Team Performance Reporting with Xero Practice Manager: Staff write-offs

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Staff write-offs

Productivity is the first metric we look at when reviewing team and staff performance. This shows us how productive our staff are when they are at work. To find out how ‘effective’ our staff are on their jobs, we look at write-offs. There is an important distinction there. Productivity looks at the percentage of time our team is working on billable jobs, whereas write-offs look at how quickly they complete the work.

Write-offs occur when the billable time on the job exceeds what is invoiced. For example, if we have $5,400 of billable time on a job and we only bill $5,000, we will have a $400 write-off when this job is closed. XPM assigns these write-offs to the time sheet entries on the job, which means we can view these write-offs for each staff member.

How these write-offs are distributed across the staff depends on how the billing was done. If we are invoicing the job based on the actual time and costs, the write-off will be applied to those time sheets that do not receive any revenue. If the job is a quoted or a fixed-price agreement, the write‑offs will be apportioned when the WIP wash-up is done by hitting ‘Remove from Invoice List’. This will take the total amount of revenue and apportion it to the unbilled time and costs on the job. The costs receive the first portion of the revenue, and the time sheets are then distributed the remaining portion of the revenue relative to the billable amount.

Let’s look at an example.

Say we have a job with a $3,000 budget. Jane is the accountant on the job and Lucy is the partner who will do the review. The total billable on the job comes out to $3,800. $1,000 is a cost item for the outsourced team and there are $2,800 of time sheets. $2,300 of this time is from Jane for managing the job and $500 is from Lucy for the review. When the WIP wash-up is done, the $3,000 of invoiced total needs to be apportioned to the billable items on the job.

The first $1,000 is apportioned to the cost item, which means we have $1,000 billable, $1,000 invoiced, so no write-up or write-off on this cost. The remaining $2,000 is then apportioned across the $2,800 of billable time. There is an $800 write-off that needs to occur, so this is done relative to the billable amounts. Jane will receive $2,300/$2,800 of the write-off, whereas Lucy will receive $500/$2,800 of the write-off. This is 72% and 18% respectively. So Jane receives a write-off of $576 and Lucy receives a write-off of $144.

Write-offs are important to review as they give us insight into how efficient our staff are at completing their work. If a staff member is constantly writing off time on their jobs, it could indicate the following:

• All their jobs are priced too low
• They have not had sufficient training to complete their work on time
• They are not totally focused on their work, so their jobs are taking longer
• They are logging non-productive time to jobs to increase their productivity
• Their billable rate is set too high.

It is up to you to discuss with your team members to find out which situation is occurring. Each point comes with its own set of challenges and solutions, but knowing that this is happening is the first step in resolving the write-offs. This is where the interpretation of the data comes into the fold. We are looking to spot trends and outliers in our data. If we see a trend of write-offs, one of the five points above may be occurring. If we spot an outlier, such as a large write-off, this may indicate there was a problem with a particular job.

Viewing staff write-offs in XPM is easy, but investigating them takes a bit more work. Use the ‘Staff Time Write-up Report’ to see the write-offs by staff members in a period. This will give you the total figure, but to find which jobs they occurred on takes a bit of exploring. For this, we will need to use the same customer report we looked at earlier in this chapter.

Here is how it is built:

Report type: WIP Ledger

Fields to display on report (in order):

• [Ledger] Staff
• [Client] Client
• [Job] Job Summary
• [Ledger] Ledger Type
• [Ledger] Description
• [Ledger] Time (Totalled)
• [Ledger] Billable Amount (Totalled)
• [Ledger] Invoiced Amount (Totalled)
• [Ledger] Write-on Amount (Totalled)

Criteria for the report:

• [Ledger] Invoice Date – is on or after {the start date you want to report on}
• [Ledger] Invoice Date – is on or before {the end date you want to report on}

Rows are: Grouped and subtotalled by the first field

It’s important to note here that we have chosen the ledger invoice date, rather than the ledger date. That is because write-offs are recognised when they are invoiced, not when the ledger entry was made. To get an accurate picture of what your write-ups were for a period, you must use the ledger invoice date.

Staff write-offs is a standard field in the Team Performance report in Link Reporting. If you click on a write-off figure, a new tab will open with all the time sheets that make up the write-off, grouped and subtotalled by job so you can quickly and easily see where and why the write-offs occurred.

Write-offs are not always a bad thing. If you are never writing time off, this could indicate your billable rates may be too low. Like productivity, write-offs are a great indicator of how staff are performing, but they only tell part of the story. This is because both write-offs and productivity can be manipulated by creative time sheet entries.

For example, if you want to increase productivity, you could stack your time on billable jobs and log very little to admin jobs. This would inflate your productivity, but increase your write-offs. Conversely, if you want to decrease your write‑offs, you can enter time up to the job budget, then stack the overrun hours to a non-billable task. Your write-offs would look great, but your productivity would take a dive. Fortunately, there are other metrics we can look at that consider both productivity and write-offs. You can help your team succeed by providing them the information they need at www.linkreporting.com

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