The timesheet has long reigned as the de facto tool for tracking billable hours and measuring efficiency and productivity. Yet, there are those who question whether time recording is the best measure of an accountant’s value and productivity, with some encouraging firms to ditch timesheets and implement a value pricing model. In a profession built on precision, accuracy, and timeliness, why do timesheets remain such a contentious topic, stirring up fervent and polarised debate on their use, relevance, and effectiveness?

Not one size fits all 

Many of the well-versed arguments for ditching the timesheet assume a one-size-fits-all scenario and are based on and applied to accounting firms with a narrow range of services provided to similarly sized clients and their needs. This is not the landscape of the clients served by the top 100 firms in any territory.

The ongoing arguments stem from the flawed assumption that many firms have a very small ownership base with limited specialization in discipline. In these firms, the owner doesn’t need to worry about internal conflicts between partners over their contribution and the belief that fairness will naturally prevail. This is not the case in the top 100 firms where the dynamics can go beyond simple cost balancing.

Time is not our currency 

“We don’t sell time,” some accountants proudly proclaim. “We sell our expertise to provide trusted outcomes”. While that might be true for some, it’s not the reality for everyone. Many accountants do sell time rather than a specific outcome. They don’t always have the luxury of known inputs and predetermined outputs that will allow for an accurate prediction of value and cost especially when dealing with a diverse client base of different sizes and service needs that require more than, say, bookkeeping. We speak to many such firms as well as those that have ditched timesheets and regretted the decision only to reintroduce them… but they don’t make it into the headlines or many of the articles devoted to the “timesheet question”.

Without delving into an extensive comparison of pricing models and billing methods, much of the debate and criticism of timesheets arises from a simplified perspective on pricing and value, often characterised by a lack of data about the true cost of delivering that service/value.

If you’re counting hours, you’re not value billing 

And here comes our favourite, the biggest fallacy of them all: “If you’re counting hours, you’re not value billing”. This is not the moment to debate the virtues of fixed fee billing, value billing, or time-based billing. That’s for another day. For now, let’s just accept that some firms find value billing preferable. But that decision is entirely unrelated to the many uses and benefits of timesheets. Moreover, it suggests that you can’t simultaneously value outputs (and hence the idea that you price by value) whilst also counting inputs.

This oversimplification ignores the fact that many successful industries do both – they count inputs while simultaneously valuing outputs. Thankfully, the distinction between the Accounting profession and other industries is shrinking, thanks in part to technological advancements. Furthermore, pricing based on value doesn’t guarantee perfection and is not the Holy Grail that value pricing zealots would evangelize: in this model, oversights can lead to misaligned pricing and unaddressed ‘black holes’, undermining profitability and growth potential.

For example, imagine if a service line costs more than budgeted and significantly impacts overall profitability. Consider the case of payroll services. What if payroll services for a given client were costing a fortune compared to budget and were reducing the firm’s profit on that client by 50%? Just because the client only sees a certain value, it doesn’t mean that you have to provide it to that client at the “value pricing” level. Should the profitable service line subsidize the underperforming one? What if an underpriced service erodes profits? 

Without the data to allow you to decide whether to exit/outsource the drag on your business to restore profit margins, you’re flying blind.

We’ve got a fixed fee model – why bother with time?

I recently met a Managing Partner of a 100-person firm who was explaining their approach to clients, fees, and time. More than 90% of their service provision is via fixed monthly fees, with the rest on a mixture of single-fee or time-based projects. They are the very epitome of the digital-first, 21st-century Accounting firm focused on value-based pricing and billing. They’re also humble enough to acknowledge that they can mistakes about the correct fixed fee level for a new client or service, “just because we have fixed monthly fees, it doesn’t mean we always pick the right level”.

The firm’s leader described how they hadn’t done any time tracking until earlier in 2023. The reason they started was because they felt (knew) that they had clients and / service lines which were under-performing. Now, thanks to the data provided by modern time-tracking tools cross-referenced against their actual billing, they can calculate the marginal cost by client, by client sector, by client size, by service line, by fee value, by delivery team. They throw this lot onto pivotable scatter charts which instantly and graphically tell the entire team which clients need that difficult fee conversation, or which service delivery team needs some help.

