5 best practice tips for better billing

A guide for project organisations

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www.theaccessgroup.com

Welcome to Best Practices

Overview How much are you giving away for free? Do omissions, guestimates and lack of accurate information mean that youre not always squeezing the maximum from your projects? If youve ever questioned the impact of billing on your cash flow, then this guide is for you. In this series, we discuss the common challenges faced by professional services organisations. So far, weve looked at bid management, utilisation, cost capture and WIP. For our fourth and final topic, we review the pains around the area of billing and income recognition. By sharing our experiences of client implementations, we hope that you will find some useful takeaways for your own business. At the finish line: Billing & credit control So youve got the order, rallied the troops, and worked like demons to deliver on time and on budget. And now its time to recoup what youve owed. Sometimes, it is that simple. But for many of us, added extras, miscommunication and admin can make billing a tortuous process as time-pressed project managers seek to establish exactly what people have done and how much theyve charged. But it doesnt have to be that way. By taking some time to figure out whats billable, and whats not and embedding this mindset at the heart of your organisation getting the money in can be made easier and more efficient. The result is greater accuracy, efficiency and compliance across the business, giving Accounts Receivable a fighting chance of driving down those debtor days and achieving your ultimate goal a stronger cashflow.

Best practice tip 1: Agree your methodology

For any project, you need to understand how you are going to charge for the work. Whether its based on milestones or a fixed fee, time and materials, or any other approach, you should be able to support any form of billing mechanism and for these to run simultaneously by project or task. Challenges often arise because you have all these methods running alongside each other and no easy way for project managers to easily see billed value against income recognised at key/agreed points. The key is to understand what your deliverables are and the method by which you arrive at the right commercial value for your offering. A detailed review of billable criteria is often essential to help you set up charge rates, decide what constitutes non-billable time, and various billable rates, such as for partners, freelancers and other staff required to deliver the project. This set-up should follow-through into the business system, making it very easy for project managers to assess, review and charge for the work required. Key benefits: Agree the cost of contract and non-contract related elements from the start Understand where your margin is coming from, and the factors which affect it most Set billing rates at client, project, department or individual level Clearly set out policies for recharging expenses and disbursements Easily monitor where you are spending your time

Best practice tip 2: Balance the clients needs with yours

Its easy to let customers dictate which format they want the invoice to appear. This creates a lot of unnecessary admin for you. Good presentation and timely information goes a long way to ensure that your customer pays up dont give them any excuses! A good system will allow project managers to create any number of easy-to-use invoice templates. Agree on a standard set that show cost breakdown at various levels, from summary through to varying levels of granularity and get the client to pick one. Key benefits: Produce professional documentation quickly Raise invoices online, anytime, anywhere Reduce inbound client enquiries Speed up the billing process

Best practice tip 3: Share ownership

Traditionally, getting the money in was a job for the finance team. Yet its often more effective to get the project teams involved since theyre closer to the action and can answer many of the queries that arise further down the line. You need the right tools for this approach to succeed. Its not fair to burden non-finance users with yet another system to learn. Providing a billing method thats intuitive and online allows a busy, multi-site project manager to easily get on with the task in hand. Ensure that the templates are workflowdriven with a modern look and feel as well as offering tight integration with your finance system. Secondly, does it make it obvious whos responsible for what? Clearly assigned milestones, tied to dates and inbuilt alerts, remind stakeholders when their action is required and will trigger the invoicing process.
Access 2013. E&OE.

