There is a movement afoot in the CPA world to get rid of timesheets. A major part of the concept is to move away from billing by the hour and move toward “value billing.”
Instead of charging based on how many hours you spend, bill the client for what your services are worth or what you can negotiate in a lump sum.
In my tiny part of the accounting world, I’ve been billing on a fixed price basis for the vast majority of work for around 20 years or more. (So does that mean I was a value-biller before value-biller was cool?)
Getting rid of the timesheets entirely is an idea I have been highly uncomfortable with, but hadn’t thought through why.
Ed Mendlowitz, CPA, has a great article at CPATrendlines explaining the reasons I’m uneasy. He explains 13 Reasons Timesheet Will Never Die.
In one sentence, look at the opposite side of the income statement – timesheets are a cost control.
They are a way to manage and monitor our inventory of time, so we can track the costs of projects to make sure the cost consists of the optimal blend of resources.
Here are a few of his 13 ideas:
1. Time records are a method of keeping track of costs
2. The information can be used for future scheduling;
12. Client and staff realization can also be charted if you have time records. It helps us with scheduling and maximizing resources by assuring the right level person is working on a client.
13. Time is our inventory and hours the units. Inventory needs to be controlled.
One final idea from me: timesheets are the internal control over inventory.
Now I can explain why I’ll never drop timesheets, even for my one person firm.