Ever since the pandemic, there have been conversations about why and how enterprises should 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 more challenging when the majority of your workforce is operating remotely.
At Replicon, we talk to CFOs like you who work with businesses ranging from SMBs to F500. And, 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. Project Hours for Billing are not Getting Tracked Accurately
Time is money. Yet, many project hours do not get tracked 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 for the enterprises.
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 trust and relationships.
Solution: When you use a platform 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 platform is non-intrusive, your employees can go about their daily work without any disruption. The platform will capture both billable and non-billable time accurately for correct invoicing.
2. Difficulty Managing Project Costs, Resources, and Compliance
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 unified platform like Replicon’s Project Time Tracking Suite will allow you to normalize costs, differentiate between CapEx and OpEx costs, enhance business process governance and improve audit compliance processes.
3. Inaccurate Tracking of Project Expenses
Projects incur expenses. The ability to track and manage costs is crucial to keep the project within a budget. Even though tracking time gives you and your employees real-time visibility about their work and projects, and helps enhance overall efficiency, productivity, and profitability. Still, managers find it challenging to collect accurate and completed timesheets as employees do not submit their timesheets. This probably doesn’t come as a surprise.
Your employees would rather be working on the billable project than scrambling through multiple systems to track the time or enter information manually during a busy workweek. As a result, a good amount of client billable expenses does not get tracked.
Solution: Give your employees the flexibility to add project costs and timesheets in real-time. Choose a platform that is intelligent and help your employees fill the timesheets by providing insights into the work they have throughout the day. Replicon’s Project Time Tracking Platform lets your employees capture time and link them to the related project to eliminate the risk of losing information. A unified platform like this will help you gain full control over your employees and project-related time and ensure the project is well within the timeline.
4. Complications while 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.
Companies also need to check with the legal department to find out if there are any laws prevailing PTO policies. For example, there are no federal laws in the US for minimum PTO requirements. However, in some states like California, it is compulsory to provide a minimum number of sick leaves to your employees. There can also be terms and conditions attached to those requirements. In the state of California, PTO cannot expire once accumulated and the unused time should be paid in full when the employee leaves the company.
Solution: Automate paid time off management to streamline the process in real-time. The platform must provide approval workflows and let you set accrual rules based on your business policies. Use a platform that lets you define and manage global locations while applying policies to satisfy compliance requirements. For instance, Replicon’s Project Time Tracking Platform 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. Incorrect Forecasting Project Bids
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 platforms that will enable them to update project-related data instantaneously, even when they are mobile. For instance, when you use Replicon’s Project Time Tracking 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.