The importance of time tracking in the creative industry and marketing
All businesses are quickly realizing the importance and benefits of time tracking. The same applies to the creative field and marketing. Different time tracking solutions allow companies of all sizes to come to the most lucrative decisions regarding their businesses. We have created our platform to help us manage our own clients, track time and project progress.
Time Analytics tracks marketing and creative company progress by monitoring different key performance indicators. These indicators (or KPIs) are quantitative indicators of any business that come from the data the software collects. They measure the current state of any business, such as profit and loss account, and are used to make informed decisions about the next steps the management should take.
Analyzing KPIs results in resolutions that can propel your business forward and elevate you above the competition. Additionally, if you implement positive time tracking practices from the start, you will be able to bring your marketing or creative team closer together through increased transparency and more equal task distribution.
What can you track?
Understanding the current state of your company through employee KPIs is one of the most important benefits of time tracking. It can help you find out
- Whether your employees are using all of their work hours to actually work
- Observe how effective they are
- Find out which distractors are making them less productive
- Establish the top performers as well as the slackers
- Track overtime and different leaves
These insights are important, as they can indicate both the positive and negative practices of your business. Then you can focus on increasing the former and reducing or eliminating the latter.
Tracking time per work task is another way to discover how you are currently doing and the ways you can improve. For example, knowing how long completing a certain type of task takes will help you with future time predictions for similar tasks.
More importantly, tracking tasks will allow you to identify oversights you’ve made in organization or task delegation. Additionally, you will see whether some tasks should be outsourced so you can have more time for other activities.
We have discussed the importance of understanding your business processes and the way your team structures their work. Yet, as you know yourself, this isn’t enough to run a successful business. Knowing how your clients operate is another important element to propelling your marketing or creative agency forward.
Simply put, these industries heavily depend on the way companies collaborate with their clients. Here are some indicators you will be able to track with a time tracker with the option of client tracking:
- Tracking time allows you to allocate costs to specific clients and make profit assessments. This, then, makes profit tracking per client possible
- Top and low performing clients and the differences between them
- Identifying the proper fees, contractual terms, and collaboration models more suitable for your firm
- What to focus on when negotiating a more favorable contract
- When it’s time to terminate the contract
- How to draft new offers for future clients
Tracking time per project or service line will give you a detailed insight into your company’s efficiency and profit margin on a project level. It is crucial to understand how much time does it take to complete industry-related tasks, and how many hours your teams invest in other activities, like phone calls, drafting, administration, etc.
How should you track time?
Simple can be better
There is a plethora of different time tracking software solutions out there. They range from very simple clock-in/clock-out solutions to very sophisticated systems. As different companies have different needs, every solution is great for some of them. Each solution offers a way to measure and increase productivity. Yet, the questions arise – Is a basic system giving you enough data to work with? And, more importantly – How sophisticated is too sophisticated?
Marketing and creative professionals have to be quite proficient in computer usage. Yet, sometimes tracking systems can still take a lot of time to get used to and even set up initially. Additionally, complex platforms require a lot of attention and time just to log time daily. Hence, we suggest using a simpler solution that still allows you to access enough data to draw conclusions and make informed decisions in the future.
Different tracking approaches
There are many ways to log employee time. Some tracking platforms rely on timesheets, while others use automatic trackers that range from a single tracker to many different ones employees can switch between for accuracy. Finally, some strict solutions log keystrokes and mouse movements or take screenshots of user computers.
The creative process looks different for everyone. Additionally, most creative and marketing professionals won’t be too happy to have their every move recorded. This method is very limiting and leaves the impression of distrust and intense micromanagement. On the other hand, having to go through numerous screenshots can be cumbersome, especially in a large firm. Additionally, taking screenshots opposes the GDPR in some countries. You should do some research on local laws if you decide to use a platform that uses this monitoring method.
In contrast, a timesheet solution relies on trust. Even if some marketing directors or artists don’t fill their timesheets correctly, it will be easy to identify these behaviors, as their results will be behind those of their coworkers.
Repetitive task management
Even though there are many creative outlets and methods both in the creative field and marketing, they can still be divided into a finite number of categories. Looking through every individual project to find a single piece of information you need is tiring and can get frustrating. The same applies to logging repetitive tasks.
That is why you should choose a solution that offers the option of task subcategories. That way you’ll be able to find what you need quickly. Also, your team is going to log their activities in only a couple of clicks, which will reduce the time they take to log time quite a bit.
Defining the planned (expected) billable rate should be determined for each employee and client. Yet, it is even more important to define the realistic billable rate. In that case, you’ll be able to determine if your planned and realistic billable rates don’t match, and by how much. The billable rate can be calculated after the project is completed and invoiced. It is done by dividing total profit from the project by spent billable hours by employee.
The profitability of any company depends on reaching your planned billable rates. Time tracking software can help achieve this. Simply put, the platform should account for an employee’s default billable rate as they’re tracking their time. There is also the possibility of using a billable hours chart. Optionally, the employee can be authorized to set their rate manually.
Cost rates are comprised of hourly rates based on general expenses and employee hourly rates, which are defined by employee salaries and other direct expenses. Again, time tracking software can automatically include the defined cost rate and calculate the cost rates per client or project. This is one more useful feature you should rely on in order to have more time to dedicate to completing tasks.
