Should your firm charge based on time or value? 

This question continues to be a controversial topic in the accounting industry. While some accountants remain staunch believers in the power of the timesheet, for others, it’s a relic of old-fashioned accountancy that should be left in the past with paper records and hourly billing.

At Capium, we think value-based pricing is the way forward, rather than charging your clients based solely on the time you spend doing each task. 

That said, there are a few ways timesheets can still be useful for accountancy firms – provided you use them in the right way.

The problem with time-based fees

Traditionally, accountants have relied on timesheets to make sure their work is profitable and efficient.

Keeping a record of how long they took completing each task meant they had something clear to refer to in the event a client disputed the fees they were being charged – a useful option to have in a service-based industry where you can’t point to a visible product of your work.

This made the most sense when the bulk of accountants’ work was compliance-based and fairly transactional. But as technology progressed over time, and more firms moved into the advisory space, measuring work purely by the time it takes to complete started to feel less useful.

In fact, the information recorded on timesheets is often inaccurate in the first place, as smaller tasks can easily end up forgotten or dismissed as too trivial to record. It’s hard, after all, to remember to set a timer every time you check your accounting software on the train or open your work emails at home. But it all adds up, and if you’re relying on your timesheet to give you a readout of the work that’s gone into a task, missing out those extra minutes here and there means you’re not seeing the real time cost at all.

The other issue is when you impose a time limit on certain tasks or clients, your team might end up rushing to get the job done by the deadline. This increases the risk of mistakes, stifles any fresh thinking and creativity, holds your team back from giving extra attention to the clients who need it, and ultimately leaves them feeling burned out by the end of the week.

Besides, when you think about it from your client’s point of view, do they really care about how many hours you spent working on their accounts? Or are they more interested in the improvements they see as a result?

Would they feel more comfortable knowing they’re paying a set fee for a service they know will be valuable to their business, rather than waiting for a bill with costs tacked on for that extra meeting they had or for answering their queries?

Value-based pricing allows you to focus on your quality of service, build relationships based on trust, and add to the services you offer – and crucially, it means no unexpected billing surprises for your clients. 

This, in turn, should increase your revenue per client and keep them with you for longer.

Is there still a place for the timesheet?

If you’re reading this with a growing sense of concern at the prospect of doing away with time tracking altogether, don’t worry.

Timesheets can still be a useful tool for accountants in certain circumstances. For instance, measuring staff productivity internally will allow you to cost up the resources going into different types of work. In particular, it helps to make sure you’re not under-charging for a service that requires a lot of time – or it can highlight to you areas that would benefit from streamlining and automation. 

When you’re managing several teams or working remotely, it can be especially helpful to see how much time each person is spending on different tasks and clients and to assess whether that time is being spent in a valuable way.

The difference is that instead of translating directly into fees and dictating the amount you charge, your recorded time should inform your thinking when it comes to fees and processes. 

Done the right way – with software, rather than a spreadsheet – it can offer genuinely valuable insights you can use to your firm’s advantage.

Check out Capium’s software, which enables you to automate more of the compliance work to focus on how you can provide real value to your clients. Get in touch to find out more.