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Effectively capturing the time spent undertaking work for paying clients is the key to increasing profitability. Understanding the amount of time you’ve spent working for a client and possibly more important, what you’ve used the time to do is essential to ensuring client satisfaction and cash flow.
Here are three considerations on of how to increase profitability within your IT business through simple time capture and management.
If you’re working on a time and materials basis, un-captured time simply means un-billed time - and lost money. One of the most effective ways of capturing time is by using a Professional Services Automation (PSA) tool.
The key is to capture time spent working for a client as you do it – this gives you the ability to quickly and accurately bill the client for work undertaken while the work is clear in both your own mind and your clients.
Without understanding the actual time spent delivering a project, it’s impossible to know whether the project was actually profitable.
For instance - you win a client project to install a new server solution with a quote based on an educated guess at the time required to install and configure the server. When the client signs off on the completion of the project, you consider it a profitable venture and take the same approach to the next similar project.
But was the project actually profitable?
By capturing and then analyzing the time spent at each milestone of the project within a PSA, you can better understand where you may have underestimated the time needed to deliver. You can also quickly highlight whether the project was actually profitable - or whether next time you deliver a similar project you need to increase your quote.
For Managed Service Providers (MSPs) delivering their time under a flat-fee arrangement, not knowing the time spent supporting a client means not knowing whether the client contract is profitable.
This makes it very hard to know which clients are good for your business, and which might be bleeding you dry.
By effectively capturing time within a PSA tool, and then automating the delivery of regular reports to key stakeholders within your business you can avoid being surprised by contracts failing to show a profit at the end of the year.
Instead you can measure your performance within a PSA tool on a real-time basis, giving you the option to adjust course and remain profitable accordingly, and effectively understand whether a contract should be renewed, or perhaps its cost to a client increased to ensure profitability for you.
The reality is that most IT businesses rely on a mixture of all three of these types of work. If that’s the case for your business, then instead of trying to work from a gut feel of whether you are profitable or not - measure your time and manage it accordingly.
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