by Ken Williams, CFO, Ruekert & Mielke, Inc.
There is a corporate tag line that you may be familiar with – “It’s about time.” They have a good meaning for their tagline but in this post, I’d like to explore the importance of time and what it means to your firm.
Your business makes money in one single way – It’s about time. It is all about selling your professional expertise, the time of your most valuable asset at your company. It is about reporting time, posting time, paying for time, reviewing time, billing time, and getting paid for your time. It is absolutely, “ALL ABOUT TIME.”
I work for a great company. The CEO and COO recognize the value of time when the CFO says we need to get time in “on time.” They give total support, not some token support to appease me. They are fully aware that we are running a for-profit business.
We are not a non-profit, we are not a charitable organization, and we are not a bank for our clients.
We are professionals, and regardless of our business training in life, we are going to run this the way a for-profit business should be run. Why? I can give a slew of reasons that people may say: to be profitable, to give a good shareholder return, to provide a nice place to work, to provide a nice family environment, and to help out clients with their problems. That is a sample of the reasons—all very good reasons.
Let me give you another reason, a very basic, selfish reason. What does almost everyone want in life and what is the reason for his or her job?
People want to make money to have a nice life and to be able to build up retirement accounts in order to enjoy life later on. Selfish–I am thinking of me only, not my fellow employees. Hopefully, a for-profit company will be profitable, enabling me to stay employed while providing me with a nice lifestyle and a future retirement. Of course, when a company has a good year, those things are more likely for me.
Your company does not do things for free; your company expects to be paid. Just as you, the CEO and every employee expects to be paid every payday. Here are our company rules (written or unwritten):
1) The importance of time—it starts from the top. The CEO has to believe that time sheets are important to get in and to be posted. Based on stories I’ve heard at conferences, some of you are probably rolling your eyes. Many employees complain that the CEO or stockholders are often the worst at doing this. I suggest that you have your top people read the following, as if it were written by you:
I care about this business, especially its profitability. I also want us to show that we truly care about our clients and our staff. As our company leader, you can set the pace for all of us. We have the tools, particularly Axium, to help this company be profitable. But we must use Axium and other tools to their fullest potential. That may mean changing our ways.
One of the most important steps we can take is ensuring that one of our most valuable assets—our time sheets—are ready to work with when we need them. If you require that each time sheet is due by (You name the day)—no exceptions—you’ll take the lead in ensuring that everyone in this company is accountable. You’ll then have the timely information you need to make decisions, and everyone will know we are serious about running a for-profit business. They will know that we all care.
At our company, we have a CEO who does realize the importance of time. We have a weekly reporting period and do payroll weekly as well (paid with a one-week delay). His direct quote in an all employee staff meeting was, “If your time sheet is not in by 9 a.m. on Monday, we will move on without you. Since you do not see the importance of reporting your time, we will catch you next week for your check as well. Accounting will no longer hound you to try to turn it in; you all know the new rule.”
Get past the part of this being against federal law in the FLSA (Fair Labor Standards Act). He was on a roll for his “for profit company” and me, and I wasn’t going to stop him!
But he set the bar. Truth is, two weeks later, he didn’t have a time sheet in. We moved on, he did not get paid. On Friday, he asked me where his check was. I answered,
“You didn’t turn your time sheet in, so I didn’t pay you, just like you told everyone.” After a few quiet, sweat-filled seconds on my part, he said, “You are right. If any employee does not turn in a time sheet on time and complains that you did not pay them, tell them you did it to me, and if they have a complaint to see me. But they won’t get any sympathy.”
I only had to do this once because he let people know what had happened to him personally.
2) Make it easy to report time. If you have not implemented a better software with an integrated timesheet, it’s about time you did. Internet-based applications will allow people to enter their time wherever there is an Internet connection. This easy access removes any excuse.
3) Accounting has to do its part. If your CEO makes a proclamation, you have to back it up. That means you need to produce the results. You must post payroll quicker, get reports out quicker to PM’s, and use the power of new applications to improve accounting for your company. You can no longer whine about time sheets. You’ll see that some people will accept the new rule, others won’t. Be the support service your company and its PMs’ need (imagine your PMs saying it’s about time). Quit fighting with them and help them. If you complain about PMs’, believe me, they are complaining about you. And there are more PM’s than there are accounting people. Make the new rule a team effort and everyone will eventually come around.
You drive your reporting periods for time. Try to make them match your type of work. If you have very small jobs that finish in a few days or weeks, then consider doing time reporting daily. Before your eyebrows get stuck in your hairline, there are a number of companies that do this now. They are the companies that bill any day they wish, they have days of WIP under 30 and sometimes under 10; they have days in AR of likely under 30.
How many of you have cycles where the total period from reporting to cash collections is 30 days? We are around 60–70 days, and I’ll bet many of you might be longer than that. But pick a period right for your company where you can be the bank for less time.
Finally, what does my company actually do (honestly):
- Our cutoff day for time is Friday, and timesheets are due at 9a.m. on Monday.
- Is everyone done by 9 a.m.? No. But out of 140 people, we have usually about five people late (in my mind, not too shabby). Usually they have been on calls or emergencies. But, yes, some still are just bad at getting time sheets done on time.
- Actually, the 9 a.m. policy was when we had about 60 people. With our size now, we cannot get them all approved by 9 a.m., so I do allow some slack.
- Do I not pay them? Of course not, that is illegal. I did withhold on the CEO to prove a point. Plus, he could afford missing a pay period.
- I try to track the time sheets down, simply because moving on with payroll screws up too many things regarding benefit withholdings in payroll. I call the people and tell them we are waiting for them.
- Habitual lateness is reported to supervisors. Management needs to understand that this is about time, and if I have to tell somebody weekly and let his or her supervisor know about the problem, I will. Eventually the employee or the boss will get sick of the prompting calls.
- For habitually late people, I personally call them and ask them to do their time sheets on Friday before they leave, or over the weekend. I also remind them that it’s about time they changed their habits.
- If the CEO won’t support this nor be upset when time sheets are late, this will likely be a hopeless cause. The CEO needs to set the example.
- We send out weekly reporting to PM’s and do billing every four weeks. But our jobs are more lengthy (months and years long). Time sheets are due at 9am on Monday; payroll is usually done on Monday, and reporting is out on Tuesday.
My last final plea to the CEO and stockholders:
- If I have upset you, I did not mean to. I meant to open your eyes to possibilities. I think the possibilities are very good things for your company. I hope you cared enough to read the entire article.
- The next time you meet with peers of your competition, ask the ones that you think really have it together at their company for suggestions on how they handle the time sheet issue. Good firms run well internally.
- You sell people’s time. Your largest expense by far in your income statement is labor. If you could improve something on the largest expense item in your company to impact numerous areas (processing, reporting, billing, collections), why would you not just try it? The payroll cost won’t change, but your revenue can (quicker payments, quicker billing, less into your line of credit, being able to do things better for your most important asset).
- I have met and talked with your accounting staff at conferences. They want to do a good job and to have fewer headaches. They’d prefer not to argue with PM’s. Accountants want to be respected for what they do. They want to be viewed as valuable to your firm. They do not want to be referred to as “overhead”, “non-billable staff,” or “non revenue generators.” Empower them to do their jobs and enable them to live up to expectations.