How to Optimize Service Operations

4/16/2014 Carsten Howitz Service

Many service companies are struggling with very poor time registration and billing processes. I am always surprised when I hire someone to do a service job and it takes the company weeks and sometimes months to send me the invoice for the services rendered. My first thought is always that they must have enough cash flow to essentially finance my invoice for all the time it takes them to send it to me.

There can be several reasons why service companies are so slow at sending the invoices out to their customers:

Manual time entry

Many companies have time sheets that are manually filled out by the service technician or consultant on a weekly basis. Time sheets are forwarded to a supervisor that approves them and they end up in the accounting department. Here they enter the information into the billing system and finally the accounting department will start sending out invoices.

It is a slow and cumbersome process that is error prone and sometimes time sheets are lost resulting in lost billings.

Service technicians are not filling out time sheets after each job

If a technician is not filling out the time sheets often and on a regular basis each day it is inevitable that something is forgotten. This results in billable time being wasted and most important not billed.

Supervisors dont get any early warnings

If a service technician is sent out on jobs and not reporting the time spent on some of the jobs as billable, supervisors will have no idea until they receive the time sheet at the end of the week. At that time it can be too late to make any corrections and the time can't be billed.

Benefits from implementing a fully integrated job billing system:

Management can view upcoming billings

Hours that are registered by the service personnel are instantly accessible in the ERP system and can be summarized to show what is going to be billed in the near future.

Cash flow is improved

Since the service consultant is entering in time each day, accounting can bill service hours promptly. This results in faster billing and consequently faster payments.

Example

Company ABC has 50 service technicians and they can each bill up to 8 hours per day. The billing rate is $60 per hour and their efficiency is 80% on average.

Using a manual system it takes 3 weeks from the work has been done until the invoice has been created and sent.

By using an integrated time entry and billing system the time it takes to create and send the invoiced is reduced with 12 days.

Result: Company ABC improves their cash flow with $230,400! On top of this they also reduce the data reentry errors to zero.

Most service companies will often have an instant return on their investment from implementing a job billing system and typically the improvement of their cash flow can pay for the entire system!

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