Paul W. Carlson, CPA (00:00):
Hi, this is Paul Carlson, CPA with Law Firm Velocity. This is a spreadsheet our hourly-based firms use to track weekly billing activity. Just to walk through what we have here is we have a row for every timekeeper within the firm. We set a goal that each timekeeper needs to make each week, and then within this sheet we post the billable dollars for each employee for each week. And then when this summary is updated, the link is re-sent to the firm owner for review. A couple of notes on how we set this up. So one, this is a Google sheet which allows multiple people to access the sheet at the same time. Much better practice than putting this into a spreadsheet and emailing the same spreadsheet back and forth. The concept we want to be careful we watch, and what we're actually looking at, is hourly-based firms have three different values of time.
So billable time is the time entries entered onto the accounting system this week. Billed time is the time that's actually billed to the client. And collected is the money actually received or payments actually received. So these numbers are different in that we could have billable time this week, but when the invoices are created, some of that time could be written off or could just be dollar value changed because we realize we can't build a client for that work. So billed will be lower than billable. And then collected, if clients don't pay, we just don't get the funds. So on this type of sheet, we are looking at real time that we want to know exactly what happened last week. So we are stuck in the realm of billable time that we don't want to wait and run this report once bills are created. And we certainly don't want to wait until everything has been collected.
Some firms will run this based on hours and others will run it based on dollars. I like to run this based on dollars because ultimately what we're trying to do is we know that the firm has a weekly revenue goal and we want to tie last week's billing activity to making this month's revenue goal. So if we do all of this within dollars then we can see if we're on track, that this goal would be one fourth of our monthly revenue goal. And to jump back into concept of billable time versus collected time, that if we will take our total billable for the week and then we'll reduce it for an expected collections rate to account for the time that's lost through the billing process and the collected process. This can be a bit of a puzzle to get into, but we want to understand and reflect that there is some decrease the amount of time we'll actually collect.
We can add more detail on the per employee if it helps the firm owner manage and set the goals. So we will include their weekly wages. We will calculate out a labor multiplier based on their billing goal. It just helps provide a sense of a comparison of what the employee is paid versus what they're expected to bill out to clients each week. And with that, it's a quick overview of our weekly billable summary. Thanks. Bye-Bye.