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In a recent blog post, marketing and media expert Christopher S. Penn detailed the two methods from which consultants must choose in order to assess their fair billing rates—the floor and the ceiling.
The floor
As its name suggests, the floor is the minimum billing rate that consultants must charge in order to justify their time and thoroughly complete the projects on which they are working. Penn explains that in order for a consultant to determine his or her minimum billing rate, he or she must zero-in on a mandatory annual income figure, taking the following factors into account:
- Actual expenses (rent, food, gas, etc.)
- Federal, state and local taxes
- Health insurance
This figure must then be taken and divided by the number of work hours in a year. Based on a 40-hour work week, the number of work hours in a year can be calculated by multiplying 40 by the number of weeks in a year (52), to arrive at 2,080. However, as Penn points out, this method of required hourly rate calculation assumes 100 percent utilization—i.e. that every hour in the work week constitutes billable time, a notion that Penn describes as being “far, far, far from the truth.”
“The reality is that consultants are lucky to get 2/3 utilization, and a better, safer estimate is 50 percent utilization,” he recommends. “The other 50 percent of your time will be spent building your business. Thus, apply the appropriate multiplier based on what you think or know your utilization rate to be.”
The ceiling
The ceiling represents a much more significant money-making opportunity, but it is also trickier to assess, as it depends on how greatly a consultant’s work is valued by his or her client base.
“In order to develop a fair ceiling rate, you have to know and understand deeply the industries and companies you’re serving so that you know the economic value of the work you’re providing,” Penn writes. Provided a consultant demonstrates a sound understanding of clients’ business needs and concerns, the implicit value is obvious and it shouldn’t be too hard to get clients on board with paying ceiling rates, provided they believe they are getting value for money.
By using consultant billing software, professionals can easily set up and track billing rates, regardless of whether they ascribe to the floor or ceiling methods. The consultant billing services provided by Sage Timeslips can help automate the process, freeing up time to attend to other tasks.
Read Penn’s post here.
| Summary: | After using floor or ceiling methods to gauge billing fairness, consultants can leverage consultant billing technology to streamline invoicing. |
Some small business owners do not place a particularly high priority upon integrating employee time tracking technology frameworks into their companies. There can be a variety of reasons for this—for instance, they may believe their current manual methods are sufficient, feel unsure about how the capabilities offered by time tracking software can truly benefit their enterprises or simply be unwilling to make an investment in this type of solution.
However, as Small Business Trends points out, accurately monitoring employee time should be top-of-mind for entrepreneurs.
“Look at it this way: [I]s profitability important? Is it important to stay on track with budgets and projects? Yes? Then you should absolutely be tracking time,” writes Small Biz Trends contributor Curt Finch.
Indeed, those with financial concerns should consider the potential return on investment they may be able to yield by implementing time tracking system upgrades, rather than solely focusing on the upfront costs.
The importance of smart shopping
For small business owners who see the value of adopting time tracking technology, it’s important to focus on ascertaining whether the product in question will be a good fit with their specific requirements.
Finch recommends that entrepreneurs in the market for new software ask two key questions of vendors—can they prove that their products will solve particular business problems, and are they able to provide references of clients that have successfully integrated their products alongside other company functions, such as accounting software, project management systems and payroll service providers?
Software upgrades are meant to automate and expedite processes, not introduce new problems, so it’s important to gauge how well a new solution will assimilate into your current framework. If your company bills for its services, wants to turn more of its employees’ time into money and is eager to realize ways to simplify even the most complex billing cycles, you might want to consider Sage Timeslips, which comes with a range of basic and advanced features, such as invoicing capabilities, time and expense reporting and tracking tools, invoice customization options and report generation offerings.
| Summary: | Small business owners considering time tracking software should be aware of how automation can benefit their enterprises. |
It could be said that maintaining business expense compliance is even more important for small businesses than it is for their larger equivalents, as small companies tend to have less of a financial cushion to work with. Because of this, they must be especially vigilant about when and how their funds are being used, as the potential to waste valuable financial resources is significant if companies do not put the appropriate safeguards and processes in place.
