Billable and non-billable hours: how to find the perfect balance


billable hours

A billable hour may not cover every administrative task on your daily to-do lists. However, the activities they’ll participate in to grow your company over time are likely non-billable. billable hours But whether you’re doing a rebrand, consulting on a product launch, or designing a new logo for a client, there are trends over time that indicate how long a project typically takes.

  • They include performing administrative work, writing reports, and creating invoices.
  • At the end of the day, we need to change our mindset about non-billable time.
  • When you track billable and non-billable time, you can understand all of the activities an employee works on in a day and assign them to the type of work they’re best at.
  • The only thing you need to do to get this data is to make time registrations a staple in your routine.
  • With manual time tracking and invoicing, mistakes are hard to avoid, and your profitability will inevitably take a hit.
  • So, if a lawyer has 2,340 billable hours per year and a total yearly available number of 3,120 hours, we’ll divide 2,340 by 3,120.
  • In some companies, billable hours are also used to monitor monthly project cash flow and budgets.
  • However, they cannot measure the value consultant adds to the project.

Between Curdbee & their new version, Hiveage, I’ve brought in more than $310,000 than I would otherwise not have. If I ever need to send an invoice, I know it’s gonna work, and I know they’re gonna get it, and I’ll know when they’ve seen it and paid or not paid it. At least if everything else gets hard, I know I’ve got a system there that’ll let me get paid. Asking yourself these questions may help you better determine whether or not you accurately bill a client. The bottom line is that the work must pertain to a client and the project for which they are paying.

How to automate tracking billable and non-billable hours with Hubstaff

They allow for a lot of detail, but they can also be cumbersome and hard to maintain. But what if you spend twice the time on the former compared to the latter? Suddenly, that $50,000 project becomes a lot less valuable than the $40,000 one. It’s known that procrastination is prevalent among individuals, with some even taking up to 2 hours procrastinating on a task.

  • Separating billable and non-billable tasks inside Toggl Track is straightforward if your projects and tasks are already set up.
  • One of the most significant disadvantages of billable hours is that a client may pay for the time for completing the work rather than the quality.
  • The type of tasks that fall into the billable bucket will vary from business to business.
  • When the time comes to bill your clients, you can filter your time by client and billability, and send the report to your client.
  • They have to practice effective communication, constructing recommendations, and may even conduct research.
  • In other words, they are the hours that you bill clients for and they pay directly.
  • If you’re using a time tracking tool, you can ensure that you’ve set up your team members to know which tasks result in billed hours and which don’t.

To assess your profitability, use your billable utilization rate as a reference. Billable utilization rates are the total employee billable hours, as a percentage of total working time. Skilled workers may need to be onsite to track billable hours while consultant workers can track work from the office or remotely. It’s worth noting that these figures are general guidelines and can vary significantly depending on the specific law firm, its practice area, and the location. Some law firms may have higher or lower billable hour expectations based on their clients, the complexity of cases, or the billing rates charged by the firm. When billable hours are properly tracked, consulting firms can ensure that they are not missing out on any potential revenue opportunities.

Get clear on what is billable

Team members in these industries track hours during their workday and note which hours they can bill to clients. Calculating billable hours can help determine employee workloads and manage efficiency. If this process is new to you, here’s what you should know about billable vs. non-billable time. Even though the term billable hours is vastly used in legal practices, it is also used in all other sectors where someone needs to be reimbursed for working on a project. The Rize app monitors your activity in real time, making it easy to see how you’re spending your day and to tabulate your billable tasks.

The benefits of staying on top of the billable hours worked should never be underestimated. In this article, we’re going to discuss everything you need to know about billable hours and the tools you need to start optimizing outputs as soon as possible. You calculate utilization by dividing the total hours worked during the year by billable time. If you’re ready for a more advanced resource management tool, we’ve rounded up the best five Resource Guru alternatives. Prove how much time you spend working, so it can be easy to negotiate a higher salary or billing rate.

Why it’s important to track billable hours

Of course, time doesn’t have to be measured in hours to be billable. If the time spent on client work doesn’t round up to an hour, you can use the billable hours chart below to understand what to bill. Billable hours unify planned and actual costs via consultants’ utilization. Therefore, comparing actual and estimated consulting hours allows consultancy firms to set reasonable billable hours for the clients. It is not measurable even if junior staff puts in more effort than experienced hires. Their pay scale and billable hours in the appraisal period would still be significantly lower than that of more qualified counterparts.

  • When you and your staff monitor all your working hours, you’ll be able to compare the number of your billable and non-billable hours.
  • That’s why we prefer to track our time with a robust tool to log every task, consolidate that information, and provide visibility into where we spend most of our time.
  • The bottom line is that the work must pertain to a client and the project for which they are paying.
  • The more billable hours you work, the more revenue you can generate for your business.
  • In this case, the client will pay the consultant eight hours even if they have spent ten chargeable hours.
  • Billable hours can be of any percentage value, e.g., 80%, 90%, or even 100%.

While the ideas of what is billable and what isn’t vary from business to business, and project to project, the idea behind them is basically the same. You need to make sure that you are only charging for work performed and not for personal time spent on non-related tasks. When clients can see the details of the work done on their case, in clear, simple, language, there is less confusion and fewer disputes over billing. It might seem silly in the moment to track a five-minute phone meeting or the two minutes it takes to send a work email. But all those small increments of billable time can add up to a significant number of billable hours over the span of an entire project.

It’s essential to have an effective method of tracking your billable work. Doing this will ensure you stay organized and help you understand exactly how much to charge your client. For example, the total number of hours in an eight-hour work week approximately adds up to 40 hours. See how ClickTime can help you make all your hours profitable by starting your 14-day free trial. By recognizing the important efforts employees make to benefit your organization, you can attract and retain team members who are always looking for ways to improve. Here are some general examples of billable and non-billable activities during a team member’s workday.

Or you can equip your employees with more skills to do higher quality work (that you could charge clients more for). On the flip side of this issue, you’ll also have objective data that will help you evaluate employees whose performance doesn’t meet expectations. When you’ve set expectations for time devoted to billable work, as well as given employees room for non-billable tasks, you can see whose performance is truly lacking.

And in the end, the result isn’t just 1,892 billable hours—it’s 2,480 hours at work. Easily track billable and non-billable time with Hubstaff’s automated time tracking, reporting, and invoicing tool. Billable hours present the most secure way to tie your work back to the client. Billing clients per time you spend rather than a fixed price turns out less risky and guarantees a higher project margin at the end of the day.

billable hours

If someone has too many non-billable hours, try to find out the reasons for that (it can be due to the client’s requests or something else). You may even realize you need to hire an extra employee, a virtual assistant, or turn to specific software to automate some of these non-billable tasks. Very few of us have a memory strong enough to sustain that kind of tracking. That’s why automating this process can save you time and ensure you’re billing clients for all the time you spend on their projects. Five minutes for an email here, half an hour for an unplanned call there — this is how billable hours go unnoticed if you don’t track them.

Maximize Your Law Firm’s Billable Hours

An attorney’s approach to billable hours will differ from a PR agency. In other words, any time you spend on a task directly related to a project. Content writers, graphic designers, business consulters, and lawyers will most likely work with this billing system. These are hours spent on activities that aren’t beneficial to a client’s project. Non-billable hours consume your budget, lowering profits and overloading your team with work. You might want to look at how long you take to do low-value tasks or the time spent procrastinating on tasks.

billable hours