Timesheet reviewing process
A time tracking platform for marketing and creative firms can’t reach its maximum potential if you aren’t going to review the reports. This process should be done regularly and be automated if needed. It is important to confirm the logged hours, breaks, overtime, different leaves, etc. Some countries made timesheets a mandatory document companies issue when paying their employees. You can find many useful timesheet templates, and here are are some categories every timesheet for a full-time equivalent should include:
- Activities per client
- Details of the performed tasks
- Total hours spent
- The proportion of billable and non-billable hours
- The hourly billing rate (expected and realistic)
Time reporting insights
Similar to reviews, drawing conclusions from the data you collect through time tracking software is an integral part of this business practice. High-quality reports are a crucial part of a functional time tracking platform. They point you to good business decisions and indicate problems in real-time.
Time Analytics offers an all-encompassing dashboard. Through it, you can see analytics per artist or marketing professional, client, task, and project. You’ll be able to learn all you need about total hours, billable and non-billable hours within them, expenses, and other important elements of your business. This way you can notice changes and trends, as well as work on problems before they take a stronger hold on your business.
How does time tracking affect the invoicing process?
Having timesheets that list all activities your company has performed for a specific client makes billing easier. This is true since you will be able to create an accurate and itemized invoice that accounts for all expenses.
Tracking company costs
Client and project cost tracking
You can track client and project costs through a time and expense tracking program by calculating the work hour price and adding it to all direct and indirect costs. Then you should allocate the expenses per project or client. The total cost rate is the sum of the overhead rate and the pay rate. Our software offers the option of automatically setting the pay rate.
Here is an example: The total gross salary in your company is $1500 per month. The average time your employees spend at work is 150 hours per month. Thus, the pay rate is $10. Yet, this isn’t enough for an accurate expense estimate. To calculate that, you’ll have to add the pay rate to the overhead rate.
The overhead rate is calculated by dividing the total overhead expenses (office supplies, utilities and renting the office space, etc.) by the number of employees and the number of working hours per month. So, if the monthly overhead costs add up to $7500 for a company of 10 employees, the overhead costs per employee come up to $5.
In other words, the cost rate isn’t $10, but $15 per employee. You can simply enter this sum, and the program will automatically allocate expenses to the projects employees are working on.
Basic KPIs marketing and creative companies should track
Average billable rate on the company level
This KPI represents the average amount you make by performing work for your clients. You need it to determine if your business is as profitable as planned. You can achieve this by comparing the average billable rate to the planned (expected) billable rate.
Billable rate on the employee level
This KPI illustrates the hourly rate your clients pay for a specific employee working on their project. In other words, understanding employee billable rate means understanding who your top performers are.
Billable rate on the project level
Understanding project billable rate is highly important, as this indicator shows whether a project is profitable or not. Knowing this can help you adjust your rates for future projects.
It is calculated by dividing total project revenue by the total hours that a particular project took to complete.
Billable rate on the client level
Similarly to other billable rates, this KPI shows whether your collaboration with a client is profitable or not. You can calculate it by dividing the total income from a client by the total hours you’ve spent on that client.
Billing rate utilization
This indicator shows whether you are achieving the planned profit. It is calculated by dividing the realized total billable rate by the planned rate. In other words, this metric shows if the company’s progress rate is reaching the rate you’re expecting.
Cost per client or project
This metric determines the total expenses a company has allocated to a specific client or project. Once you know your expenses per client or project, you will be able to budget more accurately in the next budgeting cycle.
Time tracking is essential for this KPI, as it gives you the data needed to determine your expenses. Then, with the expense data, you can determine the profit coming from a client and the resources allocated to them.
This indicator represents the ratio between billable and non-billable hours within total hours spent. Its importance lies in showing the management how much time the employees spend making the company a profit and how much goes into non-billable activities. As you know, the goal is to reduce the number of non-billable hours, and this insight can point you to the changes you’ll need to implement.
Knowing how much time, manpower, and other resources a certain type of task takes will allow you to adjust your team’s workflow to increase productivity and efficiency.
Overtime by employee
Overtime is becoming the norm in many companies. While at a glance this practice may seem positive, it is important to understand why it’s needed. It is normal to require overtime if you are working on more projects than usual, or if the current clients are more demanding.
However, the lack of organization or unproductive practices can also result in the need for overtime. If this is the case, you are going to have to look into the reasons for the unproductivity and find a solution with managers and team members.
Time tracking is a business practice that has a bad reputation in many companies. This is especially true if you are in the creative field, as people who can force themselves to be creative are rare. Hence, the resistance toward time tracking software can be very strong.
If you are looking to actually increase productivity and get your employees to use the platform, you must avoid using it as a tool for micromanagement and punishment. Instead, you should point out the numerous benefits this practice brings, such as understanding personal work rhythms. Additionally, time tracking will allow you to delegate the tasks more efficiently, so no employee is overworked.
Time Analytics offers a trust-based system that still has powerful reporting capabilities. It can help you detect and solve underlying problems, no matter where they’re coming from – your workflow, employees, contracts, or clients.
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