Alice in Wonderland by Taylan Soyturk
“You should track your time even if it’s just for yourself. If you do, you will certainly be surprised.”
– Stephen Covey, The 7 Habits of Highly Effective People
Unless you are in a time-billing profession most of us don’t think tracking our time necessary. The concept of being accountable for our time to anyone, especially to ourselves is like holding up a mirror to what you’ve spent your time on – a self-realisation we often avoid.
“I hate time tracking, but I need to know where my money is going”
Within medium to large organisations, when your project has a dedicated SCRUM team, it is rare that the team gets to focus just on that particular project for the entire duration of the Sprint, let alone the entire project. Often, in a complex environment of multiple ideas and projects – the team’s time is shared across the organisation, across projects and potentially maintenance activities. Without tracking this, how will we know what we were working on? How much this work truly costs? And whether we should “Stop, Start, Continue” this work?
Nevertheless, most of us just hate time tracking, and believe it in itself is a waste of time.
What if we reframe how we perceive time tracking to not be about justifying how we spend our time; but instead look at it as a value-add activity that can bring financial reward to your project and organisation?
In other words, if time tracking can add value by providing incentives to your project and organisation’s financial implications, wouldn’t you find those few minutes a week to do it?
Ultimately, without accurate time tracking, your project labour cannot be accurately defined as a value-add asset. If you do not allocate your time in a trackable/traceable manner to a specific project, this project cannot be recognised as an asset. And without all of this, you won’t know how much your product/asset (aka your blood, sweat and tears) is really worth. Without this knowledge, your investors would be reluctant to continue future investment into your projects.
Below are the top three considerations that lead to benefits or implications – from a regulatory and tax perspective – for your project and organisation, where time tracking is being considered.
1. Not meeting the definition of an Asset for recognition in your Balance Sheet
This means you are potentially missing out on positive P&L implications for your organisation. You can spread your value-add assets across multiple years, rather than hitting your P&L in one go. If you spread your expenses over multiple years, you can gain benefits that accounting rules provide.
If you do not allocate your time accurately, you are also making yourself less competitive by increasing your expenditure now and not offsetting this expenditure against the benefits your project is bringing in.
Most software projects that bring in benefits are allowed to be capitalised and recognised as assets, with amortisation spread over a period of 3 years. This is allowed provided you can attribute your labour to a particular project/asset – in order to do so, accurate time tracking is necessary.
2. Not meeting the requirements for the ATO Research & Development Tax Incentives
The ATO allocates certain tax incentives to companies for investing in projects. Organisations may qualify for these benefits provided that the project can be identified as a stand-alone piece of work. In order to do so, your project labour’s time needs to be tracked.
[Please seek the advice of your local Taxation expert to understand whether your organisation qualifies for the above.]
3. Not meeting the requirements for Innovation Tax Incentives the Australian Federal Government
Although very recently announced, one prominent feature is further tax incentives to companies that can attribute time to an innovation your project team is working on.
[Please seek the advice of your local Taxation expert to understand whether your organisation qualifies for the above.]
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There is a widespread view that by doing a weekly timesheet, time is tracked inaccurately, hence, reducing the value-add.
There is numerous software developed that can solve the accuracy issue and can assist staff to easily track their time accurately – but this requires investment. The alternative is using change management and company policy to drive good practice , which is generally a cheaper alternative.
Nevertheless, not tracking your project time far outweighs the risk of inaccuracies produced as a result of a weekly timesheet. Putting in a wrong timesheet can ultimately over or undervalue the cost of the asset you are creating. But if you do not track at all, the cost of losing out on P&L benefits and tax incentives is incomparable.
To garner further insights into how accounting principles can benefit your project’s success, register to one of our upcoming workshops.