Plus, a good project manager or account manager can tell you quickly if a client is over- or under-indexing (and needs re-costing next time) without checking a single timesheet.
How do you forecast and recognize revenue without measuring effort?
The first step here is a scope broken down by phase or service with further breakdown by deliverables or assets. With this set against a hardcore timeline (yeah, our account crüe is metal like that), you can forecast and recognize as deliverables are completed. And if timing shifts, so does revenue.
Bonus points: Ideally, invoicing also follows scope cadence so that cash flow is chef’s kiss.
How do you prevent passionate teams from going too ‘all out?‘
Some proactivity is great. I love giving my fave clients bonus work. But if you’re over-delivering on one client, you’re likely under-delivering on another.
That ain’t right.
For fairness to clients, you need account and ops to stay close to your people and their resourcing. No timesheets are needed, just a conversation.
How do you know if you’re going to be profitable?
Staffing, overhead and profit all need to be budgeted against signed and forecasted revenue. But 36 hours for this client or 47 for that client shouldn’t matter as much as overall profitability. And if resources are over-extended or profit is low, then figure out the gaps and rebalance: price higher, get average salaries down, better manage scopes or a mix of the above.
But timesheets are a way to stay honest about lift.
Even if we assume time equals value, a timesheet is almost always an inaccurate quantification of time spent.
Some culprits:
- The dumper: “Throw your hours on the biggest accounts! They can afford it!”
- The book balancer: “Just match the scope! We need to ‘justify’ scope, so just put 50% of your time against it!”
- The fuzzy memory: “Hmm, it was about a month ago … I am sure I put 40 hours against it. I mean, I am kind of sure …”
- The justifier: “There are a lot of cuts in the industry these days. I better put lots of hours on these jobs to ensure I’m ‘safe.’”
In summary, timesheets are not a reliable witness.
How do you show transparency to clients?
You can break out the cost of a job by phase, deliverable and asset to quite a granular level and then show under-delivery, delivery or over-delivery against this breakdown.
And then, again, the value is in the quality of those deliverables. Clients get a pretty rigorous scope with transparency in tracking, over or under.
How can clients compare one agency with another if they don’t have a rate card or breakdown of hours?
If two agencies each quote the same approximate price for the same remit, do rates or FTEs matter?
Scoping based on hours and rate cards guarantees only one thing—that you’ll be working to the lowest possible rate and/or the fewest hours. Which, in turn, means a race to the bottom. More junior talent. Artificially inflating hours to compensate for low rates. More frustrated clients.
