7 ways accountants can use time-tracking software

Amid an ever-growing range of tools for accountants, time-tracking software has become one of the most important. Accounting firms do most of their work using billable hours, so they need an accurate and reliable way to calculate exactly how much time they’ve spent on a job.

In this blog post, we’ll look at some of the ways time-tracking software for accountants can benefit firms, enabling them to increase accuracy, efficiency, and transparency.

But first, let’s answer an important question.

What is time-tracking software for accountants?

As the name suggests, time-tracking software enables accountants to monitor and record the time they spend on different tasks or projects.

Some solutions are standalone tools, often including billing functionality. Others are part of a wider accounting or practice management platform, such as TaxDome, alongside other key features such as document management, task management, client communications, workflow automation, and more.

Now that we know what we’re talking about, let’s look at some of the ways accountants can leverage time-tracking software.

1. Enhancing billing accuracy and transparency

Without a time-tracking tool, accountants rely on manual methods for logging time spent on jobs, such as clock-watching or even guessing. These are highly inefficient processes, leading to time entries that are inaccurate and lacking in transparency or accountability.

With time-tracking software, accountants can record exactly how much time they spend with just a few simple clicks. All of their time entries are logged, meaning nothing slips through the cracks. As a result, accounting firms can generate accurate and trustworthy invoices. In turn, this leads to more accurate and trustworthy financial reporting.

2. Streamlining workflow and task management

Having a dedicated digital system for tracking time doesn’t just help with invoicing and reporting. It also plays a key role in building more efficient workflows. Accounting teams can better understand the time it takes to complete certain tasks. As a result, managers can allocate and prioritize work more efficiently. They can also address staffing shortages more quickly, helping to reduce bottlenecks during peak times.

What’s more, time-tracking software often comes with project management capabilities, allowing you to track progress towards completion, set deadlines, and collaborate with team members.

3. Improving productivity and performance

Accounting can be a highly competitive industry. To succeed and grow your client base, you need to focus on efficiency. Time-tracking software can be a real help here, providing accounting practices with detailed data relating to productivity, both on a team and individual level.

Analyzing this data can help accounting teams identify patterns and trends, including when they are most productive or unproductive. They can also spot tasks that take a disproportionate amount of time relative to the value they bring to the firm.

Armed with this information, accounting firms can take steps to increase productivity and profitability, including automating repetitive tasks that add little value in terms of revenue. They may also be able to spot certain staff members who excel in some tasks but not others and allocate work accordingly.

4. Facilitating compliance and audit trails

Accounting firms must remain compliant with the latest industry standards and regulations. Time-tracking software can help by providing clear and accurate data on work performed and amounts billed. This can be essential in the event of an audit, providing verifiable evidence that they have a trusted and transparent system for billing clients.

What’s more, many time-tracking tools have compliance built-in to their functionality, which can automatically update as regulations change. This helps to ensure that processes are always in line with the latest accounting standards.

5. Enhancing client communication and trust

Having verifiable proof of time spent can also be useful if a client challenges you on the amount billed, or asks for proof of how long the job took. With time-tracking software, accountants can easily generate and share reports detailing the exact time spent on different tasks. This helps clients understand who is working on their jobs and when, leading to increased trust between clients and firms.

6. Managing multiple clients and projects effectively

Time-tracking software is an invaluable tool for accountants handling multiple projects and clients simultaneously. It allows you to track how much time you spend on each project separately, ensuring that time spent on one job doesn’t bleed into another. Most time-tracking software also allows you to set reminders and alerts for deadlines and other important milestones, ensuring that you’re always on track to complete tasks on time.

7. Integrating with other accounting software and tools

The best standalone time-tracking tools integrate seamlessly with other software, either through native integrations or workflow automation tools such as Zapier. This allows you to connect your time-tracking software to your invoicing, project management, payroll, or accounting systems, resulting in seamless data transfer and more joined-up processes.

Alternatively, you can opt for a complete practice management platform that includes time-tracking capabilities. This way, you get all the tools you need to run a highly efficient and streamlined accounting practice — including time-tracking capabilities — in one place. This not only simplifies your accounting tech stack but also reduces costs by replacing multiple software licenses with just one.

Conclusion

Time-tracking software offers accounting firms a multitude of benefits, from increased accuracy and transparency to more efficient processes, improved efficiency, and a deeper understanding of what drives productivity. As the accounting industry continues its shift towards digital transformation, time-tracking software is not just a nice-to-have — it’s an essential tool in a modern accounting firm’s toolbelt.