Happily for the owners of small enterprises, there are a number of small business expense technology solutions that companies can use to ensure they are complying with reporting and tracking requirements. They can also use these solutions to facilitate streamlined expense management by automating processes in order to mitigate staff involvement. In addition to freeing up time for HR personnel to attend to other tasks, automation also typically mitigates instances of human error, which, if allowed to go unchecked, can rapidly spiral and result in incomplete or erroneous expense records. Small mistakes may go unnoticed, but human error has the potential to lead to extensive frustration, aggravation and unnecessary costs once the end-of-fiscal-year tax bill rolls in. Because of this, mistakes related to manual expense management methods should be avoided at all costs, which is where small business expense software comes into the picture.
In the past, expense tracking software and expense reporting technology had to be run using desktop computers. It was the advent of the laptop that first injected a degree of mobility into proceedings, and nowadays, an array of smartphone applications and web-based solutions is remotely accessible via cellphone and tablet device, provided the user is in an area where wireless internet is available.
How can Sage Timeslips 2013 help?
Small businesses can use offerings such as Sage Timeslips 2013 to record time and expenses, invoice clients and streamline the entire process with features such as expense category creation, invoice and report customization and the flexibility to assign up to 20 different price levels per expense item. Additionally, the new, fully integrated calendar in the latest iteration of Sage Timeslips helps professionals ensure that all their calendar appointments are accounted for and billed accordingly, allowing them to verify slip creation and pick up on missing slips in order to ascertain that their time is being processed correctly and comprehensively.
| Summary: | Maintaining business expense compliance is even more important for small businesses than it is for their larger equivalents. |
Many aspects of life in the United States—and indeed, much of the rest of the world—are in the process of being revolutionized by mobile technology.
A recent Accounting Today article detailed how an increasing number of people are ascribing to the trend of going mobile for filing taxes, as the process is modern, convenient and easy to carry out. The news source cited a study by OnDevice Research, conducted on behalf of mobile ad network InMobi earlier this year, which found that Americans spend more time on their mobile devices than they do on any other platform. As Fierce Mobile Content reports, nearly two-thirds (65 percent) of survey respondents said they favored mobile’s ease of use over other media channels, while more than half (56 percent) indicated that they preferred mobile because they were able to always have their devices with them.
A separate study by the Interactive Advertising Bureau indicated that approximately seven in 10 mobile phone users bring their devices everywhere with them. What’s more, numerous other pieces of research have underscored the profound attachment that many cellphone owners feel to their phones, whether they are consumers using mobile apps to play games and compare product prices or professionals tracking time and submitting expenses on the go.
How businesses can benefit from mobile technology
Mobile technology is well-positioned to eventually become an integral part of everything from filing taxes to billing and invoicing. Businesses looking to get in on the action can implement mobile time and billing software, such as Sage Timeslips and the accompanying Sage Timeslips eCenter, to take advantage of capabilities that facilitate mobile employee time tracking, offer remote project monitoring and make it possible to engage in expense management from out in the field.
While time and billing professionals can work with the software’s desktop incarnation, professionals can use Sage Timeslips eCenter to carry out key processes without needing to be in the office or use desktop and laptop computers. Thanks to the mobile revolution, working remotely and on-the-go has become significantly easier—and with the help of products such as Sage Timeslips, invoicing, billing and time and expense tracking can be streamlined as well.
Read the full Accounting Today article here and the Fierce Mobile Content article here.
| Summary: | Technology is evolving, and businesses can get it on the action by integrating mobile time tracking, project monitoring and expense management. |
Legal billing technology allows law firms to go far beyond the traditional tracking and invoicing approaches that are known to have significant shortcomings. Legal billing software offers a range of significant benefits, including:
Easier tracking
Firms that use spreadsheets—or, even worse, systems that involve paper records and filing cabinets—open themselves up to considerable confusion when it comes to breaking down how much time was spent attending to individual tasks and clients. Inaccurate or incomplete information pertaining to this may result in the generation of invoices that bill clients for too much or too little. Overbilling has immense potential for causing client dissatisfaction that could result in loss of business for firms, while under-billing presents two potential downfalls: Firms that do not realize they are underbilling essentially end up providing services for free, while those that do realize are put in the embarrassing and unprofessional position of having to recoup further fees from clients. Legal billing services that incorporate solid tracking methods can help firms avoid these types of issues.
Out-of-office updating
With legal billing software, professionals are no longer shackled to the office when it comes to recording how long they spend carrying out particular tasks or dealing with specific clients and cases. Rather, they can use time invoicing solutions such as Sage Timeslips eCenter via their mobile devices to submit information from any remote location with an internet connection. This revolutionizes time and expense tracking by allowing lawyers to submit time records from practically anywhere, thereby facilitating faster billing.
