In my quest to increase my billable hours, I have identified some inefficiencies that divert my attention on a regular basis. I recently solved the email problem and have been automating bill-paying and money-saving for years. But there are still some inefficiencies that need to be cured. In particular: I get lost in the little details whenever I sort out client billing.
I keep time in 6-minute increments (1/10th of an hour), and was getting out the old-fashioned calculator whenever I wanted to tally my billable hours. Sometimes I just want to tally the hours so I can project my income for the month, and then a few days later would find myself, calculator in hand, tallying up the time again! Very frustrating.
To get on top of these little details — which in fact add up to the most important details to my bottom line — I turned to my favorite software program to develop a more efficient billing system.
Making Timekeeping More Efficient
Anyone who obsesses about their personal finances knows that an efficient system of keeping track of income and expenses will free up your time for other obsessions … or fun things … or billable hours.
I developed a fairly efficient system for our personal finances over the years. I use a combination of Mint.com to track expenses, automatic bill-paying and money-saving with Capital One 360, and two key spreadsheets in Excel that project our monthly income and expenses (helping us prioritize and time our bill-paying and student loan slaying) and our budget. These systems keep our personal finances tracked and predictable.
Where was that automation in my work?
It wasn’t. I was using Word for my invoices. The problem is that I couldn’t insert a formula that automatically updated, like I could in Excel. (at least, if I could insert an auto-update formula, I don’t know how) Sure, I used a template that I copied for each new invoice, but the lack of an auto-updating formula was what led me to whip out the calculator.
I buckled down and spent some time developing a professional-looking invoice in Excel. By strategically formatting gridlines and shading certain cells, you can’t even tell it’s an Excel spreadsheet when I print it out. The beauty of it is that it automatically updates the totals whenever I add any time to the sheet. Goodbye calculator. Hello automatic income projection.
Making My Timekeeping More Reliable
Anyone who wakes up to the same morning routine understands the power of habit. I wanted to harness that power in order to keep my cash flowing and keep my clients happy, because I was not billing my clients regularly.
Billing clients regularly alleviates cashflow problems. Attorney billing rules allow me to hold a retainer in an escrow-type account. I can withdraw funds only after sending the client an invoice. Many times over the past few months, I didn’t send invoices because it was only a little bit of money that I could withdraw. But over the summer, we had a bit of a cashflow problem and I’m sure a few hundred dollars would have alleviated a little bit of stress.
For businesses that don’t hold client funds in escrow, sending out timely invoices ensures you get paid for all of your time. When you depend on a client sending you a check after receiving an invoice, you should build in 14 to 30 days before you see the money. If you don’t see your money after 30 days, then you have a warning that you may want to suspend working more hours for that client. If you hadn’t sent the invoice, you wouldn’t know to stop working. So, regularly sending invoices helps you keep track of what jobs will actually pay you for your time.
Now that I had an efficient billing system, sending clients invoices each month is a lot easier. On the first business day of the month, I print out any timesheet where I clocked hours and send them out. Once they’re in the mail, I can withdraw the funds from escrow.
Billing clients regularly increases their customer satisfaction. When a client receives a bill, she knows that I’m working on their case and has a better idea of how much it costs. This also encourages clients to keep in touch with me if they have questions and allows them to make more informed decisions when it comes to settling a case (because they know how much my time costs, and therefore how much it will cost to proceed with the litigation).
There Are Other Options for Efficient Billing Systems
I have worked at several organizations that have customized software to keep track of billable hours, and I know that there are several software programs that help small business owners develop efficient billing practices. But for now, I decided to lay out zero dollars and zero time learning new software because I’m so familiar with Excel.
If you’re already using financial software that includes invoicing features, I recommend you play around with it to see if it can shave some time off of your un-billable hours. Or, if you’re more familiar with a database program, that would provide you with more features you can develop — such as taking notes about the work you’re doing for each client or keeping a task list for each client. Give it a few minutes and see what you can develop that will help you stop getting lost in the little details.
If you’re a freelancer or small business owner, how do you handle billing clients? Is it something you struggle with, or have you developed an efficient system to get the job done?
Image by iosphere, from FreeDigitalPhotos.Net