Why Use a Timesheet?

If you’re a consulting or contracting company, the answer to that question is a no-brainer.  Or so says the video below.  In this video, the author asserts that consulting companies absolutely must use a timesheet for the job.  I tend to agree.  Consulting has become so complex, and the margins so slim that you can’t afford to lose a single hour of billable time.

Consultants regularly check their utilization rates to make sure they are making money.  Utilization is the ration of billable to scheduled hours for the employee.  For example, if the employee is scheduled for 40 hours and only works 35, then he is only 88% utilized.  And because he hasn’t worked the full 40, he is not billing as many hours as possible.  Therefore, his effective billing rate is lower than what the company actually charges for his work.

Here’s an example of a poor effective billing rate.  Suppose a consultant bills at $100 per hour.  But he only gets 10 hours per week of billable work.  His effective billing rate is now only $25 per scheduled hour.  And if you miss any of those hours, the rate goes down.  So using a timesheet to collect and account for all the billable time is probably a no-brainer.


Manufacturing companies like to track project hours using a timesheet.  It allows them to connect with their employees and see where their time is going.  But it has more value than that.  Manufacturers who track projects want to improve their deliverable schedules, milestone predictions, and task duration estimates.  This obviously lends credibility to their project management efforts.  The only way to get good project task estimates is to use a timesheet.  They must collect actual employee hours so those hours can be compared with the original estimates.

And finally, even if you are not a services-based company that tracks time for client billing, and you are not a manufacturing company that tracks project management metrics, you may still just want to see employee status and weekly hours.  That’s a good enough reason to use a timesheet.  Simply keeping an eye on employee activities is a worthwhile management practice, even if you don’t have a hard reason to use a timesheet.

All these reasons are illustrated in a nice little YouTube video.  Check out the ScoutwestInc channel for additional timesheet videos.  Some of them make a lot of sense.