Automation
Although they are more sophisticated than basic pen-and-paper timesheets, spreadsheets still come with a substantial manual component. Coding can be tedious, and it’s easy to make small mistakes that can quickly compromise the accuracy of entire bodies of data. In contrast, legal billing technology offers much more in the way of automation. This makes it easy to use and saves time for professionals.
Improved access to data
Centralizing time and invoice data streamlines the tracking and billing process by allowing multiple professionals to access information simultaneously, even if they are in different locations. The ultimate goal is to expedite firms’ cash flow, and legal billing software is well-positioned to do so.
| Summary: | Legal billing technology offers automation, easier time invoicing, improved access to data and out-of-office tracking capabilities. |
For many companies, the concept of employee theft conjures up images of workers stealing from cash registers, pocketing office supplies or helping themselves to products. As an increasing number of businesses upgrade from filing cabinets and Rolodexes to cloud storage and computerized databases of customer information, firms are also realizing that they need to protect their digital assets and other information, as Entrepreneur magazine explains.
Closed-circuit video and Internet Protocol cameras can be instrumental in helping companies crack down on product thefts and register pilfering, while cloud-based security services and data encryption allow business owners to safeguard electronic information, the news source reports. The cloud can also be beneficial when it comes to securing firms against a type of employee theft that may not immediately come to mind when thinking of ways that workers steal from their employers, but is still extremely costly—time theft.
“Coming in late, leaving early and taking extended breaks shave time off the workday—and also steal from the payroll budget,” notes business writer John Patrick Pullen, writing for Entrepreneur.
As well as being rampant across HR time tracking (i.e. companies tracking their employees’ hours in order to ensure accurate reimbursement for work done), this type of theft also occurs with time tracking for billing purposes. It could be argued that overbilling clients is even worse than overstating hours in order to commit payroll fraud, as it directly involves customers.
Mitigate overbilling with internet timesheet technology
Sometimes, overbilling is deliberate on the part of a professional—to meet billable hour quotas, for instance—but in other instances, it is accidental. Sub-par online timesheet management or manual time tracking is often to blame in cases of unintentional overbilling. Businesses can crack down on these types of inaccuracies by integrating online time tracking solutions such as Sage Timeslips. In-house time and billing departments can work with the desktop incarnation of the Sage Timeslips software, while professionals can leverage Sage Timeslips eCenter to carry out detailed, precise time tracking and reporting without having to be in the office. Sage Timeslips eCenter can be used with iPhone, iPad, BlackBerry and Android-based mobile devices, negating the need for professionals to track and enter their time using desktop or laptop computers.
Read the rest of the Entrepreneur article here.
| Summary: | Companies can use online time and billing software to mitigate instances of overbilling and time theft. |
An increasing number of companies are realizing the benefits of cloud time tracking, cloud billing and other initiatives that involve cloud computing. Along with this rising popularity come corporate and consumer concerns about information privacy and security that need to be addressed in a two-pronged fashion. Specifically, laws that are already in place need to be updated in order to take the latest technological developments into account, while additional legislation may have to be introduced as well.
Cloud computing and legal protections
Senator Amy Klobuchar, a Minnesota Democrat, recently introduced a bill to “improve the enforcement of criminal and civil law with respect to cloud computing,” as quoted by Santa Clara University law professor Eric Goldman in a recent Forbes blog post. Goldman acknowledges that the Cloud Computing Act of 2012 is unlikely to ever actually be passed because it was introduced so soon before the election, but it still sets a precedent and an example.
Essentially, the bill aims to shore up existing protections under the Computer Fraud and Abuse Act (CFAA) by integrating aspects that are specific to what it calls “cloud computing services.” For instance, under the proposed legislation, each unauthorized access of a cloud computing account constitutes a separate CFAA offense, and each CFAA violation represents a minimum loss of $500 per account.
In his analysis of the bill, Goldman points out several perceived shortcomings and contends that “even well-meaning legislators can botch internet regulation.” The legislators of today are working with an act that has been in existence since the mid-1980s and underwent numerous amendments over the years—each of which makes it more unwieldy, according to Goldman.