The key point here is that it’s the fact that a firm uses value-based / fixed-fee arrangements becomes the very reason why they need to get more accurate time data. Without measuring the inputs, the quality of the output data becomes meaningless for productivity and pricing initiatives.

You should not measure inputs, only outputs: a risky approach 

The argument advocating for an exclusive focus on outputs suggests that as long as the result is achieved, the path taken to get there doesn’t matter. It emphasizes that what truly counts is what the client is purchasing and how they’re paying for it. However, this perspective overlooks crucial realities. It assumes that employees automatically grasp the underlying business model, when, in fact, this understanding often requires guidance and leadership from the firm. This knowledge doesn’t materialize by simply abandoning timesheets.

Besides, this approach assumes a constant, smooth operating environment across systems, colleagues, and clients. But, as we know, the real world is far from constant. Issues arise, and without measurements, you’re left with knowledge of an undesirable outcome without insight into its cause. How can you address the root of a problem if you’re only able to see its effect? Moreover, how can you detect early signs of trouble before a breakdown occurs? Without tracking progress – and time along the way – identifying trends or recognizing when an employee needs support becomes a near-impossible task. Ultimately, this approach leads to a reactive stance, perpetually dealing with crises rather than providing timely guidance, and effective leadership.

If people are counting time, they don’t care about client outcomes: a misguided myth 

Isn’t it as absurd as it is insulting to every professional who diligently logs their task hours to imply that meticulously tracking time equates to a disregard for client outcomes? Isn’t the suggestion that time recording somehow encourages deliberate procrastination for the sake of additional billing, quite frankly, ludicrous? If a person loses sight of the client’s ultimate goal, it’s more likely due to poor leadership and/or company culture, rather than their time-tracking habits.

Consider the example of a high-performance sportsperson, or indeed these days, any individual focused on their physical health. Look at the measurements now available – heart rate, blood pressure, blood sugar, split times, final time – personal bests galore. These indicators form a key part of their journey in improving their outcomes. It’s no different for professional knowledge workers wanting to make better use of their time.

Back to Accounting, it’s also naïve at best to imply that clients are gullible enough to foot any bill simply because a firm claims they’ve spent time on it. Are clients seen as ready to dispense cash at the ring of a time-recording bell?

Try asking any Partner at a top 100 firm if they genuinely believe all bills go unchallenged, or if clients don’t consider value for money when deciding where to take their business. Spoiler alert: they don’t – and they’re not that conceited!

From realisation and utilisation to accountability… 

We share some of the common concerns regarding performance metrics used today in many firms. The focus on recovery ratios, for instance, drives people to only record time where they feel that 100% of it will be recovered. For the individual that often means working 12 hours a day to book their 7.5 hours of “standard time”. The damaging effect on employees is clear but so too is the flaw in the argument for eliminating timesheets: the implication again is that by removing these time recording measures you will instantly get a culture of accountability and that there is zero value to the employee and the firm in understanding what these same people are spending that 5 hours of unworthy time on.

How can we help these people perform more effectively if we don’t have any measurements of how that time has been spent? That’s about the key inputs, including time.

Measuring time = lack of trust 

There’s a rather unpleasant undertone to the notion that just because you are measuring time (or any other inputs), that means you don’t trust your colleagues. We will return to this topic in greater depth in a later edition but for now, why can’t a firm trust its employees to work diligently, while also tracking the activities that come their way, and tracking that input measure of time, to show how productive they are to themselves? Of course, they can.

This is not about trust – this is about taking a considered, measured approach to understanding how to help people perform more effectively every single day.

If it’s broken, fix it! 

Much of the debate and impetus to abandon timesheets focuses on the mechanism for completion rather than the principle of using them in the first instance. The arguments for jettisoning timesheets are still applied to earlier iterations of time recording. These manual, traditional time recording methods are dismissed as a chore to complete, full of erroneous entries and untruths, and a drain on time with firms having to spend considerable effort and money administering timesheets.

In an era of automation and integration, these excuses seem rather flimsy and outdated. Modern time-recording software and apps eliminate most of the drudgery associated with traditional timesheet completion. Ongoing investment and improvements to the data collection process provide accountants with the necessary tools that make the task easier to complete and with greater degrees of accuracy than they’ve achieved before and those tools now exist at a price that makes them justifiable.

