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When a Big 4 global accounting firm needed a leave management solution, Empire TIME OFF saved them millions.
Our comprehensive time and expense tracking, resource scheduling and time off management platform brings automated efficiency to your organization.
The right scheduling tool will improve scheduling and your firm’s productivity and profitability.
Do you remember the old ‘proof’ about why there is really no available time to go to school? The ‘proof’ piled assumption on top of assumption in a clever bit of double counting and misdirection to convince eager and gullible young readers that after accounting for weekends, holidays, summer and sleep, there wasn’t any time left for school.
What does this have to do with your accounting practice? It’s simple: be careful not to under or over-value your firm’s utilization metric by using an incorrect assumption about the number of hours in each month or year.
You’ll often see firms setting their annual utilization baseline denominator at 2,080 hours (52 weeks times 40 hours per week), and then assuming that each month has 1/12th of the total, or 173.33 hours per month. Or firms will fix their utilization baseline at 168 or even 160 hours per month (21 days or 20 days times 8 hours, respectively), regardless of the month.
No practice can afford to have under-utilized assets on the books indefinitely. However, unrealistic utilization expectations means that a practice may not ever achieve projected productivity or profitability results. Professional services firms that rely on Realization and Utilization to make sense of their financials, and whether or not prospective projects will be profitable, need a more precise approach.
Would you rather have 100% of $80,000 or 90% of $100,000?
The answer would seem pretty self-evident: $90,000 is more than $80,000, so it’s hard to argue otherwise. However, it’s not uncommon for professional services firms to focus on the 100% rather than the $90,000. We’ll explain below why this happens and why you should think differently about realization on your Time & Materials projects.
Realization is usually calculated as the sum of the net revenue generated by the project, plus or minus
any adjustments, divided by the net revenue. But net revenue is not as simple as you might think.
Recent articles in the Journal of Accountancy asked whether you should ‘Dump the Billable Hour?’ and offered suggestions as to ‘How can firms implement value pricing’ as some accounting industry experts have suggested. The article offers compelling arguments why a firm should consider value pricing and we agree this makes sense in certain cases. However, we think there is more to the decision than the articles cover.
Value pricing means defining a fixed price for a particular service or range of services. Value pricing has the considerable appeal of simplicity: the fixed price is agreed upon before the work starts, it’s what the payment terms are based on, and there’s no haggling or reviewing the invoice line by line to understand exactly what was done and by which staff member and how long it took. Fixed price projects, when executed correctly, can produce gross margins exceeding those generated by time and materials-based projects when the resources involved are experienced and knowledgeable and the available economies of scale have been identified and leveraged. In many cases, value pricing can even improve client relations by eliminating the tension sometimes associated with presentation of the time and materials invoice. We agree there are certainly instances when value pricing makes sense for the client and the firm; however, it is not appropriate for all cases. Firms should make informed decisions about value pricing after evaluating many different factors.
Every business wants to collect every dollar on every invoice they produce. However, the reality is that there may be write downs and partial payments and some invoices just won’t get paid no matter how many follow up calls you make or letters you or your attorneys write.
For professional services firms, taking reserves against your receivables may not be enough. For most professional services firms the largest current asset is your unbilled time and expenses. If all of your projects are contracted as time and materials work and you are lucky enough to be able to collect all of the time and expenses charged to your projects then you do not need to worry about WIP reserves. However, if you have fixed price projects or you do not always collect 100% of the time and expenses charged to a project then you should be considering the use of WIP reserves.
So what exactly are WIP Reserves?
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There is no ‘Right Way’ to do cost normalization – the possibilities are endless.
Most modern project accounting systems can be configured with cost rates for cost accounting purposes. The hourly cost rates are “estimates” based upon the total expected cost to be allocated and the total expected hours to be worked.
If your firm uses SAP, you know the information available to you and your managers is staggering in its depth and breadth. From the tiniest detail to firm wide rollups to year-over-year comparisons, everything you need to manage your business is at your fingertips. Or is it?