Additionally, there are problems at the heart of the bill itself—particularly its definition of cloud computing, which Goldman termed “incoherent.” He specifically called out the breadth of the definition, noting “Every user-generated content website seems to qualify; but so should every online bank. In fact, this definition of cloud computing service probably becomes co-extensive with the internet generally.” He chalked much of this up to the complex nature of cloud computing, and the fact that legislators tend not to be altogether familiar with the latest developments. Moreover, the trend of “regulatory exceptionalism” further complicates matters by attempting to segment specific internet subsets.
| Summary: | Lawmakers are struggling to update existing legislation to cover cloud time tracking, cloud invoicing and more. |
Many law firms that are small or rooted in tradition continue to rely on paper records, spreadsheets, checkbooks and other outdated billing and accounting methods, rather than the more powerful legal accounting software that is available today. There are a variety of explanations behind this—for instance, some firms may believe their more manual approaches save money, or they are eager to avoid the perceived complexities associated with integrating more advanced legal accounting technology. Additionally, they could be hanging on to their more manual approaches simply because these are how things have always been done.
There’s something to be said for familiarity, but not when it comes at the expense of needed innovation. For example, recording billable hours on paper timesheets and then typing the information into a spreadsheet is not only inefficient, but also significantly increases the risk of errors creeping into the data. Because of the way spreadsheet coding is set up, one minor error can have a domino effect on the accuracy of the whole sheet and might even result in clients being billed for too much or too little time.
So how can upgrading to legal accounting solutions benefit your firm? There are several key benefits that come with modernizing your billing and accounting methods, including:
More accurate time capture
Both the Sage Timeslips desktop application and the Sage Timeslips eCenter come with a stop/start functionality akin to that of a stopwatch. This feature facilitates accurate, precise time accounting—a task that is harder said than done given the number of interruptions that practicing attorneys deal with throughout the day.
Compatibility and convenience
With Sage Timeslips eCenter, professionals can log their time using mobile devices while out in the field. This negates the need for them to transfer data from paper records to spreadsheets after they get back to the office. What’s more, Sage Timeslips eCenter is compatible with all major mobile device models, including Android, BlackBerry, iPhone and iPad, as well as recent versions of popular browsers such as Microsoft Internet Explorer, Mozilla Firefox, Google Chrome and Apple’s Safari.
Improved billing insight
The delays and inaccuracies associated with manual methods can be mitigated by legal accounting software that allows professionals an in-depth, up-to-date look at what clients owe, thereby providing the opportunity to streamline the invoicing process and expedite the firm’s cash flow.
| Summary: | Firms that upgrade to legal accounting technology can take advantage of several benefits not provided by manual methods. |
It can be all too easy for small business owners to fall afoul of expense reporting compliance laws by inadvertently combining professional and personal accounts. This course of action may seem less laborious than the arduous, ongoing task of ensuring all expenses are appropriately separated, but failing to adequately distinguish between business and personal expenses at tax time could have dire repercussions, notes a recent article by the Canadian Imperial Bank of Commerce (CIBC).
“If you own a business, you are required by law to keep adequate records,” said Jamie Golombek of the CIBC. “Failing to do so can cause extra hours of paperwork at tax time instead of focusing on your business and you could end up having to pay tax penalties.”
For company owners concerned about maintaining business expense compliance, Golombek recommended taking a three-pronged approach that involves separating personal and business expenses (ideally by keeping two different bank accounts), keeping thorough and timely records that distinguish between business and personal charges—the former of which can be deducted on a tax return, while the latter cannot—and seeking professional advice when necessary.
Compliance on a budget
Small business owners often find themselves constrained by tight budgets that don’t allow for them to hire accountants or financial advisers. In such cases, they can bolster their efforts to achieve and maintain compliance by incorporating small business expense technology into their operations.
Using software to automate tax-related activities can also help entrepreneurs reduce the amount of red tape they have to deal with, which was described as an “ever-growing patchwork of credits, deductions, tax hikes and sunset dates” by the National Small Business Association (NSBA). The NSBA’s 2012 Small Business Taxation Survey, released earlier this year, revealed that the complexities and inconsistencies of the federal tax code are problematic for many independent company owners.
“Nearly half of all small business owners spend 80 hours every year dealing with federal taxes, and two-thirds spend more than one full week,” said NSBA Chair Chris Holman, who went on to characterize the significant time commitment as “an unnecessary and massively unfair drain” on members of the small business community who have already been beleaguered by considerable economic turbulence in recent years.
| Summary: | Small business owners concerned about business expense compliance should be careful not to combine their corporate and personal accounts. |