Keep your workflows simple this will ensure the smoothest billing possible while giving you the control you need.
Piers McLeish, Consulting, Access.
Finally, consider getting project heads involved in the credit chase. The ability to view any queries their client may have in a non-obtrusive, hassle-free way an online portal for example allows the people closest to the project to deal with queries quickly. Many software providers are now making this functionality available via the cloud and integrating online dialogue into their applications. Webbased portals allow both client and project manager to view invoices in their own secure area and work through any issues using Facebookstyle instant messaging. One of our clients chose to make its fee earners responsible for aged debt against their client accounts: by aligning invoice control against individuals (and incentivising them for on time payment), the aged debt has decreased significantly, allowing the credit control department to escalate the most troublesome debt. Key benefits: Dont miss any billing opportunities Make it easy for project owners to stay up-to-date Resolve invoicing queries early on Allow credit controllers to focus on the most serious debt The key is to keep approvals simple and streamlined. Whether one or five levels deep, approval paths should be aligned to your business needs. Using the same workflow for every invoice may actually create bottlenecks, so consider creating several pathways that will fit a range of typical scenarios. For example, your set-up might have department and value-related authorisations running simultaneously. Key benefits: Increase visibility for budget holders Decrease admin in the finance team Eliminate late, inaccurate billing Strengthen your cash flow FDs cannot afford to simply dump these figures into the accounts. Conversely, project managers need to understand the relevance of the information theyre providing. What can I do about it? Some form of automation is required to bring everything together. This will distil hours of administration and effort into a format that makes sense for project managers and is efficient at month end. Weve found that a semi-automated system, linking project-manager data and finance data makes the process easy to manage. On one side, an online portal accessed via mobile technologies makes it easy for project teams to enter the required information for finance. This information should be easy to gather and adjust, enabling the accounts team to make any final adjustments as necessary before automatically posting as a journal. Why should the apps we use at work be any different from those we use at home? Discover the benefits of integrated mobile technologies in our short video. For the setup to be truly successful, you need strong links to costing information. An integrated portal comprising timesheets, expenses and purchase orders provides the evidence needed both internally and for your clients. Key benefits: Improve access to vital information Reduce rekeying and errors Keep track of an entire project portfolio Inform pricing for future projects

Best practice tip 5. Bridge the gap between projects & finance

Billing methods very rarely match the way you recognise your income. And as you may have found yourself, efforts to get the two in sync can be painful. And when it comes to recognising revenue, there are almost as many methods as there are businesses! Methods even vary from one type of project to another. Project managers might want to understand the cost per project. Operations managers within agencies and practices will want to understand the profitability of their fee earners. Any businesses with long term contracts such as construction firms may utilise standard order billing, tracking incurred costs against an agreed value.

Best practice tip 4: Implement a workflow but dont over engineer

Getting the information right before you bill may seem obvious, but with so many variables, and people involved, mistakes can easily slip through. Yet the last thing you want to be doing is recharging things you shouldnt, or creating countless credit notes. By setting up rates in advance, and implementing a workflow for the authorisation of sales requests, you are more likely to get the right bill out the door.
Access 2013. E&OE.

Summary

The tips in this guide focus on three key areas: the importance of embedding a clearly defined cost structure and billing process for your organisation; ways to increase engagement with the billing process; and ways to implement robust procedures and templates. By following these tips, you can: Maximise revenue by ensuring the passing on of all costs Reduce debtor days by reducing billing errors and administration Get more cash into the business more quickly! Get in touch We hope that youve found this useful and we wish you every success in your next project. For advice on how we can help you to implement any of the best practices covered in this guide please call 0845 345 3300 or email info@theaccessgroup.com. To read about our solutions for project-based businesses, visit the Sectors area of our website www.theaccessgroup.com. Why not download the series? You can find all four of the Best Practices guides on our website under Resources/whitepapers.

Contributors

Piers McLeish Consulting Services Director

Once a specialist in technology and service delivery for Andersen Consulting (now Accenture) working with clients such as Barclays and Marks & Spencer, Piers went on to spend nine years at MBNA International Bank. There he led a joint business and technology team responsible for turning strategic business issues into funded I.T. projects before joining Access in 2004.

Aidan Bartlett Director of Professional Services

With over 15 years experience in the software industry and prior to joining Access in 2001, Aidan served as FD at QuoVadx Inc. and then Future Dynamics. During this time he was responsible for setting up global subsidiaries and obtaining investment of over 8m from a major U.K. Private Equity Manager. Aidan started his career at Access as Senior Project Manager and successfully managed over 70 implementations before joining the board in 2004 as Strategic Planning Director.

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Access 2013. E&OE.