Unbilled and unbillable hours are an epic problem many businesses are facing right now. As we approach the end of the year, clients are left wondering why their profits are taking a hit. This issue isn’t limited to just one industry; it’s prevalent in construction, technology, manufacturing, and more.

The problem lies in not being able to bill for the hours your team is spending while still incurring fixed expenses. You can’t offset these costs with production rates for your clients. The result? Unbillable or unbilled hours.

Strategies to Minimize Unbilled and Unbillable Hours

Digging deeper, I’ve discovered that the lack of a proper handoff between the sales or estimating team and the operations team is a major contributor to this problem. There’s a misalignment in expectations and commitments, leading to finger-pointing and a negative impact on company culture.

But there’s a solution. By going upstream in the process and ensuring alignment between the sales and operations teams before a project even begins, you can avoid these issues. Imagine both teams in the same room, discussing and agreeing on what it will take to deliver on their promises to the client. When the customer accepts the project, they’ll get exactly what the sales team pitched because the operations team has been in lockstep from the start.

The result? A reduction in unbillable and unbilled hours, increased profitability, and a better client experience. Who wouldn’t want that? After all, serving our clients and maximizing profit are why we’re in business in the first place.

Implementing Tools and Practices to Track and Bill Hours Accurately

But let’s not forget about tracking hours correctly. Many companies are leaving money on the table because they aren’t accurately recording and billing for their work. Don’t let valuable revenue slip away! By ensuring crystal clear expectations between sales and operations right from the beginning, you can minimize the risk of losing out on what you rightfully deserve. Additionally, implementing proper tools and practices to track hours will also help in reducing unbillable and unbilled hours.

Utilizing time-tracking software and project management tools can make a massive difference in accurately recording and billing for every hour worked. These tools not only provide real-time tracking but also give detailed reports on how each team member is spending their time, allowing for better resource allocation. This can ultimately improve productivity, reduce wasted time, and increase revenue.

As business leaders and owners, it’s crucial to focus on the impact of our behaviors and eliminate unintended profit fade. Let’s maximize our profits, serve our clients better, and create a thriving business environment.

Contact Cogent Advisors for a clear strategy on how to get the most from your team.