The real issue often missed is that if you make it easy for an employee to provide accurate data about how their time was used, they will. Give them the feedback and insights about how to make the most of their time and they’ll track their time enthusiastically. Then, and most importantly of all, the leadership must use that data to identify areas where improvements can be made to increase the performance of the individual and the firm as a whole.

You don’t get to this point by ditching timesheets. You get there by giving them the right tools to capture time and by avoiding outdated metrics and targets for recovery and utilisation.

As alluded to at the beginning, the issue isn’t a binary one: it’s not, and shouldn’t be whether you’re pro-timesheet or anti-timesheet. It’s about fixing the measurement system and embracing new tools and methods to achieve that.

Data tells a story: making the transition from anecdotal to analytical 

“Looking at a timesheet doesn’t give you the answer…” is a common refrain and yes of course that’s right. No single measurement will give you all the answers. Just like a client survey won’t tell you the cause of any problems inside your firm. Just like a missed deadline won’t tell you why something went off track.

Undeniably, you need context. But if you don’t have the data around the time factor, then all the other things you’re measuring don’t have context either. Surely knowing the true value – and cost – of your services applies to any business? If time is money how do you know the value of that if you aren’t tracking how you invest and value your time? And if you don’t actually know how many hours have been worked in the business over a defined period? Put simply, you’re operating in the dark. Sure, you could estimate how many hours based on average start and finish times, but there is a big difference between ‘gut feel’ estimated numbers and hours to the actual numbers when properly recorded and measured.

Transparency: building trust and accountability

How essential is it to have accurate and streamlined time management to provide a breakdown of fees to clients? What can happen and what should you do if a client requests a breakdown of fees and you don’t have time recorded? Surely having accurate easily accessible time management information is advisable when a client asks for a breakdown in fees especially if they are questioning the amount? Even in a fixed fee arrangement keeping timesheets is advisable arming you with data insights to demonstrate that your rates reflect your time and providing clients with a clear understanding of how the fee is justified. Surely such transparency can only strengthen the client relationship.

New ways of working 

Much has been said about the impact of hybrid working on productivity, performance, and well-being and how managers can help support and lead disparate teams. Aside from turnaround times and project completion, how can managers support their teams, see which tasks are being completed on time, or faster, and if the firm is at sustainable capacity or risking burning out some team members?

As mentioned earlier, some may still suggest that time recording indicates a lack of trust and is snooping on employees, and is not a way to manage a team or maximise performance – we will come back to that in a later edition. In a hybrid environment, the adage “you can’t manage what you can’t measure,” has never been truer: how can you assess your team to review and improve their productivity, and calibrate their work/life balance to ensure well-being, if you have no data to make strategic decisions? In other words, with no actual visibility in an office setting, how do you ensure visibility on the time spent across clients and services? With time recording data and insight, there is clarity and the ability to see where efficiencies could be—or need to be–created and to help people work more effectively.

Time recording = increased focus 

We live in a world of distraction – both digital and the rough and tumble of daily life – often referred to as “context switching”. An exploration of this concept is for another day but broadly speaking one of the biggest drains on productivity is distraction: multi-tabbed web browsing, endless notifications from email, SMS, messaging apps, social media; it is easy to get distracted and lose focus across the day.

Time recording makes it easier to surface this behaviour. This knowledge promotes focus and helps people understand their work patterns, interruptions, and priorities. By uncovering insights that often go unnoticed in a busy workday, employees can improve their work-life balance and make informed decisions. Investing in the presentation of this data across the firm builds mutual trust with the employee rather than eroding it.

Putting an end to misunderstood timesheets 

In a world where we are all looking for answers to how to price and sell services in a way that benefits you, your clients, and your practice, the question isn’t whether to timesheet or not to timesheet. It’s why a firm uses (or doesn’t use) them that counts and it’s why a one-size-fits-all scenario and instruction to throw out your timesheets doesn’t work.

The question should instead be how do you make measurement smarter and in doing so answer the question where did we invest our time? That enables us to assess the most strategic and effective use of our time for sustained capacity, efficiency, and profitability. In an era of hybrid work environments, modern time recording becomes even more critical for understanding team productivity, managing workloads, and supporting employee well-being.