SAP Financials was designed and built as a comprehensive ERP solution for organizations ranging from multi-national manufacturing to retail to government to consulting and professional services.
But the data is only as good as the inputs, and a challenging user-interface can be a data capture barrier, especially for project-oriented groups like an internal IT group or a professional services company or consulting firms using the SAP CATS module.
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It’s not too big, it’s not too small…it’s just right. How to help your employees stop hating the dreaded time entry process – and get
valuable data out of your time reports.
Why is it that entering time cards is so…hard? Way back when we all worked factory jobs, everyone had to punch
the clock to get paid. Today, with so many workers on salary, timecards aren’t always entered timely – if at all – and paychecks are still
deposited.
But that doesn’t mean time tracking isn’t important for both employers and employees. On the contrary, knowing what employees spend their time doing over the course of their workday/workweek is even more important today than ever before. And there are actually solutions on the market that employees LIKE to use. Okay, well maybe not like, but let’s just say they don’t hate doing timecards.
Project and program managers know developing and executing a project plan, scheduling the necessary resources and controlling the project budget all while trying to manage project deliverables and coping with changing customer requirements and expectations is difficult under the best of conditions, and nearly impossible under less than optimal conditions.
If your firm is like many of the firms we work with, your project and program managers are undoubtedly adept at scheduling project resources and your firm has a functioning day one absence and time off management process, but do they work together? Do your scheduling managers know who’s going on vacation and when, or who has some kind of statutory leave of absence scheduled? Is your process something like this: employees request time off or leave from their immediate supervisor, who then checks with HR to see if the employee has accrued enough time off to cover the request or is eligible for the requested leave type. And if the requested time off days are within the firm’s policies, or the
employee is eligible for the type of leave requested, the time off request is approved. From there, what
happens next?
There are a lot of scheduling tools available for project-oriented organizations. Different scheduling tools provide a wide range of features, ranging from dropping and dragging employees into a calendar to scraping what’s in Outlook or your mobile device into a companywide ‘big board’ view so everyone knows when Millbury in Sales has a meeting or Jones in IT has a dentist appointment. But meetings, appointments and assignments are only part of the story.
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We’ve all done it. Excel is an easy, reliable and familiar go-to tool – to a point. Whether you are scheduling employee time or resources for a project, Excel seems like a logical choice: chances are you already have a subscription to MS Office, everyone is (at least somewhat) familiar with the interface, and customization is virtually endless. You may even have templates based on past projects so you quickly hit “Save As”, delete the old data, and you are on your way to scheduling for your upcoming week, month or project.
This is a common story. Many people we talk to are currently using Excel to manage employee schedules and project deliverables. From accounting administrators to IT managers, it seems Excel is a popular choice for scheduling – and it’s already paid for. So why consider a change, especially if it will cost money up front?
A recent survey noted that workflow was one of accounting firms’ top technology challenges. The survey found that 62 percent of responding firms had no workflow software – 38 percent had no workflow software or any intention to implement it, while 24 percent had no workflow software but were considering it. Can workflow be an industry-wide technology challenge if nearly two thirds of the firms surveyed don’t embrace it in the first place? Perhaps the gaps in workflow software better explain the “challenge” and firms’ perceived failure to adopt automated workflow processes.
Oh, workflow. How we love to hate you. It is a necessary evil to have what’s known as “workflow” among professional services businesses. In other words, it is the series of activities necessary to accomplish a task. Because different fields of work define workflow differently, managing and automating workflow can prove to be a challenge. For example, an accounting firm might define one workflow as moving a tax return from initialization to completion and then getting paid. Contractors might define workflow as the process in which a project goes to bid, receives approval, materials as sources, labor is managed and the project is completed. See the challenge?
