Why Time Tracking is Important for R&D
In Research and Development (R&D), time tracking plays a crucial role in measuring the value of the work done by resources assigned to complete projects or tasks. Whether it’s in pharmaceutical, software development, manufacturing, or engineering organizations, an efficient R&D department is essential for driving the company’s innovation, profitability, and success. By measuring the amount of time and effort resources spent completing those activities, R&D departments prove the value they contribute to their organization.
Here are some common questions R&D department leaders may ask when evaluating the time and effort invested in projects:
- What are my team members working on?
- Are we working on the right projects?
- How do we know our projects are profitable?
- How much do these projects cost?
- Are our projects on budget?
- Do I have enough of the right people to complete my projects on time?
- Do I have the information I need for any Capital/Expense and/or R&D tax credit reporting?
To have confidence in answering these questions, it is essential that your organization has a clear and comprehensive project time tracking solution. Without visibility into task assignments, project costs, timelines, and resource utilization, it would be nearly impossible to know the answers to these questions with certainty.
Project Time Accounting for R&D
Project accounting is the process of tracking the financial progress of projects through the creation of specialized financial reports. In R&D, project accounting involves tracking all costs, including time and expenses, associated with the research and development phase of a new product. This enables companies to determine a product’s profitability before it goes to market.
However, managing resources and collaboration partners in an R&D environment is much more complex due to its multidisciplinary—and even multi-organizational—nature. Effective management of resources requires careful tracking of time and effort spent on R&D projects, such as studies, clinical trials, and associated activities. This data is crucial for making accurate cost and resource estimations for future projects while ensuring that current projects stay on track from a resource and budgeting perspective. Implementing project time tracking software streamlines this process and provides the necessary information for making the most informed decisions on product development.
Robust integrations with ERP/project accounting and project management/planning software can automate project time tracking, eliminating the need for multiple systems. The right time-tracking solution with well-designed integrations offers many benefits for users and improves overall business operations- especially those in project accounting and R&D.
The benefits of integrating your R&D project accounting and project management time tracking include:
- Consistent data visibility: Entering project time data once into a single system synchronizes it with both your ERP and project management software, resulting in more consistent data at the highest level for project accounting and analysis.
- Detailed work breakdown structure: A more detailed project work breakdown structure that rolls up to project accounting categories can be used by project managers for planning and tracking work at the resource level.
- Efficient time entry: Entering time once in a single system makes project time tracking more efficient for everyone and provides financial and project management professionals with the specific time tracking information they each need.
- Improved data: By requiring employees to enter their data once within company-set parameters, timesheet data will be more complete, timely, and compliant.
Tracking Time to Qualify for R&D Tax Credits
Research and Development Tax Credits are a powerful tax savings opportunity for companies engaged in qualifying research activities across all industries. Time tracking software can play a vital role in obtaining these credits, which can help companies save money, offset costs, and improve cash flow – benefits that can make a massive impact during bearish economic conditions.
By accurately tracking R&D time and expenses, organizations can generate the necessary documentation to claim credit and potentially reduce costs enough to invest in new products, hire new employees, and grow their operations. However, it’s important to have detailed payroll records and reports that track time, expenses, and other project accounting information to qualify for these credits.
To maximize available credits, the first and most important step is to start tracking R&D time and expenses accurately. With the right time tracking software, companies can streamline this process and increase their chances of obtaining R&D tax credits.
To learn more about how your organization can accurately track time and expenses to qualify for R&D Tax Credits, see our whitepaper: Get Your Money Back with R&D Tax Credits.
Making the Most of Time in R&D
Efficient time tracking is crucial for R&D departments to measure the value of work done by their resources, ensure profitability, and qualify for tax credits. With the right project time tracking solution and integrations with ERP and project management software, organizations can streamline the tracking process and gain consistent data visibility, a detailed work breakdown structure, and efficient time entry.
By tracking R&D time and expenses accurately, companies can generate the necessary documentation to claim R&D tax credits, reduce costs, invest in new products, services, and employees, and ultimately grow their operations and profitability. It’s never too late to start accurately tracking R&D time and expenses, so don’t hesitate to explore the available solutions and maximize your organization’s potential for success.
Learn more about how Journyx’s time tracking solutions have been proven successful for pharmaceutical & biotech companies, research & development, engineering firms & software developers, and more.
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Journyx helps you track time for projects, payroll, and more. Learn how Journyx can help you use time to your advantage in your business.