In the April 16-May 6, 2007 issue of Accounting Today, there is an article by Ted Needleman, a former editor of Accounting Technology, a consultant and a freelance writer based in Stony Point, New York.
Of course, the title itself is offensive: “Time and billing software: Do you know where your money is?” But what’s worse, is this totally unsubstantiated, spurious, economically illiterate, and just plain stupid contention by Ted:
While you might argue that it’s the expertise of your staff and the product that you sell, the actuality is that what the client pays for is the time your staff spends on their behalf. Value billing is a great concept, but even after all these years of trying to move clients over to this method of billing, many clients still want to see how much effort, in the form of time, is being spent on their account.
Regardless of the rates and service levels that your staff provides to your clients, one great truism prevails—time is a non-renewable resource. Once it’s spent or wasted, there’s no getting it back.
That makes time a precious commodity and resource, one well worth using wisely. The time component of time and billing is designed to do that. By keeping track of the time spent on practice matters, you can make sure that not only will you bill for every precious minute and second, but you will also (hopefully) be able to see where time is wasted or spent poorly.
This is nonsense on stilts. I wonder if Mr. Needleman asked Porsche how long it took to make his car? I wonder if he cares how long a plumber spends fixing his sink, or is he more interested in results over efforts?
Customers don’t buy time, Ted. If they did, I’m sure they’d buy it from someone cheaper than a CPA. And yes, time is a non-renewable resource. So what? It is for Bill Gates and Microsoft, too, but you don’t see them doing timesheets. You don’t see Pixar doing timesheets. Why not? Because they don’t think they sell time.
Review all the time and billing programs you want. They are the buggy whip of the knowledge economy, and I personally like the idea of you investing your intellectual capital studying dinosaurs, like a paleontologist. We need musuems. But don’t think majorities determine truth, they don’t. At one point, we thought the earth was flat. And today, a majority of CPAs and time and billing software developers think CPAs sell time. They are wrong, and we’ve proven it.
The world around you has changed. Wake up. Study the firms out there that don’t subscribe to your dogmatic faith that customers buy time and are interested in efforts. McKinsey doesn’t. Accenture doesn’t. And every day, more and more accounting, legal, advertising, and IT firms are joining them.
This is not just a theory, it’s also practical reality. And by the way, the billable hour and timesheets are also a theory, just the wrong one. We have replaced them with a better theory. It’s just a matter of how long it will take to reach a tipping point.
You continue to embrace a status quo that is dying. Wealth doesn’t reside in hours, it resides in intellectual capital. This applies to you as a consultant and to a CPA firm. You are what you think. Would you rather follow Microsoft’s pricing paradigm or that of time and billing software vendors?
To ask the question is to answer it. Unless you’re a consultant, apparently.