Invoicing is still challenging for many companies, says recent survey

According to a survey we conducted in spring 2024, invoicing processes are leaking revenue in many companies. Time tracking and invoicing are fundamental to the operations of any professional services firm. When these processes are not functioning properly, the resulting revenue loss can be significant. This article summarizes the key findings from the survey and offers guidance on how to plug the leaks and improve cash flow by streamlining your invoicing process.

Survey results: Invoicing and time tracking in professional services companies

The survey focused on Finnish professional services companies. It included responses from executives at 50 companies, with annual revenues ranging from just under €1 million to €9 million.

The most striking finding was that more than half of the companies reported revenue loss due to missed invoicing opportunities. Additional challenges included inaccurate time entries, inefficiencies in transferring work to invoices, time-consuming invoicing processes, and delays in invoice sending.

Interestingly, similar issues were observed in a comparable study we commissioned nearly a decade ago at Aalto University in 2015. Despite the time that has passed, the situation has improved surprisingly little.

View the infographic summarizing the survey results

How to plug revenue leaks and improve invoicing processes?

Even small inefficiencies can accumulate into substantial losses over time – often without detection, especially when there is limited operational oversight. That’s why it’s critical to ensure your time tracking and invoicing processes are robust and that reporting clearly presents all necessary data. The following tips will help you get started.

Fix time tracking first

Nearly half of the surveyed companies suspect they lose revenue because employees don’t record all their hours. Interestingly, over a third of respondents who believe they don’t lose revenue are actually in this same group – indicating that recording billable hours may be difficult, and managers may lack visibility into how time is being used. These are fundamental issues that need to be resolved first.

Simple time entry methods support accurate recording of billable work

First, ensure that your employees know how to use the system correctly and that everyone understands the importance of time tracking and invoicing. Next, make the process simple and intuitive. When time entry methods are straightforward and relevant, and all required details can be easily attached to entries, time tracking becomes a natural part of daily routines. Accurate and timely entries benefit the entire organization.

Seemingly minor tasks – like customer calls or handling service tickets – often go untracked but can add up to significant losses. Tools like ticketing systems and quick-entry features with blank timers help ensure this time is captured.

If employees are frustrated by tracking time across internal and client tasks, consider using a separate workday clock. It helps avoid fragmented entries and focuses tracking only on meaningful, billable activities.

Provide clear oversight for managers

Managers should have access to comprehensive and clear reports on employee time usage. For example, Koho PSA’s employee profitability report offers valuable insights into employee efficiency, and helps increase profitability. Make sure any data from separate software is integrated into your main system through proper integrations.

Without systematic time tracking, it’s difficult to spot issues – and even easier to miss billable work. Simplifying how work is recorded and providing clear management views minimizes lost revenue.

Explore Koho PSA’s time tracking solutions →

Invoicing shouldn’t be complicated or time-consuming

The survey found that companies spend an average of 24 hours per month on invoicing. For example, one office assistant reported needing 30 minutes to create a single invoice, and with 75 invoices per month, that adds up to 37.5 hours – a full workweek with half-hour lunch breaks. This is a significant time investment for a process that can largely be automated today.

Automate invoicing: save time and reduce errors

If your accounting firm still relies on Excel for invoicing, it’s time to move on. A good accounting practice management system can cut invoicing time by up to 87%. Many modern systems offer robust automation features and are affordable. In the long run, lost revenue due to poor processes costs far more than system fees.

A high-quality system will consolidate all billable data efficiently. Monthly and recurring invoices can be fully automated based on contracts, eliminating manual effort. With Koho PSA, you can generate a contract directly from a proposal. Some systems even support automated billing for hours exceeding the contract scope. Once time tracking and entry become systematic, invoices can be automatically populated with the correct rates and rules – provided your system supports this.

When invoice data is collected automatically from time entries, associated products, and contract lines – the invoicer simply needs to review and approve. With automation, you can shorten your invoicing cycle to under seven days and balance your cash flow more effectively.

Discover Koho PSA’s invoicing solutions →

A Flexible system supports even complex invoicing needs

Most surveyed companies use either an ERP system or a time tracking system. Yet the survey revealed ongoing issues in invoicing and time tracking, suggesting many businesses still struggle with:

• Lack of internal process clarity from leadership
• Systems that are outdated, cumbersome, or poorly suited to the company’s workflows
• Multiple disconnected systems
• Inadequate automation capabilities

Having a system that matches your company’s current and future needs is crucial. It’s worth conducting regular audits to ensure your system supports – not hinders – your growth.

Want to improve your time tracking and invoicing processes?

Book a meeting with one of Koho PSA’s experts. We’re happy to consult and show you how to enhance your accounting business and boost profitability with Koho PSA.