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At Replicon, we talk to CFOs like you who work with businesses ranging from SMBs to F500. Ever since the pandemic, many of those conversations have been around ways to optimize project finances and budget for better cash flow. But the way to achieve this goal is not as easy as it might sound. There are several hurdles that derail project cost management efforts. And it just gets tougher when the majority of your workforce is operating remotely.
Don’t fret! You can overcome most of these challenges by keeping a few key tactics in mind.
Below, we’ve distilled our discussions into five commonly heard challenges and their solutions in the hope that other CFOs can use these insights to optimize their project and time tracking.
1. Accurately Tracking Project Hours for Billing
Time is money. Yet, many project hours go untracked because it’s often considered an extraneous activity and an unnecessary disruption to the daily workflow. This inability to capture all the billable and non-billable time is a common challenge that directly translates into revenue leakages and poor project profitability.
Without full visibility into the accurate billable time, you could either underestimate the project time and sell yourself short, or overcharge your clients and damage customer relationships.
Solution: When you use tools like Replicon’s Project Time Tracking Suite, you can easily configure timesheets to track up-to-the-minute project time for client billing. Since the tool is non-intrusive, your employees can go about their daily work without any disruption and the tool will capture both billable and non-billable time accurately for correct invoicing.
2. Managing Project Costs and Resources
Regardless of a project being internal or external, cost management and budgeting can mean the difference between successful project completion or a costly mistake. When not managed efficiently, labor costs such as turnover time, idle time, and wasted resources may consume a significant share of cash flow.
Also, with a number of projects running in parallel, it can get difficult to identify which project is causing the maximum leakage of cost and resources. And without this visibility, you might see billing errors, incorrect statements of work, and misquotes — all leading to lost revenue or projects going over budget.
Solution: Associating resources and costs with their respective projects helps CFOs like you understand how a project is performing against the allocated budget and quickly identify runaway projects. With an effective solution in place, you will be able to track and account for all project costs and take control of the project budgets. An advanced tool will allow you to normalize costs, differentiate between CapEx and OpEx costs, associate costs with R&D tasks to claim tax credits, and utilize the context-based costing information to enable accounting, chargebacks, and more.
3. Tracking Project Expenses
Projects incur expenses. The ability to track and manage expenses is crucial to keep the project within a budget. But close to 40 percent of employees fail to submit expense reports on time. That probably doesn’t come as a surprise. Your employees would rather be working on the billable project than scrambling to find those receipts and manually entering information during a busy workweek. As a result, a good amount of client billable expenses go untracked.
Solution: Give your employees the flexibility to add expenses in real time. Pick a tool that notifies managers about pending expense sheets and allows them to manage approvals even from the field using mobile devices. When you use Replicon, our Expense Tracking feature even lets your employees capture pictures of receipts and link it to the related project to eliminate the risk of losing information. A tool like this will help you gain full control over your employees and project-related expenses and ensure the project is well within the budget.
4. Managing Paid Time Off
Do you use an outdated system, emails, or (even worse) spreadsheets to keep track of your employees’ paid time off, vacations, overtime, or leave accrual? If so, there’s a high chance that your finance team is struggling to keep track of these expenses to accurately make payouts.
Even if project managers and HR teams are taking care of the approval processes, the delays in sending the information to finance teams can be the difference between a cash flow positive and cash flow negative month, quarter, or year.
Also, now that many employees are remote, tracking time off and overtime with 100 percent accuracy is no longer just nice to have…it’s a must-have.
Solution: Automate paid time off management to streamline the process in real time. The tool must provide approval workflows and let you set accrual rules based on your business policies. Use a tool that lets you define and manage global locations while applying policies to satisfy compliance requirements. For instance, Replicon’s global TimeOff software lets you assign specific policies based on region, employee type, or other attributes. And you can enable your remote employees to quickly book time off from their mobile whenever it’s convenient for them.
5. Forecasting Project Bids When Working Remote
You need insights into historical trends on how, where, when, and why money was spent to accurately forecast spends and prepare a budget. And in unprecedented times like these, you need intelligence and flexibility to course-correct budget allocations to ensure business continuity. A lack of current visibility into project costs — estimates vs. actuals — will potentially set up project budgets for failure.
Solution: Make it easy for your employees to submit project-related information. Automate project time tracking to capture data that is error-free. Empower your workforce with tools that will enable them to update project-related data instantaneously, even when they are mobile. For instance, when you use Replicon’s TimeBill solution, you can accurately capture project data anytime, anywhere. This way, you get accurate and up-to-date information to make forecasts that are close to the actuals.
None of us know what the future will look like, but CFOs have a responsibility to think about what’s likely to happen and to prepare for business process continuity. Using the right solution for project financial management will help you differentiate between projects that are bringing revenue and burning cash. In these times, when remote work has become the new normal, you need a secure cloud solution that gives you 360-degree visibility into project time, cost, expenses, and other factors that directly influence cash flow.