If you don’t understand your utilization rate, you can’t understand your efficiency and productivity – which means you can’t begin to evaluate the profitability of your business.
In a nutshell, utilization rate is the percentage of a person’s total working hours that are spent on work that can be billed to a client.
No matter how motivated or productive an employee is, no matter how determined they are to do the absolute maximum, time will always be their limiting factor. There are only 24 hours in the day – and we can’t be “always on”.
Any company that bills by the hour needs to know whether they’re billing enough to cover their costs plus overheads. If you have a healthy utilization rate, you’ll know you’re billing efficiently.
Utilization rates are especially important when it comes to resource management, and can significantly improve forecasting and resource optimization. Your utilization rate can let you know whether you have the capacity to take on a new client, whether you need to hire more people, if you’re spending enough time on client work and whether you should invest more in internal projects.
Timely makes it super easy to find out your utilization rate and set KPIs to keep you hitting metrics and avoiding sunk costs.