Unless you are a freelancer, working from home in most consulting industries was fairly uncommon until the pandemic hit. Some firms have transitioned to the new remote-working normal relatively painlessly, while some have suffered significant financial impacts. The reason for the difference is either economic (business has declined), organizational or both. The good news is that the organizational challenges can easily be overcome with the right tools, setting your firm up for long-term success during and after the pandemic.
But how can firms measure productivity remotely and how do staff remain accountable for their time when they work from home? Surprisingly, the answer is the same whether staff are working in the office, or working from home. They need a cloud-based networking tool that connects them virtually to the office, their projects, their team, and to the financial data they need to run a project. Staff must be accountable for their time everyday just like they would while in an office, and the firm must be able to monitor people’s time, project budgets and progress, and still do the accounting operations remotely. If you want to substantially improve the productivity of your home-based consulting team, follow the 5 simple steps below.
1. Implement Daily Timesheets
It is impossible to know what your team is working on from home if you do not make the bold move to enforce daily timesheets. This step is a common best practice at most successful consulting firms, but it is a necessity for accountability when people are working from home. If no one is checking on how people are spending their time, your company is literally flying blind. If your timesheets are not yet online, it’s time to switch to a cloud-based timesheet system like GroupThinq. Managers should make a point out of reviewing their team’s timesheets at least weekly. Timesheet reports should be submitted weekly at the end of every week by all billable staff, no exceptions. If I had to choose one piece of advice for managing a home-based consulting team, it would be implementing daily timesheets.
2. Break Projects Down Into Manageable, Understandable Phases with Budgets
A small project (say under $5k) might only require a single phase, but larger projects need to be broken down into smaller phases in order to ensure each stage of the project is kept on time and on budget. More importantly, everyone working on the project needs to understand what the deliverables are for each phase and how much time (or dollars) has been allotted. A project charter is a short document designed for your team that describes the project from start to finish — including what the phases are, how much budget (time or $) has been allotted to each phase, who will be working on it, what the deliverables are at each phase, and when each phase is due. If your team doesn’t understand what each phase means, what budget has been allocated, or what is due and when, then you can be assured that your project will run over-budget and overdue. As a rule of thumb, any job over $5k should be broken down into a series of easily understood phases. There shouldn’t be so many phases that staff don’t understand where to put their time. Everyone should understand what is due in each phase and when it’s due.
Your online timesheets should have the ability to create phases for a project, and staff should be able to choose which phase to assign their time to in their timesheets. Everyone on the project should be able to monitor how much time (on average) has been assigned to a phase, and how much time has been spent to date so that they can manage their time responsibly. If everyone is updating their timesheets daily, the financial status of each project is available in realtime, allowing people to make important decisions about how they spend their time on a project. This feedback step is called collective intelligence, and it allows the collective to achieve the financial objectives of the project daily as they work. It also provides a forensic breakdown of the project once it is complete to determine which phases met the financial objectives and which didn’t. The step of dissecting the success or failure of a project is crucial in improving and growing as a consulting firm.
When staff are working from home (or from the office) it is important that they understand what the phases mean, and that they are assigning time to the proper phase. Managers should be closing phases that are completed regularly to simplify timesheets.
3. Do Weekly Project Check-ins
When staff are working from home, the weekly staff meetings are more important than ever to reconnect people and to remind people of looming deadlines. Weekly staff meetings shouldn’t just focus on superficial updates of projects and proposals. Managers should be honing in on what phases have been completed, what phases are pending in the coming week, who will be working on the project and any weekly deadlines. Staff meeting provides an opportunity to clarify what the phases mean, who will be working on what, what deliverables are due and how much time has been budgeted for each phase.
GroupThinq provides an active project summary report, designed for weekly staff meetings, showing everything your team needs to know to meet deadlines and the financial objectives of the project. It highlights the time remaining on the project, and when it was last invoiced so that regular invoicing is not missed.
Regular weekly project check-ins are even more important when staff teams are working remotely. An hour of coordinating everyone at the beginning of the week saves weeks of project over-runs and highlights everyone’s time accountability.
4. Switch to Monthly Billing
Milestone billing is usually preferred by clients, but it does not create financial regularity like monthly invoicing. Most firms start out doing milestone billing by sending invoices only when project milestones have been met. As a firm gets more experienced, the benefits of doing monthly progress invoicing become more apparent. There is a more stable cashflow with everyone’s time being billed on a monthly basis as compared to the bust and booms of milestone billing.
To effectively implement monthly billing, it is important to note the monthly billing terms in your proposal in advance. Even for fixed-fee projects where the fee limit is fixed irrespective of the time spent. Some projects and clients require milestone billing, but whenever possible, your firm should be switching to monthly billing. Your timesheet software must be able to generate monthly timesheet reports for easy inclusion in the invoice. In some cases, clients will want a detailed timesheet summary attached to every invoice. GroupThinq makes is easy to generate a monthly summary and to attach detailed timesheets to invoices.
Why is monthly billing important during this crisis when staff are working from home? It creates a more manageable cashflow for firms and it is safer in times of financial crisis. More, smaller invoices are much safer than fewer, larger invoices. You will know more rapidly when a client is not paying on time, and there is less chance of a client defaulting on a larger invoice. In times of economic uncertainty, monthly progress billing is the way to go.
5. Have Your PM’s Do Their Own Invoicing
To maintain the firewall between a firm’s accounting system and staff, most firms have their controller (or the owner) do all the office invoicing. This approach introduces significant organizational challenges at most firms. If you’ve been in consulting any length of time, you will have experienced the animosity between the firm’s accounting person and the project managers (PM’s). This chilly relationship is as old as consulting and it creates significant internal tension in most organizations.
One way to sidestep the challenge is to have project managers do their own monthly invoicing. This requires an intermediate step in accounting called project accounting. In project accounting, the corporate accounting system (managed by the accounting department) is separate from the project accounting system (used by all staff with controlled permissions), allowing PM’s to do their own invoicing without needing access to the office accounting application. In Project Accounting, a PM can create their own invoices or purchase orders (for sub-consultants) which are sent directly to the accounting department for inputting into the corporate accounting system. The advantages for the firm is that the corporate accounting remains isolated from managers, but they still have access to all the financial information (including accounts receivable reports) for their own active projects. So PM’s have a financial snapshot of their projects but not of the entire company.
Project accounting drastically reduces the conflicts between accounting and management in most firms. At a time when managers and accounting staff are working from home, this networked project accounting approach eliminates the need for face-to-face coordination of invoicing, purchase orders and bill management. It works equally as well when project teams return back to the office.
Working from home could be the new normal for the next few years depending on the length of the pandemic. While telecommuting may be a foreign way of working as a consultant, there could be many long-term advantages for shrewd business owner to strengthen their practice. GroupThinq provides all the operational tools your consulting firm needs to work together seamlessly from remote locations. Implement the 5 steps above and you will find much greater accountability and productivity for your home-based workforce.