It is a fact of life that business owners often spend all day working on billable client projects and then spend evenings or weekends writing checks, calculating payroll, preparing client invoices and writing proposals. How much of your time could be freed up to do business development or other growth activities? You’ll never know if you don’t write it down consistently.
When you achieve your hard-earned growth, you may wish to add staff to perform some of these business support functions. Will you need a full-time or part-time person? Should you outsource?
Recording all time worked is also an ironclad requirement for government contractors. It applies to everyone equally, including owners and both salaried and hourly employees. There are no exceptions and little tolerance for poor practices. If you currently have a mix of government and commercial customers, the requirement applies to both types of contracts, so you need to get this right. If you are providing professional services to your customers, this is your bread and butter.
Where to Start
First – Lead by example. Reinforce, and reward in any way that is effective, that time needs to be recorded each and every day. Smart companies put this requirement into the employment agreement and have the employee sign it.
Second – Establish what activities constitute “direct vs. indirect” time. Direct time is generally spent working on a contract. Indirect time is almost everything else. Further refine your indirect time into meaningful and consistent categories. Common examples are: vacation, holiday, project management, recruiting, business development, HR, proposal writing and general business administration.
Third – Train your employees. Make sure that all of your employees understand what each category means and give them examples specific to your company’s activities. Include this information in your on-boarding session on their first day of work. Revisit it periodically at company meetings.
Make it Easier
Invest in some smart tools. There are many choices for web-based time recording systems at an affordable cost. The best ones (and the wiser investment) already have the requirements for government contractors built right in. Most of these systems will also integrate with both your accounting system and perhaps even your third party payroll provider. This may save you quite a few late nights.
What You Can Achieve
Gain strategic insight into important operational information. For example:
For more information about developing effective timesheet procedures or other government contracting best practices, please contact Barbara Morgan of Aronson’s Outsourced Accounting Solutions practice at 301.231.6238