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How to improve billable utilization

Written by Remco Kroes on . Posted in Exact Online

For many professional services firms maintaining healthy levels of billable utilization is key. Yet tracking and measuring (billable) utilization per employee can be challenging when relying on spreadsheets. Exact Online Project Management helps you to monitor the time your employees spend working on (non-)billable projects and activities and provides the insights needed to improve your firm’s billability. More importantly, without spreadsheet hassles.

Use the correct base when calculating billable utilization
It is key correctly calculate the available hours per employee. Not everyone works on a full time schedule of 2080 hours per year (assuming 40 hours per week * 52 weeks). Part-time employment is quite common nowadays. Work schedules may differ. People may also work irregularly – e.g. working 40 hours in one week and 32 hours every other week, or change work-schedules mid-year. These scenarios should be taken into account when calculating billable utilization. In Exact Online Project Management work schedules can be set up in such way that these cases can be supported.capacity forecast

New: public holidays

To determine the correct base to track billable time against you also need to take public holidays, such as Easter and Christmas, into account. We now added the ability to manage public holidays in Exact Online Project Management. They are treated as non-working days. Available time is now calculated by subtracting public holidays from employee work schedules. Helping you to more accurately track past performance, better check completeness of your timesheets, and better forecast future availability.

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The numbers should add-up
Improving utilization starts with measuring utilization accurately and fully and making sure every hour is accounted for. Unfortunately, many manage absence & leave related activities separately from their timesheets. Exact Online Project Management tracks all both (non)billable and leave & absence related activities against employee work schedules. A fully integrated leave & absence engine, incl. employee self service for leave entry, helps to ensure that all numbers add up in your billability and forecast reports.

Billable vs. billed time
Next to monitoring billable utilization, it is important to look at other key performance metrics. You can achieve high utilization rates, but not making any money on projects. You therefore also need to monitor how average actual billable rates per employee develop over time or need to closely monitor costs and margins. It is also key to monitor revenue leakage. Studies showed that the industry average for lost revenue is about 5%, mostly due to billing errors or time wasted on project delivery issues. EOL Project Management seeks to address this issue by aiming to continuously improve visibility and control over key areas such as billable utilization, costs, project margins, revenue leakage and days sales outstanding (DSO).

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