Timesheets Are A Problem At Mediocre Agencies. But Are They Fraud?

“Fraud” is a very strong accusation, and that’s why this column in the Agency Post, written by Deborah Fisher of Response Mine Interactive got my attention.

Fisher provides the all-too-common view of timesheets in the agency world:

Driven by the need to bill clients in a timely manner, the accounting department nips at the heels of the corporate flock to convert its man-hours into billable client time for invoicing, only to walk away each month that much more disenfranchised by their co-workers. No wonder no one wants to work in accounting.

I’ve never had much of a problem doing my timesheets, even daily if it was asked for, but the real problem is that billable hours don’t provide much guidance into how completely, or how creatively, any job in an agency gets done. We’re basically working in a factory where no two products made are ever alike.

And timesheets have been the bane of contention at many agencies I’ve worked at. The mediocre agencies, especially. Because agencies need to make money, and if jobs take too many billable hours to complete, the agency loses money. But it’s very difficult to predict how long complex jobs will take — particularly ones where multiple concepts are needed and the creative bar is high. So if a copywriter or art director decide they need more time, or the CD demands that the work needs more time, it’s a problem. At a certain point, it’s “pencils up, you’re out of time.” Whether the ads are any good or not. The creative desire to make the work great (when it involves nights, weekends, or more time in general) comes at a price in a timesheet-dependent agency.

It’s also a no-win situation for creatives: Bill less hours than needed to be profitable, and management complains. Bill more time than allotted, and management also complains. I’ve witnessed this numerous times.

What Fisher doesn’t speak to is exactly how her agency now charges its clients. All she says is that the agency is now on a “fixed billing” system, without defining how it works. Might be a fine idea, given that most of an agency’s staff is a fixed cost. Agencies need to make money, clients need great work and should be willing to pay a fair amount for it. Timesheets clearly get in the way of that at many agencies.

Is the timesheet system “fraud” though? As I said, it’s a strong term. Timesheets are not 100% spot-on accurate, that’s for sure. But only the agency management knows whether it’s truly overcharging clients. Either way, it’s always the rank-and-file agency employees that are at fault when the timesheet system fails. Although it’s more of a sign of mediocre leadership and processes.

Does your agency use other methods than timesheets? What’s a better solution?

About Dan Goldgeier

Dan Goldgeier is a Seattle-based freelance copywriter with experience at advertising agencies across the U.S. He is a graduate of the Creative Circus ad school, and currently teaches at Seattle's School of Visual Concepts. Dan is also a columnist for TalentZoo.com and the author of View From The Cheap Seats and Killer Executions and Scrubbed Decks.