Your consultancy business is never better than the collection of your employees’ timesheets.
And perhaps your hair is turning grey waiting for delayed Excel timesheets. Maybe the same is true when you need to compile the timesheets into something you can invoice your customers - in good conscience.
If not you, then maybe 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 it make sense to invest in a dedicated system for time tracking?
To help you find the answer, we have found the most important pros and cons for both solutions.
But first, we should address a common misunderstanding.
Misconception: Excel timesheets are best for small companies and time tracking systems are only for large companies
The short answer is: Not quite.
Your benefits from using a time tracking system do not depend on your company size. A good 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 dictate the pros and cons with one solution or the other. And most smaller teams do 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 even larger, the advantages of time tracking systems will be even more pronounced.
So what are the pros and cons of timesheets in Excel vs time tracking systems?
The list of pros and cons could potentially be very, very long. But we have picked out three main areas essential for a consultancy.
And then we will take a look at the price in the end.
- 1) User-friendliness
- 2) Invoicing
- 3) Reporting and analysis
- And then there is the price
1) User-friendliness: Ensure you collect your hours
When you select a solution, it is normal to focus on the advanced features in the individual solutions.
But arguably the most important feature in time tracking is that is has to be easy, because everyone in the organisation will be using it.
If it's not easy, your employees will not track their times right or too inaccurate for you to make money. Or you will have no idea if you earn or lose money on your fixed price projects.
”User-friendliness is crucial to achieve a good billable utilization rate”
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 for making money on your projects.
Let’s take a look at that now.
Great recognisability, but clumsy user-friendliness in Excel
Excel’s big strength is that everybody knows it.
If you do not use any advanced formulas, an Excel timesheet is easy to use for the employee, and you do not need to introduce your employees to the program.
If you are busy putting out fires, Excel can be a good solution, 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”.
Excel is basically built for analysis and desk work
For consultants who spend most of their time with customers, it may be troublesome to open up the computer and enter the hours in an Excel timesheet while they are on their way from customer to customer.
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 in the end of the day, when they track time in Excel. It affects precision and the employees on average track less 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.
The bookkeeper is charged with heavy administration
Finally, Excel has the con that you as a user needs to manually manage the timesheets. Especially the bookkeeper is entrusted with the responsibility that all employees enter their hours in the Excel sheets.
Because Excel cannot give an automatic notification when a timesheet is completed, the bookkeeper has to open them all to control if they are completed and remind employees manually.
This procedure with opening sheets and tabs take place over 3-4 rounds until everything is filled out.
New routines required, but great user-friendliness in time tracking systems
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 just track their time on the right tasks and do not need to worry 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 of your employees’ routines.
On the other hand, this is often an advantage.
2) Invoicing: Crucial difference in how much you invoice
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 the 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 to hand over information and do the invoicing.
And it is in the invoicing process many experience a specific difference in using Excel sheets and a time tracking system.
Invoicing from timesheets in Excel is bad business
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 that numbers are moved between Excel sheets, which makes it impossible to control the correctness of registrations or follow de- and appreciations.
”You lose money because you invoice too little using Excel”
The problems keep getting bigger 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.
Time tracking systems increase the invoicing percentage
Contrary to Excel, the time tracking systems provide a financial profit when you use them to invoice the hours.
A good 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.
Most time tracking systems integrate to the biggest finance systems so the chain from registering hours to invoicing is linked.
This means that no errors occur because data needs to be moved between Excel sheets or systems. And because all data is linked and the hours are easily traceable, it gets easy to control the time registrations and follow de- and appreciations.
3) Reporting and analysis: Timesheets are your most important data source
In consultancies, the main purpose of the time tracking is to form the basis for the invoicing.
But as your company grows and matures, the need for analysis of time registrations increases.
How do you spend your time? Which project types and customers are time consuming? What are your consultants’ realised hourly rate compared to the sales price?
You can get the figures you need in both solutions.
Excel offers advanced reporting for advanced users
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 pretty high user level to build reports advanced enough for you 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 very difficult to track across Excel sheets.
Comprehensive and deep reporting are standard features in time tracking systems
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 with collecting and preparing the timesheets disappears.
If you need different reports than the pre-defined ones in the time tracking system, or if you calculate KPIs like invoicing percentage in a different way, 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 the single projects and customers or the employees’ internal and external time without building complex Excel sheets.
Oh, yes… Now to the price
A real comparison of Excel timesheets vs time tracking systems would not be complete, if we would not take the price into account.
For Excel is not only the go-to solution because it is recognisable and has reporting options.
If you have the rest of the Office package, it is at the same time cheaper.
At the time of writing, you can get the basic Business package incl. Excel for 55 DKK per user/month.
In comparison, you can get time tracking with reporting in TimeLog from 59 DKK month/user and 75 DKK month/user, if you need to invoice.
Try the benefits of TimeLog 30 days for
Would you like to test if online time tracking is relevant for your company, you can try TimeLog for free.
Via the link below, you can create a demo user and test the system as much as you like.
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. And if you link your TimeLog to your finance system, you can also send invoices to your customers, quickly, simple and without errors.