Efficiently leveraging workflow processes can help organizations better manage due dates, decrease bottlenecks and avoid under- or overutilization of resources, which increases productivity and improves client satisfaction and retention. So, what is best for you and your situation? How do you define workflow? Will an off-the-shelf product meet the needs of your organization?
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Your firm has a limited number of resources and you have a general feel for the number of returns you can prepare during tax season: that is, your staff can process some number of returns and to process more, you and your staff must work longer hours or file extensions. Adding additional hours to an already busy season is problematic for your firm and filing extensions can be problematic for your customers. What if there was a way to solve this problem without increasing your workload or filing extensions?
Optimization software may be a big part of the solution. In a small firm, partners know the staff intimately, how efficient each employee is for each of the different types of returns processed. When you assign returns to each of the employees you have this information in mind. As a firm gets larger, details about staff and their skills and experience grow exponentially, making it difficult to assign the different returns in an optimal fashion. And constantly shifting priorities can further complicate your scheduling: A client may call and tell you they need their return for a bank loan as soon as possible so you raise the priority on that return. Optimization technology keeps track of the myriad inputs – staff efficiency, staff cost, your staff’s experience with different industries and different clients, filing dates and deadlines, and most importantly, changes in priorities driven by you and your clients – that would overwhelm a manual scheduling effort. Optimization software evaluates all these inputs and generates the best scheduling options for completing the returns on time.
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A recent survey and article in Accounting Today noted that ‘workflow was identified as one of the top technology challenges’ faced by accounting firms. The survey also noted that workflow software was absent from 62% of firms responding to the survey – 38% did not have workflow software and had no intention of implementing it while 24% did not have workflow software but were considering it. What to make of this disparity? Can workflow be an industry-wide technology challenge if nearly two thirds of firms surveyed don’t yet embrace the technology? Perhaps gaps in workflow software explain both the challenge and the failure of firms to adopt the technology.
There are multiple Workflow definitions, each a variation on this basic concept: Workflow is the series of activities necessary to accomplish a task. For an accounting firm, we can frame the definition of workflow as moving information, be it a tax return or compliance document, from initialization to completion and getting paid. Technologies such as email and document sharing can make it easier to move information from one person to another, but that technology doesn’t by itself help firms manage due dates, reduce bottlenecks or prevent resources from under- or over-utilization.
What’s commonly referred to as “workflow” in professional services businesses, such as accounting firms, is the series of activities necessary to accomplish a task. An accounting firm, for instance, could define one workflow stream as moving a tax return from initialization to
completion and then getting paid.
Leveraging your workflow process effectively can help your organization better manage due dates, reduce bottlenecks and prevent under- or over-utilization of resources, which leads to better productivity and improved client satisfaction and retention. Here are seven steps that can ensure your workflows work for you.
If your company isn’t doing a thorough job of tracking exempt employee time off, you’re losing money slowly at present and quickly later on. Slowly, because a day here or a day there may not seem like much, but when an exempt employee who has been taking time off without recording it leaves or retires, paying out unused vacation or sick time can be costly. And with more states enacting laws
outlawing ‘use it or lose it’ policies for paid time off, the risk is increasing.
Employer surveys typically find companies estimating they only capture about 70% of exempt employee time off in any given year. If we make some assumptions about exempt employee paid time off, say, two weeks of vacation and another week of sick time, and use the most recent average annual salary of $47,060 or $905 per week according to the first quarter 2019 BLS survey, a 30% ‘leakage’ in uncaptured time off is more than $800 per employee per year. You can see how this amount can add up quickly for even a small company paying their exempt employees an average salary.
Unrecorded half days, the Friday before a Monday holiday or the Tuesday after a long weekend and the occasional week taken when HR wasn’t notified add up slowly and insidiously over the months and years. As an added insult when a long-time employee leaves for a new job or retires, the unrecorded time off taken when the employee was new and presumably paid less must now be paid out at the employee’s exit salary which can often be substantially higher than the entry level compensation.
