Because revenue is generated through billing clients, profit comes from employee time spent on tasks that can be billed to the client, or ‘billable hours.’ Additionally, non-billable hours are taken directly from the company’s payroll budget. Since payroll is one of the largest expenses to an organization, efficient employee utilization is paramount in driving profitability. Boost business success by motivating your employees to accurately track their time to the minute through a centralized ticketing and time tracking solution.
Optimize your time with ConnectWise! Download Your eBook >>
Tips to Accurately Track Billable Hours
Streamline schedules through centralized, automated timekeeping systems, such as ConnectWise Manage. Schedule projects at client sites first thing in the morning to cut down on time inefficiencies—that way your techs’ first hours are already billable. With ConnectWise Manage, employees can check updates to schedules remotely and in real time to have all the information needed en route to the next client. Make it a habit to input the time and notes as soon as work is completed for accuracy. No more mistakes trying to rely on memory recall of the amount of time taken to complete work for each client!
Essential Employee Utilization Guidelines
Employee utilization refers to the percentage of billable time out of total employee hours. Each full-time employee works 2,080 hours a year (40 hours a week for 52 weeks). In order to calculate individual employee utilization rates, measure the total amount of billable time the employee had for the year, and divide that number by 2,080.
Employee utilization rates of 80% or more is the ultimate goal, along with annual client billings of at least 2.5 times the amount paid to the each salaried employee. ConnectWise partners consistently profit from reaching and often exceeding these goals!
If you’re struggling with calculating the hourly rate you must charge clients in order to meet these guidelines, refer to the chart on page 5 of our Ultimate Guide to A More Profitable Technology Business to make the number crunching simple.
Inform and Inspire Your Employees
To encourage employees to meet utilization objectives, openly discuss these rates with your teams. Provide clear and specific goals, and consider incentives, such as bonuses, for achieving or exceeding billable-hour targets. Additionally, heed the advice of business-strategist and author Simon Sinek, and explain to your employees WHY it is important to achieve high utilization rates and billable hours. Create an understanding that each employee is important to the organization. When employees feel connected as an integral part of their company, utilization rates and profitability skyrocket!
To get more tips on how you can increase the profitability of your company, download “The Ultimate Guide to a More Profitable Technology Business.” You can also check out this blog to get more tips on how to increase efficiency and profitability through your help desk.
Promote employee utilization and time efficiency to accelerate profitability!