
For example, if it takes 30% longer than expected to complete deliverable A, it will affect the schedule and cost of the entire project. It is then your responsibility to present this information to your customer. This is when the data from tracking time comes in handy.
That way, not only can your customer see how much time you spent on certain tasks, you can also use the information to estimate or plan upcoming projects that are similar in nature.
What could go wrong?
While reviewing worklogs may be time consuming, data from your timesheet can ensure that all billable hours are actually billable hours. If working overtime was required in order to complete a project, you will also get a more accurate idea of how long certain projects take and can use that data when negotiating projects in the future.
This thought operates slightly within the realm of loss aversion in order to create a win-win situation where both customers and providers reap benefits instead of loss from their collaboration.
The concept of loss aversion was first introduced by Amos Tversky and Daniel Kahneman. It refers to our tendency to prefer avoiding losses to acquiring similar gains — it’s better to not lose $100 than to find $100.
Impact of losses, however small, can have an instant negative impact. If your customer feels that they have been overcharged or billed incorrectly, your credibility is almost immediately at stake.
It is rather similar to building trust in a relationship. A tiny white lie can go a long way in destroying an existing foundation. In this case, that existing foundation would refer to your customer relations and satisfaction. Therefore, transparency certainly helps in maintaining happy customers.
Still wondering how time tracking and invoicing go hand-in-hand?
Metaphorically speaking, having accurate data when invoicing your customers is equivalent to having accurate facts to back an argument.
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