time and materials contract is an efficient and effective means of charging for services that have a lot of variables. From software development to marketing, construction, and more, certain industries require flexibility in their work.

But any business familiar with regular time and material tracking knows it isn’t always easy. Making sure that employees track their time and expenses while executing their job efficiently often feels like chasing cats.

So how do you make this necessary task easier? We’ve put together a guide to nailing down your process in a way that offers accurate tracking without slowing down your workday.

What is a Time and Materials Contract?

For those unfamiliar with time and materials contracts, this precise pricing method provides flexibility in a service’s delivery while charging the customer or client for the exact services rendered.

Many buyers like this form of contract because it offers transparency over what they are paying for as well as the ability to scale up or down in their budget if certain needs arise.

This form of contract is common in many industries, including construction, contracting, web design, software development, and marketing. Perfect for both projects and subscription services, it has one challenge: ensuring the appropriate information is tracked for proper billing.

Time and materials tracking is a simple task, but challenges arise when a team’s process doesn’t accommodate for easy reporting. If your business leans upon a time and materials contract, make sure you’re implementing the best practices possible for accurate billing.

Tips for More Efficient Time and Material Tracking

Like all good businesses, it’s important to have a well-defined process for everything from producing a contract to executing your services. Below, we’ve put together 3 tips that will set you up for success and help you avoid frustrating mistakes and poor tracking habits.

Make Sure Your Contract Outlines the Expectation

How a service is executed starts with the details outlined in the contract. Every time and materials contract should include 4 details:

  • Labor Rate
  • Material Markup Percentage
  • A Defined Cap (if any)
  • Maximum Labor Hours (if any)

Your labor rate is the established hourly rate for your service. Your material markup percentage is the total percent of the material’s cost that you tack onto the price. Both of these are necessary for a time and materials contract.

Depending on the terms of the agreement, your client may also have a defined budget cap or your business have a maximum number of labor hours. Both of these are useful in defining the project’s parameters.

But why would a company limit their number of hours worked? Isn’t that losing revenue?

Having a cap on your maximum number of labor hours can actually help you manage a healthy revenue. By placing your own parameters on the services provided, you prevent your contract from straying too far out of its scope.

Your contract sets up the expectation and the process for your service, so make sure you take the time to make sure its clear. Even with the flexibility of this kind of contract, clear phases, expectations, and deadlines are important.

If you create a clearly defined process in your contract, it will be easier to execute by your team.

Set a Clear Expectation for Every Team Member

Once your contract is signed, you should already have a clear process for how to execute the agreed upon service. This includes a clear expectation for when and how your hours and materials are tracked.

It’s always best to track hours and material expenses as soon as possible. The longer you or your employees wait to record this information, the larger your risk for error grows.

Many companies make it a standard to track your hours and materials upon the completion of each task, session, or job. However, there are some common challenges that come with this task, including:

  • Accidental Duplicate Reporting
  • Unreported Hours or Materials
  • Guestimated Time and Costs

To avoid these problems, its best to refrain from using a highly manual process. The more automated you make your information tracking, the better.

Automate as Much as Possible with Good Tracking Software

Most companies use some kind of software in order to record and process time and materials. While tracking information is easy for employees who work in an office setting or at a desk, what if you’re out in the field?

Jotting the details down on paper to be inputted into your tracking system later sounds like a good idea. Yet loose paper and even notebooks are easy to lose in transit or when you’re on the move.

Plus, it can be easy during a busy workday to forget to input or record this information despite its important role in getting paid. So how can companies mediate this process to ensure information is properly recorded without impacting employee efficiency?

The best solution is to use a time and materials tracking software that works both on a desktop and a mobile device. There are a ton of options on the market, but they are far from equal. In order to find the right application for your business, you’ll need to do your research.

The purpose of this software is to make life easier. Thus, it should smoothly integrate into your current process. Aim for a solution that has an easy-to-use interface with an input process that is quick and automatic.

You don’t want your employees spending too much time clicking buttons and trying to navigate a complicated dashboard. Instead, the software or app should be designed to minimize errors and speed up the reporting process.

The best software is the kind that speaks to your other systems, such as bookkeeping, accounting, or payroll programs. As you explore your options, don’t be afraid to ask questions regarding compatibility or specific scenarios unique to your business.

Demo an App That Will Make Tracking a Cinch

Make time and material tracking easy no matter where you or your employers are working. Whether you’re in the office or on the go, our cloud-based solution makes tracking, reporting, and approving hours and expenses easy.

Explore Rhumbix T&M Tracking‘s features and how its perfect for field use. You can schedule a free demo for a firsthand look at how the applicat


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