Jerry Seinfeld has wonderful bit about going ‘out’ – “…not one person here is home, we are all out…there are people trying to find us, they don’t know where we are…I can’t find him…where did he go? He didn’t tell me where he was going…he must have gone out!”
Funny stuff in a comedy club, but not so funny in an office when phones are ringing, deadlines are imminent, deliverables are due but desks are empty.
Notifications, a 360-degree review and approval process and full transparency of time off conflicts and overlaps can prevent practically any staffing problem caused by employee time off events. What do we mean by ‘Notifications’, ‘360-degree review process’, ‘conflicts’ and ‘overlaps’?
Determining FMLA eligibility and calculating available FMLA leave balances is complicated and
employers should understand their options for determining the best 12-month FMLA leave period for their company.
Federal Law allows the employer to select from one of four different methods:
(1) The calendar year
(2) Any fixed 12-month “leave year,” such as a fiscal year or a year starting on an employee’s
“anniversary” date
(3) The 12-month period measured forward from the date any employee’s first FMLA leave begins
(4) A “rolling” 12-month period measured backward from the date an employee uses any FMLA leave
For simplicity, we’ll ignore paid company holidays and other paid time off types such as sick time and
vacation. To be sure, these other paid leave types affect the available FMLA balance when they are
taken instead of FMLA leave, but our purpose here is to illustrate why the 12-month rolling backwards
method is preferable.
“I’m on vacation next week!” Every employee looks forward to that declaration, whether it means a trip to an exotic locale or just a few days of R&R at home. The benefits of allowing flexible personal time in the workplace has been widely studied and advocated. However, much less attention has focused on how to manage personal time off (PTO) effectively so its costs don’t outweigh the benefits.
Managers and HR professionals know that managing Personal Time Off (PTO) involves more than covering for an employee and making sure work is completed. Still, most companies track PTO using ineffective, outdated and inadequate tools. Memory, hallway conversations, Excel spreadsheets, sticky notes and email threads are fairly common.
PTO should be managed with the same care and precision the finance team uses to look after the company bank accounts. Firms don’t allow employees to make unapproved or unauthorized withdrawals from the company till; unauthorized or unaccounted for PTO should be treated similarly. Some firms specializing in HR services (e.g. Unicorn HRO and Checkpoint HR) estimate there are, on average, three untracked PTO days taken every year, by each employee. If we assume an average salary of $1,000 per week, that’s $600 you’ve lost, per employee, per year. Add in indirect costs, such as project delays or potential overtime pay for covering employees, and the impact could be substantial.
For many of the firms we work with, managing time off and ensuring company time off policies are followed can be a challenge, especially for exempt employees. It’s very common for companies to require timesheet information only for time off events such as vacation, jury duty or a planned sick leave lasting more than a couple of days, and for those employees not required to submit a regular timesheet or ‘punch in’ every shift, it’s not uncommon for time off details to be lost or ignored. We’ve found companies often have very detailed time off policies for exempt employees, but we also find a surprising lack of continuity between the firm’s absence management policies and the actual process.
Based on our experience and research with our customers, we are convinced there are four components of an effective and integrated absence management solution:
1. Electronic Requests
2. Multiple Approvals
3. 360-degree Notifications
4. Integration with Payroll
From whispers within progressive tech companies, to commonplace across industries, the idea of Unlimited PTO is enticing to most employees. As organizations are leaning more on their HR departments to establish company culture, it’s becoming increasingly enticing to employers as well. It’s been four years since Netflix and GrubHub decided to think outside of the box and provide their employees with a better work/life balance.
What we’ve learned over these four years is progressive ideas cause a lot of confusion, as it paints company time off policies with hues of gray. Can I flex my schedule? How much time is too much time? Will taking time off affect the perception of my work ethic in a bad way? Will someone eat my parfait in the fridge while I’m away? (Well, the last one was mine.)
