10 August 2017

Accounting for projects correctly and promptly: The first order of business for entrepreneurs and start-ups in the service sector

According to the Kreditanstalt für Wiederaufbau (KfW), a total of 672,000 new companies were founded in Germany in 2016. Cities such as Berlin, Munich or Hamburg have now firmly established themselves as start-up metropolises. For years, the majority of start-ups (approx. 70 percent) have been in the service sector.

For these founders from the service sector, precise and timely invoicing of their services, which are usually invoiced in hours worked (project hours/project days), plays a central role, because this is the only way to "get money in the till". Especially in the early phase of a company, the issue of liquidity plays a (super-) vital role for the company, especially if the company is a start-up financed by the founder(s) themselves ("bootstrapping").

If, on the other hand, external investors or lenders are involved, it is important for the company founder in the service sector to introduce professional and transparent project controlling right from the start, with which he can present the progress of the first projects to his external financiers both organisationally (who worked on what and when?) and economically (what was billed for what and when?).

Timesheets and Microsoft Excel dominate

In practice, many start-ups still rely on tools such as the classic timesheet or Microsoft Excel as a standard software solution available in every company in the early days. However, in many cases these tools are not sufficient to ensure correct and timely accounting of project work. Timesheets get lost, Excel lists are not kept carefully - the recording of working hours and the transfer of the recorded times into the accounting, which is usually done with Microsoft Word or special software for creating invoices (billing), is time-consuming and prone to errors. And so it is not uncommon for project times worked to be billed incorrectly or not at all.

However, if one then considers that a lack of liquidity and financial bottlenecks on the most common reasons for the failure of entrepreneurs and start-up companies the advice to all founders can only be: rely early on a solution for time recording and project controlling that ensures that you also receive the corresponding payment for the hours you have worked on the project.

ZEP: Because time is money

The software solution ZEP - Time Recording for Projects - was developed precisely with the aim of supporting service companies in the areas of time recording and project controlling from the very beginning. The solution covers the complete project cycle from time recording to billing and project controlling via a central platform. Time recording takes place via an intuitive web-based user interface - or mobile via corresponding apps. The recorded data is then automatically transferred to the accounting, and the corresponding invoices can be created and sent directly from the software.

And for project controlling, comprehensive evaluations are available for areas such as

  • Resource planning
  • Employee utilisation
  • Incoming payments and open items
  • Turnover forecasts and target/actual comparisons
  • u.v.m.

available.

This means that not only does the company founder or the start-up company itself maintain an overview, it is also able to provide its external investors and financiers with a precise and up-to-date overview of the status of the newly founded company at all times.

Time recording and project controlling from the cloud

The operation of ZEP as a cloud computing solution offers important advantages, especially for company founders and start-up companies. On the one hand, they do not have to invest in their own IT infrastructure; all they need to use ZEP is a PC, notebook or tablet with internet access. The software is operated by provantis IT Solutions, a company based in Ditzingen near Stuttgart. The solution and data are operated in high-security data centres in Germany, so ZEP meets all data protection and data security requirements. So instead of investing time and money in IT, the young company can concentrate fully on setting up and expanding its business operations. In addition, the founder(s) is/are able to access the latest project data at all times, regardless of time and location: On-site at the customer, while travelling, in the home office, or when talking to banks and/or investors.

Further information on ZEP is available on the ZEP website available.