Time Tracking in Time-and-Materials Engagements: The Practical Guide for IT Services Companies

Time-and-materials is the dominant business model for IT services companies in France. Over 70% of the sector's revenue comes from time-and-materials engagements, where the client pays for a consultant's time -- typically at an Average Daily Rate (ADR). This model rests on an elementary principle: every day worked by the consultant must be tracked, validated, and billed. No reliable time tracking, no billing. No billing, no cash flow.

Yet time tracking in time-and-materials engagements remains a blind spot in many IT services companies. Processes are informal, tools are ill-suited, and contractual obligations are poorly understood. This guide lays the foundations for structured tracking: what the law requires, what the client expects, how to organize data entry so it works with consultants on assignment, and how to structure data so it serves billing, management, and compliance simultaneously.

Contractual Obligations for Time Tracking in Time-and-Materials Engagements

Time tracking in time-and-materials engagements is not an optional best practice. It is both a legal and contractual obligation, governed by several texts and by the clauses of service contracts.

The Employer's Legal Obligation

The French Labour Code (articles L.3171-1 to L.3171-4) requires the employer to establish the documents necessary for calculating each employee's working time. This obligation applies to IT services companies as the consultant's employer, even when the consultant works at the client's premises.

In practice, the IT services company must be able to justify, for each consultant:

• The number of days or hours worked per period
• Rest days, leave, absences
• Compliance with maximum working hours (10h/day, 48h/week, 44h average over 12 weeks)
• Compliance with mandatory rest periods (11 consecutive hours between two working days, 35 consecutive hours per week)

In the event of a dispute with an employee or a labor inspection, it is the employer -- i.e., the IT services company -- that must produce these records. The absence of time tracking can lead to a presumption in favor of the employee in disputes over overtime.

Key takeaway: Time tracking is not just a billing tool. It is a legal obligation of the employer. In labor court disputes over overtime, the absence of time records systematically works against the IT services company.

The Contractual Obligation to the Client

The time-and-materials contract almost systematically stipulates that billing is contingent on the production of an Activity Report validated by the client. This clause creates a direct link between time tracking and payment triggering.

Large accounts (banks, insurers, public administration, industrial groups) have formalized this process with precise requirements:

• Activity report submission deadline: generally between the 1st and 5th of the following month
• Imposed format: often an internal client template, sometimes integrated into a supplier portal
• Dual validation: signature of both the consultant AND the client-side line manager
• Payment conditions: the invoice is only processed after receipt and validation of the activity report

A late or non-compliant activity report blocks billing. A disputed activity report triggers a verification cycle that delays payment by an additional 15 to 30 days. These delays have a direct impact on the IT services company's cash flow.

Key figure: According to industry data, 15 to 20% of payment delays in IT services companies are directly attributable to incomplete, late, or client-disputed activity reports. This is the leading cause of delay, ahead of accounting processing times.

Specific Obligations by Contract Type

The level of requirement varies depending on the contractual framework:

What the Client Expects (and What Blocks Billing If They Don't Get It)

Beyond formal obligations, it is essential to understand what the client concretely expects from time tracking -- and why they block billing when they don't receive it.

The Client's Perspective

For the client purchasing time-and-materials services, the activity report fulfills three functions:

1. Budget justification. The client-side manager must themselves account for the use of their contractor budget. The activity report is the supporting document that proves the budget was consumed in accordance with the contract. Without an activity report, the client manager cannot validate the expense in their own management system.

2. Service monitoring. The activity report allows the client to verify that the consultant was indeed present on the declared days, that there is no billing for unworked days, and that the volume of days is consistent with project progress.

3. Audit traceability. Large companies are subject to internal and external audits (statutory auditors, tax audits, ISO audits). Activity reports constitute the audit trail that links a supplier invoice to a service actually delivered.

Requirements by Sector

Each sector has developed its own standards and requirements for time tracking. Knowing them allows you to anticipate requests and avoid the back-and-forth that delays billing.

Concrete example: An IT services company specializing in banking had its March billing blocked for 22 days because 3 out of 12 activity reports did not include the internal project code required by the client. The correction and re-validation time delayed the collection of EUR 45,000 by nearly a month. The real cost of this error: increased working capital needs and avoidable administrative stress.

What Concretely Blocks Billing

The most frequent reasons for rejection or delay are:

• Unsigned activity report by the consultant or the client manager
• Date inconsistency: days declared as worked while the client's access badge shows an absence
• Non-compliant format: the activity report doesn't follow the client-imposed template
• Working day error: the consultant declares 22 days in a month that has only 20
• Late activity report: past a certain deadline (often 10 days), the client refuses to process the previous month's report and requests a catch-up on the following month

Each of these reasons is preventable with a structured tracking process.

Entry Methods That Work with Consultants

The consultant on assignment is a remote employee. They work at the client's premises, sometimes hundreds of kilometers from the IT services company's headquarters. They are caught up in the operational demands of their mission. Time tracking for their employer (the IT services company) is, at best, an administrative task they agree to do; at worst, a constraint they postpone and rush through.

