Notes for owners · Industry-Specific Software Guides
Where a Software Services Firm Loses Margin Between Timesheet and Invoice
A software services firm loses margin on change requests nobody priced, hours that never reach an invoice, bench time and fixed bids that overrun. Each shows once hours, scope and rates sit on one project record. GullySystem builds that record as custom software. A small team may manage with a sheet.
Ganesh HS, Strategy and Technology, GullySystem · · 3 min read
Change requests that never became a priced line
A client asks for one more report in a stand-up call. The team builds it because the sprint has room. Nobody decides to give the work away. It is simply never written down.
The fix is a change request log per project. Each extra ask gets a short note, an effort estimate and a yes or no from the client. Approved items become a priced line on the next invoice. Declined items are recorded too, so the same ask does not return in a different form.
- The ask, in the client’s own words
- Who raised it and on which call or thread
- Effort estimate in hours
- Client approval and the invoice it joined
Hours that never reach an invoice
The tracker holds one total, the timesheet another, and the invoice a third. Somebody matches them by hand at month-end, and the gaps are usually settled in the client’s favour.
Pick one place where billable hours are entered, and make every invoice read from it. Keep billable and non-billable time apart, with a reason for the non-billable part. Review the difference between logged and invoiced hours for each project every month.
Bench time that nobody sees until it happens
A project ends, and several people are idle before sales knows. Allocation sheets tend to be updated when someone remembers, so they trail the real position.
A simple allocation view shows each person, project and share of the day, with an end date. Sales can then see who frees up next month and quote against that capacity. Bench people can be placed on internal work or training on purpose.
- Person, project and share of the day
- Planned end date of each allocation
- Skills held, such as backend, mobile or testing
- Names without an allocation next month
Fixed bids that burn more than the estimate
A fixed-bid project is sold on an estimate of effort. If the burn runs ahead of the plan, the loss grows quietly until the last milestone. Then it is too late to renegotiate.
Show hours burnt against the estimate at each milestone, not only at the end. When a milestone has used most of its effort and is half done, raise it with the client at once. Record what the overrun came from, so the next estimate improves.
A monthly check before buying anything
A sheet per project with estimate, hours used, change requests and invoices will show most of these leaks. The habit of reviewing it matters more than the tool.
Software helps once several projects share people, and hours must tie to invoices across currencies and contract types. Until then a careful sheet, reviewed at every month-end, is honest enough.
Project margin worksheet
One row per active project, with the contract type, hours estimated and used, change requests raised and approved, and the amount invoiced against the amount earned. Fill it in at each month-end. Any project where hours used outrun invoices is where margin is leaking.
Open a blank worksheet to printQuestions owners ask
Is a project tracker like Jira enough to find these leaks?
Not on its own. A tracker holds tasks and hours. It does not hold the contract, the rate card, the change request approvals or the invoice, and those are where margin is decided.
Will GullySystem software post invoices into Tally?
There is no live link. A file of invoices for your accountant is possible as separate, priced work. Many firms invoice from the project record and let the accountant import the file.
Should every developer fill a timesheet?
For billable projects, yes, at the task level. How much detail is useful depends on the contract. Time and material work needs more. Fixed-bid work needs enough to compare burn with the estimate.
Which leak should a small firm fix first?
Usually unbilled change requests, because a short log and a habit of asking for approval cost nothing. Hours reconciliation and bench views come later, as the team grows.