Why Proper Time Tracking and Billing is Important for Engineering Firms
The complexity of engineering firms requires careful, accurate time tracking and billing to keep the cash flowing and the business running smoothly.
by Lucas Hayden
Engineers know all too well that time is money—and they don’t have extra to waste on chasing down timesheets or resolving billing issues. And yet, many firms find themselves in this very position. Engineering time and billing can be a different beast than other industries. Engineering firms balance a wide variety of projects all at once, each with its own unique requirements, scope, budget, and staff. Any one firm likely has a wide range of staff types—some with allocated billable hours, and others without. On top of this, the industry is in a near-constant state of change.
The complexity of engineering firms requires careful, accurate time tracking and billing to keep the cash flowing and the business running smoothly. In this blog, we will dive deeper into why this is so crucial and discuss the role that technology plays in timekeeping and billing.
Profitability & Cash Flow
It can be easy to overlook just how important accurate time tracking is to the bottom line. Some engineers may have asked themselves questions like: “How much does it really matter that a few hours here and there go unaccounted for? The time spent tracking down that information would be greater than the missing hours in the first place.”
It’s important to keep in mind that time tracking greatly affects profitability. Having as many employees as possible spending the right amount of time on the right projects not only prevents double or extra work, which cuts down on costs, but helps projects run smoother and the firm see payment faster.
Ensuring all hours are billed or allocated correctly leads to a healthier and more accurate bottom line. Without accurate time tracking, the finance team is left guessing if the important numbers they are seeing are truly accurate. They can’t confidently make financial decisions based on an incorrect bottom line, and have difficulty steering the firm into the future.
Productivity & Efficiency
The importance of proper engineering time and billing isn’t just directly profit-based (although that is certainly the overarching priority that everything boils down to). How employees are spending their time provides a wealth of insight all its own. Firms currently using disparate software or manual processes—or worse, the honor system—to keep track of time don’t have an accurate gauge of the efficiency of their organization.
A certain project or task may be top priority for one team, and they spend most if not all of their hours completing it. Meanwhile, upper management is expecting that an entirely different project is being accomplished—a project that is high priority for them. When upper management asks for an update, the team is suddenly behind on a project they did not have on their radar. This should ideally be avoided with a larger discussion and alignment before the projects begin, but proper timekeeping allows stakeholders to see where employee hours are actually being spent at every step of the way and help inform the discussion of what projects are higher priority.
Insight Into Project Status
Like being able to monitor employee productivity, proper timekeeping and billing is necessary for gaining crucial insights into project status. If employees assigned to Project A, which had a maximum of 40 allotted employee hours per week, are working more hours than expected and allowed, this indicates that the requirements of the project may be more demanding than predicted. This can alert Project Managers that the project is heading for the red and they can take action to correct the ship before it’s too late—hiring new staff to support the project or adjusting the project scope or schedule, for example.
Clarity Across the Enterprise
Employee timekeeping reaches into every part of the organization—so engineering firms should be prepared to do it right. With accurate timekeeping, it’s easier to know what work has been accomplished and needs to be billed, providing valuable information to the finance team. Project Managers better understand how the project is progressing and are able to keep a close eye on hours worked on a project and adjust staff as needed to stay on track. This enables upper management to assess which projects are high priority—or should be if they aren’t already.
All of these come together to show the status of and provide insight into the entire organization. Modern engineering firms require a modern project-based ERP that automatically gathers all the pieces to form this big picture.
The Power of a Project-Based ERP for Time Tracking & Billing
Engineers need a solution that is purpose-built for them and ready to lead their firm into the future—and spreadsheets and legacy software won’t get them there. Cloud ERP software allows engineers to automate engineering time and billing and feed valuable timekeeping information to the rest of the organization. Purpose-built in-house by engineering professionals, Unanet A/E is the only native integrated Cloud ERP solution built from the ground up to serve this unique market. Unanet A/E’s web-based time and expense software enables the collection of project and effort anytime and anywhere. By automating these processes, Unanet A/E helps firms eliminate human error, reduce time spent on manual tasks, save money, and provide stakeholders with real-time insights into the financial health of their organization.
Unanet A/E tied everything together for us in a way that’s incredibly useful to helping us manage our business more strategically. This is an amazing piece of software that has given us the ability to understand each and every part of our business in ways we never had before.
To learn more about how a project-based ERP solution can guide engineering firms into the future, get your copy of our Change Agent Playbook for A/E Firms.