Time Intelligence

To maximise your company’s profitability without staff burnout Purpose

Key Ratios 1.Billable Hours 2.Surplus Capacity 3.Over Servicing 4.Write offs/discounts

Introduction How your company spends it’s time can affect profit. An effective way of increasing your profits is to maximise productivity and billable time This presentation details how to use CCT to help manage productivity and billable time.

Actions Record time – have staff record all their time accurately. Establish billable norms – how many hours a week should be allocated to client work, training, administration and business development by staff grade? Set charge out rates – what is the market rate for your industry? How much do you have to charge to achieve your desired profit margin?

More Actions Calculate your spare capacity, client over serving (more hours than booked) and planned write off (discounts given to clients) Evaluate the reasons for spare capacity, client over serving and write offs Take action to reduce the above

Summary so far 1) Record time 2) Establish billable norms 3) Set charge out rates 4) Calculate your spare capacity 5) Evaluate the reasons for spare capacity 6) Take action to reduce surplus and write offs

QuestionnairClick Click TimeSuggestions Do you use a time sheet system?Set up time recording Do you have a time budget by each employee? Set up a billable hours budget on CCT Eg. Set your budget on a level of efficiency. Say 80%, on a 40 hour week (40*0.8)=32 hours or use a known work pattern Does each employee have a chargeout rate? Set up employee chargeout rates. To be profitable chargout rate has to exceed costs Base chargeout rate on market rate or salary multiple or desired profit margin Are chargeout rates reviewed regularly? Check the Rates Report :User Charge Out List Perform a market survey Are your clients informed of the new rates? Download CSV list of clients from CCT and mail merge in MSOffice Send out standard letters to clients Be bold and prepared to negotiate Do you monitor actual time to budget time per employee? Produce time analysis reports Do you monitor actual time against budget by client and project? There are stacks of reports detailing costs of time by client and project Do you review your staff ratios?Calculate staff utilisation and recovery rates Do you act on your findings?Ratios and reports give you an idea of what actions need to be taken. Act fast once an action has been identified

The analysis shows fees, planned write off and under/over client servicing allocated by person. This is information will be readily available from the Click Click Time system. Actual hours are below budget by 741 (b-d) the oportunity cost of this is £72,550 (c-e). We can determine who is not performing against budget and of all Gordon is worst and for over servicing of clients, Onya is worst. In order to assess why certain staff are performing better than others you would need to know which clients they are working on and who their manager is and the exact circumstance but certainly we know we need to investigate Gordon’s and Onya’s performance amongst others…..or review the budget. NB: apologies about the complexity of this slide Analysis of CCT sourced data - example

Utilisation and trend analysis Billable hours Ratio (charged /budget)*100 The billable hours ratio should approach 100% over time. This graph shows an improving situation. If billable hours are less than 100% you have surplus capacity, if greater than 100% you need extra capacity (hire more people) Utilisation ratio (actual/total) *100 Utilisation is a key ratio. It highlights how employees are managing their time. If the billable ratio is 100% then utilisation should be in the region of 75%. If it is say 60% then it suggests that either the budget billable hours target is to low or employees are having to spend extra hours in the office to get all their tasks completed

Utilisation and trend analysis The trend anlysis shows us user recovery (profit by employee) is below budget but higher than last year and it seems that around May/June there is some seasonality so it is time to realy increase the effort. Effort now should pay off bacause the seasonality suggests this is the right time of year for recovery to increase. NB: This trend shouldn’t be viewed in isolation.

Issues and actions IssueAction Not achieving target client recovery ratio, over servicing the client 1 introduce a monthly capacity plan for each staff member, detailing hours to be spent per client 2 inform the client that due to extra hours being worked on the account some activity will have to be cut or our fees will have to increase 3 at the renewal stage introduce fee and cost estimators which detail the hours and charge out rates by staff member, present this to the client to form part of your renegotiation 4 consider not renewing the contract. Note that 20% of your clients produce 80% of your fee income – is this client part of the 20%? If it is then you will need all your time analysis information to form part of your fee negotiation

Toughness The next slide is the “Billable hours ratio low and surplus capacity” slide The 4 th action, only to be taken if all else fails is not very nice. It affects people.

Issues and actions IssueAction Billable hours ratio low and there is surplus capacity 1 consider employing a marketing agency to win new business 2 networking within your existing client base 3 offer discounted rates to your existing clients to try and secure extra work 4 give yourself a set time period to win new business. In the end, if these actions do not work, be decisive and cut your staff numbers

Issues and actions IssueAction Not achieving total recovery budget ratio!Reasons could be 1 surplus capacity 2 over servicing clients 3 too much planned write off If you do not have surplus capacity and you are not over servicing clients then you have discounted your rates too much. Renegotiate your rates if you can.

Maximise your company’s profitability without staff burnout This presentation deals with some of the key ratio’s to monitor, others which are worth considering include future capacity ratio, new business ratio, investment ratio and staff cost ratio. You may have noticed that the ratio’s we looked at are inter connected. Each one monitored correctly will maximise your profit.

End of Presentation This presentation is based on an original presentation by John Collett ACA. John specialises in the provision of Part-Time Finance Director Services for small to medium companies. If you are in need of a Finance Director we strongly recommend you contact him. "The reason you should use JohnCollett.com is because a good finance director is a profit generator not an overhead“