These industries have the most lost billable hours – and it costs them a lot

A recent study by Tribes.AI found that missing or incorrect timesheets cost businesses $63,807 per employee per year, or $7.49 billion per day for US professional services firms.

Management perception of billable time lost by industry

The survey was based on government figures combined with a recent Tribes.AI survey of more than 1,200 industry executives. No fewer than 90.5% of them agree that billable hours are missing and estimate the loss at an average of 21.5%. The staggering statistics indicate that nearly one in five billable hours goes unrecorded.

The survey surveyed companies in three countries, the US, Australia and the UK, with a combined workforce of 55.6 million people across 4.7 million companies. In the three countries, professional services sectors lose a staggering amount of revenue every day. In the US, this works out to $7.49 billion; $1.26 billion in the UK; and $377 million in Australia due to inaccurate timesheets.

Management’s perception of lost billable hours is very close to the average of 21.5% in all three countries. However, the resulting estimated loss of earnings per employee per year varies from country to country because of differences in the average number of hours worked in a year.

According to the executives surveyed in the report, the industries that lose the most billable hours in the US are ranked as follows:

Website and hosting service providers show the highest perception of lost billable hours at 9%, according to executives. This is closely followed by lawyers and legal services: 27.6% of managers believe loss of income due to missing or incorrect timesheets. These are followed by construction and engineering (24.1%), advertising and marketing (23.4%), real estate (21.4%), and banking and insurance (21.3%). Companies involved in software, IT and support (19.9%); advice and accounting (19.8%); and photo, film and video production (19.2%) fell below the global average of (21.7%).

The US shows a much higher perception of lost billable hours across all industries overall. Advertising and marketing companies are the only exceptions where managers in the UK seem to see lost billable time as a much greater challenge.

What are billable hours and how can you keep track of time?

With average hourly rates for senior staff averaging $244 and hourly rates for juniors averaging $211, accurately tracking time spent remains a huge challenge for professional services teams and can potentially lead to lost revenue.

Despite the use of manual timesheets, a significant amount of billable work goes undetected, costing businesses billions of dollars in revenue. Nine out of ten executives surveyed say accurate time tracking data would increase revenue. US executives are the most optimistic, expecting a 31.1% increase in revenue based on accurate timesheets. Australian managers come in a close second with 28.4%, followed by the UK with an expected revenue increase of 25.7%.

Billable hours are the time spent working on business projects that can be charged to a client according to an agreed hourly rate. Companies, agencies, entrepreneurs and consultants often use billable hours to charge customers for the services they provide. To bill by the hour, companies need to keep track of how much time they spend on each client’s projects each day.

In addition to determining your hourly rate, you must also draw up an invoicing schedule. Once you’ve accomplished this, you’ll need to create a time log to track your billable hours based on the specific customer. This can be done using a spreadsheet. If you find that completing timesheets manually is time-consuming, you can also choose to digitally track your billable hours by using cloud-based accounting solutions.

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