In most of the world there are solid laws around book keeping with heavy rules and regulations about what you must and must not do. Most people also find this utterly boring and will be quite disappointed when I suggest that you keep track of your numbers yourself, outside of the book keeping too.
The reason for this, is that as a consultant you are mostly billing your hours. Every day you work up value in your company (your time) as you are in an instant selling this time to your clients, whether packed in a project or on an hour-by-hour basis. Just tracking this when you invoice the customer gives you a very skewed picture of your company.
Track Hours. Track Earnings. I am suggesting that you focus on two things. First of all, track all the amount of ours that you work (I use Harvest—It’s an excellent app with great reporting). Billable and non-billable. This gives you an overview of how much time you are actually spending on projects and customers. If your find your billable hours too few in comparison to the non-billable, you know what you need to do.
However, don’t stop here. Summarize the would-be-earnings on a project or client basis every month. That is, take the hours worked, multiply by your hourly rate as necessary and you will get the worth that you have worked up during the month. Put this in relation to what you are billing and you have some great data on how your company is doing.
Basically, just looking at the invoices aren’t enough. Some projects might go on over several months, causing big lump sums in certain months, and no earnings in others. In traditional result reports, this isn’t answered. Creating an internal report like this however, solves the problem nicely, simply and easily and doesn’t take much time at all.
