Don’t let Time Slippage Wreak Havoc with your Agency’s Profitability
Time slippage refers to the amount of revenue lost as a result of work carried out that goes unbilled. In an ideal world an agency could bill all hours worked by staff and dramatically increase profit levels, but, obviously, clients would have none of that! However, tackling the issue of the slippage at your agency can be the next best thing.
Stuart Smith, Director at agency software provider, Tempora, says, “clients of ours often think they have a clear idea which of their clients are profitable, only to later find out they were wrong. This means that they’ve been over-servicing clients - working beyond agreed budgets and scope and not giving enough attention to the more profitable accounts, which is fast route to agency growth.”
Agencies need to be able to identify the areas where time slippage is occurring to be able to stop it. Stuart Smith points out below a number of ways that the right software can help with reducing slippage and boosting profitability by project:
1) Allowing your team to see easily how their work is impacting on an individual or project budget – this focuses attention on working efficiently throughout the life of a project to avoid overrun.
2) Knowing which team members are absent and for how long – this sounds obvious, but it’s easy to commit to a client deadline with only a rough idea of staff availability. This can cause project overrun or result in over qualified team members having to complete more straightforward tasks.
3) Comparing forecasted billable time against what was actually billed the client – this will help you understand your true hourly rates and help you quote more accurately in future pitches.
4) Tracking pitching time – often the excitement of a potentially big win can lead an agency to over-resource a pitch at the expense of nurturing existing clients and expanding retainers by upselling services.
5) Stop micromanaging with unnecessary internal meetings – surveys have found that on average 25 hours per month are spent in this way, which is (on average) half a week’s work wasted!
The question is how many of these potential pitfalls does your agency fall into? As Tempora’s clients have found, if you can avoid them, you can increase your profitability without even winning any new business.