Is your hair turning grey waiting for delayed Excel timesheets? Or when you need to compile the timesheets into something, you can invoice your customers?
If not you, then maybe that's the case for your CFO or bookkeeper.
But despite these drawbacks, Excel is still an incredibly solid and thoroughly tested tool. So maybe it does cover your company’s needs just fine.
The question is whether Excel is enough. Or does investing in a dedicated system for time tracking make sense?
To help you find the answer, we have listed the essential pros and cons for both solutions.
But first, we should address a common misunderstanding.
The short answer is: Not quite.
The benefits of using a time tracking system do not depend on your company's size. A sound time tracking system will scale and adapt to your company as you grow from a small start-up to a large enterprise.
If you have a small company, it is not the size of your organisation that dictates the pros and cons of one solution or the other. Most smaller teams use Excel timesheets as their go-to solution.
But as soon as you grow above 15-20 employees, the cons related to Excel timesheets will be increasingly pressing. At this stage, administration, invoicing and analysis become time-consuming and cumbersome.
And as you grow, the advantages of time tracking systems will be even more pronounced.
The list of pros and cons could potentially be very, very long. But we have picked out three main areas essential for a consultancy.
Then, we will take a look at the price in the end.
When you select a solution, it is customary to focus on the advanced features of the individual solutions.
But arguably, the most crucial feature in time tracking is that it has to be easy because everyone in the organisation will use it.
If it's not easy, your employees will not track their times correctly, or it is too inaccurate for you to make money. Or you will not know if you earn or lose money on your fixed-price projects.
The reason employees do not fill out their timesheets is rarely based on ill will. It's usually because it is too difficult.
This makes user-friendliness decisive for timesheet completion, a strong billable utilization rate, and making money on your projects.
Let’s take a look at that now.
Excel’s significant strength is that everybody knows it.
If you do not use advanced formulas, an Excel timesheet is easy for the employee, and you do not need to introduce your employees to the program.
Excel can be a good solution if you are busy putting out fires because you do not need to spend energy on changing work processes.
At the same time, Excel is a go-to solution for many employees for other work tasks. It may be appealing for them to have “business as usual”.
For consultants who spend most of their time with customers, opening up the computer and entering the hours in an Excel timesheet while they are on their way from customer to customer may be troublesome.
It may, in general, be a bit disturbing to open Excel to open the timesheet, as it may not be part of the employees’ other work processes.
Experience shows that most people track their time at the end of the day when they track time in Excel. It affects precision, and the employees, on average, track fewer hours and minutes than they have actually worked.
This is why many companies experience an increase in the invoicing percentage when they move away from this practice.
Finally, Excel has the con that you, as a user, need to manage the timesheets manually. The bookkeeper is primarily entrusted with all employees entering their hours in the Excel sheets.
Because Excel cannot automatically notify when a timesheet is completed, the bookkeeper has to manually open them all to control if they are completed and remind employees.
With opening sheets and tabs, this procedure takes place over 3-4 rounds until everything is filled out.
Contrary to Excel, all systems are designed for you to fill out a timesheet.
It is a good point of departure for a solution the employees find easy to use, as user-friendliness in the time tracking tasks has been included in the systems from the beginning.
For instance, employees can track their time on the right tasks without worrying about handing in Excel sheets.
It makes it more simple and manageable.
In addition, most time tracking systems offer alternatives to the online timesheet. It is very easy to track time on your mobile with dedicated apps. Or during the day via applications running in the background on your computer.
If we should point to a con about time tracking systems, it is that an implementation often requires changes in your employees’ routines.
On the other hand, this is often an advantage.
One of the routines which can go badly in many companies is linked to the invoicing process.
The transformation of timesheets to invoices has countless creative solutions in companies. Often, an e-mail is sent to the bookkeeper when the project manager remembers to do so.
All in all, it involves several employees handing over information and invoicing.
In invoicing,, many experience a specific difference between using Excel sheets and a time tracking system.
You see the weaknesses of Excel in the invoicing. And there is not much positive to say about it.
The symptoms of Excel sheet invoicing include a low invoicing percentage, managers flowing up on delayed timesheets and a bookkeeper or finance employee trying to create invoices from a pile of Excel timesheets.
It often takes 3-4 days and is full of errors.
The errors are often not due to the bookkeeper. But those numbers are moved between Excel sheets, which makes it impossible to control the correctness of registrations or follow de- and appreciations.
The problems keep getting more prominent as the company grows. But this is also the case for the smaller companies.
In short, you lose money because you do not invoice enough and spend too much time if you do it in Excel.
Contrary to Excel, time tracking systems provide a financial profit when you use them to invoice the hours.
A sound system lets you (or your bookkeeper) pull hours linked to projects or customers and convert them to invoices.
Without sending any e-mails to the organisation.
Usually, tracking systems integrate with the most prominent finance systems, so the chain from registering hours to invoicing is linked.
This means no errors occur because data must be moved between Excel sheets or systems. And because all data is linked and the hours are easily traceable, it becomes easy to control the time registrations and follow-ups and appreciations.
In consultancies, the main purpose of time tracking is to form the basis for the invoice.
But as your company grows and matures, the need to analyse time registrations increases.
How do you spend your time? Which project types and customers are time-consuming? What are your consultants’ realised hourly rates compared to the sales price?
You can get the figures you need in both solutions.
If you collect the timesheets in Excel, you can build comprehensive reporting. Excel is an advanced analysis tool for those who understand to make use of it.
At the same time, the formulas are open, and you can follow the calculations and adjust them if you need to.
It requires a high user level to build reports advanced enough to see the figures you need for a deeper analysis.
And it is time-consuming to fill in data in the reports when you need to collect and process timesheets and pull data from different sheets.
At the same time, there is a big risk that errors occur. A single wrong calculation or erroneous data source can cause a chain of wrong calculations. And it is challenging to track across Excel sheets.
Most time tracking systems have a set of pre-defined reports that pull data directly from the time, expense and mileage registrations.
It means that the work of collecting and preparing the timesheets disappears.
If you need reports different from the pre-defined ones in the time tracking system, or if you calculate KPIs like invoicing percentages differently, you can often extract the data and process it in Excel.
Time tracking systems have a clear advantage in the depth and filtering of the reports.
Often, you gain insights into the profitability of single projects and customers or the employees’ internal and external time without building complex Excel sheets.
Try TimeLog for free if you want to test different time tracking systems. You can create projects you can have your employees test time on, pull reports with the data from the time registrations and follow your key figures. If you link your TimeLog to your finance system, you can also send invoices to your customers quickly, simply and without errors.