For a tracking system to work with consultants, it must respect three absolute constraints:

Constraint 1: Minimal Friction

Entry must take less than 30 seconds per day. Beyond that, the adoption rate drops drastically. Consultants don't refuse to enter data out of ill will -- they forget because the gesture is too cumbersome to become a reflex.

Effective entry implies:

• The mission is pre-assigned: the consultant directly sees their current mission
• Working days are pre-filled: they only need to confirm or modify
• Absences (leave, public holidays) are already integrated into the calendar
• A single screen, no complex navigation

Constraint 2: Mobile Accessibility

The consultant is not always in front of a computer connected to the IT services company's network. They travel, they're at the client's site, they're commuting. Entry must be possible from a smartphone, without VPN, without a heavy application to install.

Constraint 3: Non-Intrusive Reminders

The system must remind the consultant to enter their time without the reminder being perceived as managerial pressure. The automatic notification (push, discreet email at end of day) is more effective than the manager's follow-up email -- and less damaging to the relationship.

Entry Frequency Comparison

Entry frequency has a direct impact on data quality and end-of-month compilation time.

Key takeaway: Daily entry is not a theoretical ideal. It is the only method that produces data reliable enough to bill without corrections. Monthly entry, still practiced by the majority of IT services companies, generates 25 to 40% errors that must be corrected manually. See our guide on preparing monthly activity reports to understand the impact on compilation time.

Structuring Tracking: Client, Mission, Period

Effective time tracking relies on a clear data structure. Too many IT services companies manage their time in Excel files without hierarchy, where information is scattered across multiple sheets, files, and email inboxes.

The Logical Hierarchy

The optimal structure for time-and-materials time tracking follows a four-level hierarchy:

┌─────────────────────────────────────┐
│  CLIENT                             │
│  (Alpha Group, Beta Bank...)        │
├─────────────────────────────────────┤
│  └─ MISSION / ORDER                │
│     (Ref. ORD-2026-042, ADR, dates) │
├─────────────────────────────────────┤
│     └─ ASSIGNED CONSULTANT          │
│        (Jean Dupont, profile, ADR)  │
├─────────────────────────────────────┤
│        └─ PERIOD / ENTRY            │
│           (Day by day, status)      │
└─────────────────────────────────────┘

Level 1: the Client. Each client is an entity with its own activity report requirements, contacts, and validation processes. A single client may have several missions running in parallel.

Level 2: the Mission (or Order). Each mission is linked to a client and carries the contractual information: order reference, negotiated ADR, number of planned days, start and end dates, billing conditions. Budget tracking is managed at this level.

Level 3: the Assigned Consultant. One or more consultants are assigned to each mission. The assignment carries the consultant's specific ADR (which may differ from the contractual ADR if the IT services company negotiated different profiles at different rates), their effective mission dates, and their status (active, completed, up for renewal).

Level 4: the Entry (Period). Each day worked by the consultant on the mission is a unit record: date, duration (full day, half day), status (worked, absent, public holiday, between contracts). It is the aggregation of these entries that produces the monthly activity report.

Essential Information by Level

Integrated Budget Tracking

The Client > Mission > Consultant > Entry structure enables natural budget tracking. At any time, the mission director can answer essential questions:

• How many days have been consumed on this order? Sum of "worked" entries for all consultants on the mission.
• How many days remain available? Contract-planned days minus consumed days.
• When should the order be renewed? When the day balance falls below an alert threshold (typically 10 to 15 days).
• What is this month's realized revenue? Days worked x ADR for each consultant, aggregated by mission.

Key figure: IT services companies that structure their tracking with a Client > Mission > Consultant hierarchy reduce the time spent on monthly reporting by 60 to 80%. The data is already organized -- all that remains is to query it.

The Link with Client Reporting

This data structure doesn't serve internal management alone. It directly feeds the reporting the IT services company can provide to its clients: order consumption, consultant utilization rate, end-of-mission projection. Structured reporting strengthens client trust and facilitates mission renewals.

Indicators to Monitor Continuously

Beyond the monthly activity report, time-and-materials time tracking must feed a permanent dashboard with the key indicators for managing an IT services company:

• Overall utilization rate: percentage of billed days out of total available working days (target: 85-92%)
• Entry rate: percentage of consultants who have entered their time to date (target: 100% every week)
• Between-contracts days: number of unbilled days per consultant, per month
• Order consumption: days consumed vs planned days, per mission
• Average activity report validation time: number of days between month-end and client validation

These indicators enable real-time management of the IT services company's activity, instead of discovering problems after the fact during accounting close.

Time tracking in time-and-materials engagements is not just another administrative constraint. It is the central process that links the consultant's work to the IT services company's billing. Every unentered day is a potentially unbilled day. Every late activity report is a late invoice. Every entry error is a risk of client dispute.

Structuring this tracking -- clear contractual obligations, daily entry with minimal friction, Client > Mission > Consultant > Period data hierarchy -- is not an ambitious IT project. It is an organizational choice that can be implemented in a few weeks and transforms the daily management of an IT services company.