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  • Yuri Kapilovich, CPA

Billable Hours

Saucy topic alert 🚨 - Billable Hours


Story time: Yuri (a 3rd year senior) has become very well versed in flow-throughs and individual returns and gained tremendous efficiency from his 7 years in the industry. Gets assigned a new client on Monday (during tax season) that is budgeted for 50 hours (theoretically an entire week in tax season + admin time). The thing is, Yuri has seen this type of client before, knows the nuances and finishes the job in 40 hours the realization on this client will be through the roof and the partners should be happy right? WRONG! The following Monday Yuri gets an email from scheduling/admin saying his hours are short for prior week and that it is unacceptable. Yuri gets assigned 3 more clients blindly as punishment for low hours the prior week. Plot twist - Yuri already has 50 hours scheduled for the following week plus these 3 new punitive clients because Yuri had a HORRIBLE week of 40 hours.


Billable hours and tracking timesheets is the kryptonite of this industry in the year 2022. Lets face it, my billable rate in the last 4 years of my career in big firms was between 350-500 an hour. At the height of my career I wasn't even getting a 5th of that. Now sure, there are variable costs associated with each staff but the reality is the engagements are typically fixed fee engagements so are billable hours really used to measure profitability or just to track people's time (see my example above). If its billed by hour its 70% of standard anyway but I have very rarely seen true hourly billing other than out of scope work.


Here are pros and cons of timesheets:


pros:


✔It is important to measure the time it takes for each client to complete the job for purposes of proper pricing.


✔Utilization of resources - Proper time tracking and a rethink of timesheets will yield to actually properly allocating and deploying your resources and, in turn, creating happier staff.


cons:


❌ Timesheets at the big firms are fabricated - this is a fact. The plotting and strategic time sheet management in order to fly under the radar is so real because no one wants that email I mentioned above. no one will admit this.. but I will :)


❌Promotes inefficiency and true time reporting - Efficiency means less hours, less hours means more harassing emails from scheduling so why would anyone accurately reflect their time. Worst of all you will never know how much time a job actually took because the time sheets are inaccurate.


In short, reward accurate time keeping, stop hounding for hours and reward efficiency (truly pursue realization as a metric) and you will retain your best staff and word will spread to bring you more staff.


I speak on behalf of many accounting professionals out there when I say people aren't over the accounting industry itself but over archaic practices that no longer work in 2022.

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