How many of you have heard phrases such as, “Embrace technology”, “Discover these time-saving solutions”, “Apps are an easy way to enhance your businesses’ productivity”, or “Work smarter not harder!”. Ok fine, you have all heard of that last one for sure. While most of these statements may seem common and generic, there is some truth behind the underlying concepts. Truthfully, we could all benefit from “gaining” more efficient hours during the day. Utilizing the benefits of applications with your accounting system is a beneficial step toward achieving this goal.
Time and Expense billing procedures are one way to use technology to improve productivity. I would like to outline this by telling you a story of a skilled business owner by the name of Bob. Bob’s service business earns revenue from time and expenses incurred toward projects that his employees and contractors provide to customers. Bob is struggling to operate his business because of his inability to deliver invoices to his customers in a timely manner. His existing processes, including requesting timecards and reimbursable expense forms by project, are manual. Bob is consistently finding accuracy errors related to the underlying receipts not totaling to the reimbursable expense reports. He had recently encountered an embarrassing gaffe when a major customer pointed out an error that resulted in Bob overcharging the customer by over $5,000. This prompted Bob to start triple checking his invoices before sending them to his customers, creating a significant increase in time and delay in sending out invoices. Clearly, this process is not the highest and best use of Bob’s day.
To make matters worse, unsurprisingly, his employees and contractors are still expected to be paid timely regardless of any delayed issues in his billing process. The real concern is that the frequency of payments from clients are irregular creating cash flow problems. Bob finds himself using his business credit card more frequently and not being able to remit payment in full. Also, he has needed to loan the company cash to alleviate this shortfall in order to pay company expenses. Finally, Bob decides that “enough is enough” and he takes steps to implement a technology solution to his problems.
What Bob needs is a time and expense tracking app. There are many to choose from so he wisely selects one that integrates well with his specific accounting software program, like QuickBooks Online (QBO). Let’s explore this potential tool for Bob’s problem that we are calling “App X”. (The features that will follow are not necessarily in every application but are shown here as potential features that are more common and beneficial to look for.)
“App X” requires Bob’s workforce to register as separate users. This enables them to record their time and expenses directly to specific projects and customers. The workforce can select from a list of tasks predetermined by the project manager for maximum completeness and accuracy. Bob will have the ability to log in with his own credentials to approve all inputs from his workforce. This eliminates mathematical errors that he has been encountering with his existing manual process and saves him many inefficient hours. Within App X, Bob can now create invoices based on the approved time and expenses by project. He can choose to include information ranging from a simple summary to a detailed invoice listing out every single hour incurred by person and or task. Expenses will also be summarized and included as PDF attachments accompanying the digital invoice when sent to the customer. There are many other added benefits such as automated late invoice reminders to customers, charts and graphs showing progress on any given project, forecasting and scheduling of Bob’s workforce to map out team capacity for future periods, and creating recurring invoices for those specific projects that follow a fixed-fee billing structure. All this data integrates seamlessly with his accounting system thus eliminating the need for duplicate inputs of information between both programs.
Now let’s check in with Bob after he has implemented and integrated App X with his accounting system. Remember that customer that pointed out the summation error between his expense report and receipts? There hasn’t been another billing issue since AppX was implemented. Additionally, Bob now has more confidence in his invoicing process. His irregular cash flow issues have subsided now that he is sending out his invoices faster and has more time to spend on business development and working on his business. His capacity for accepting projects has increased because App X has granted him the ability to monitor his projects more closely so he knows where his team is spending their time and how much capacity they have. He has eliminated his debt and has even been able to pay back his personal loan to the business sooner than he expected.
Be like Bob and embrace technological change to provide solutions to your business pain points. Contact LGA’s Management Accounting team for assistance in reviewing your systems to see if implementing a billing workflow or utilizing technology within different apps can enhance a current process.
by Shawn Christman, CPA, MSA