So how does a company and its employees navigate the tumultuous waters of a progressive time off policy? After all, Unlimited PTO or not…you still have a job to do. By this point, we’ve all heard about some of the consequences of “Unlimited PTO”. Let’s take a look at three pros and cons you may have missed.
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In 2019, we find ourselves with the lowest unemployment rate since 1969. As it drops below 4%, we also bear witness to a stock market and economy on a bull run. Despite the bullish economic conditions, HR professionals find themselves left with a talent pool firmly positioned in a “bear market”. The reality of a strong economy with low unemployment is that businesses begin to grow, so there’s an increased
demand for talent but unfortunately a shallow pool to fish from.
With a running record of low unemployment numbers, companies are having a tough time finding the right workers. Despite this available talent drought, top executives in companies across the U.S. are yelling “Feed Me Seymore,” turning HR offices into little shops of horrors. The reality is 66% of US companies have plans to expand in 2019. These expectations place a palpable strain on HR professionals, as they struggle to find talent to fill positions in a “candidate-driven” market with an unemployed to job openings ratio that fell below 1:1 at the end of 2018.
Working in human resources has often meant dealing with antiquated software, overseeing inefficient processes, and being reactive to the needs of the organization’s employees.
However, there has never been a more exciting time to be a Human Resources Professional than today. Today’s HR professionals are equipped with software solutions tailored to their organizations and responsive to their most pressing needs. Intelligently designed software, along with thoughtfully re-imagined HR processes allow HR professionals to be proactive and not just reactive when it comes to managing the needs of their workforce.
The public sector is often overlooked when evaluating the current state of disruption in the HR industry. Yet mounting pressure from fiscal realities and constituent expectations to deliver more and better services with fewer resources forces local governments to operate in one of the most complex work environments imaginable. This has caused a staggering increase in agencies seeking software solutions to automate manual processes, locate, hire, manage and retain talented employees and make their own HR jobs easier.
As countless FMLA statutes find their way to the floor of federal and local government chambers, it’s becoming increasingly more difficult to keep up. How can Benefits and HR teams manage the constant onslaught of intermittent and standard FMLA requests, while also reducing exposure by ensuring their organizations remain compliant with ever changing regulations?
Let’s take a closer look at six ways to clearly improve your regulatory leave process and make your work-life easier.
You probably control all the hours for your timecard employees down to a detailed level: regular time, overtime, sick time and vacation. Do you have the same level of control for your salaried employees? What happens when a salaried employee calls in sick? Do they leave their manager a voicemail, call HR, or send an email to an administrative person? What happens when they return to work? How is their time off recorded in the payroll or HR system and who does it? And, what about other time off? Do you have a corporate wide process for requesting time off or does each group make their own rules? Assuming you have an approval process, does the approver(s) have all of the information to make the decision or are they acting in a vacuum without knowing if the employee has the hours available or how the absence will affect staffing and projects?
Wouldn’t it be faster, simpler and more efficient for everyone if an employee’s time off request triggered a transparent, end to end process?
Determining FMLA eligibility and calculating available FMLA leave balances is complicated and employers should understand their options for determining the best 12-month FMLA leave period for their company. Federal Law allows the employer to select from one of four different methods:
(1) The calendar year
(2) Any fixed 12-month “leave year,” such as a fiscal year, a year required by State law, or a year starting on an employee’s “anniversary” date
(3) The 12-month period measured forward from the date any employee’s first FMLA leave begins
(4) A “rolling” 12-month period measured backward from the date an employee uses any FMLA leave
For simplicity, we’ll ignore paid company holidays and other paid time off types such as sick time and vacation. To be sure, these other paid leave types affect the available FMLA balance when they are taken instead of FMLA leave, but our purpose here is to illustrate why the 12-month rolling backwards method is preferable rather than complicate the methodology. We would be happy to share our Excel-based FMLA leave calculator which illustrates how various other paid leave types can interact with FMLA leave.
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