The Best Way To Calculate Billable Hours Right

Billable Hours

A complete online invoice software platform for small business invoicing, billing, reports and more to help you grow. By making some small adjustments to your work schedule, you can enhance the number of billable hours you collect at the end of each day. When invoicing comes around, an organized log categorized by the patron is your best friend. Before a business, agency, or freelancer starts working with a client, they must first come to an agreement on the rate charged per hour.

  • You get to basically reinvent your resource management practices, discover internal trends, forecast demand, and increase project profit.
  • Many professionals working on hourly assignments know how complicated it is to properly track their billable work.
  • ” they realize that it’s a lot of hours and that it can seem very difficult to track that time, especially when almost every minute must be productive and profitable.
  • You may end up with a smaller count of hours than you were expecting for a workday.
  • It takes a lot of time to find the right angle and lighting to take a perfect photo.

Non-billable hours also include activities that employees do for their own benefit, for example, taking a 5-minute break to freshen up, or eating. These activities are not directly related to work tasks but contribute to the employee’s total hours. QuickBooksmakes it easy for solopreneurs and teams to invoice, track payments, and manage cash flow. Once you complete the project and your billable hours, you can feel confident that your books are in order. When working in a business that charges for its services by an hourly rate, be sure to keep an eye on the utilization rate of your employees.

Indicator 1: How Productive Your Team Was

If you’re a business owner and you want to generate more billable hours, you and your team should start following these simple steps. Whatever the case, registering time and keeping track of billable hours is paramount if you want to know what to expect from your projects in terms of timing and budgeting. Depending on the industry, project, and collaboration details, you might have to either include only billable hours in your tracking sheets or both, billable and non-billable ones . Here is a list of tasks and activities that could get included in the average billable hours template.

Billable Hours

Remember, non-billable hours are equally important as billable hours. Think of non-billable hours as a photo frame and billable hours as a photo itself. It takes a lot of time to find the right angle and lighting to take a perfect photo. But, at the end of the day, it’s the frame that’s holding that photo and making it visible to others. So, non-billable activities, like administration tasks, will keep your business running smoothly.

Calculate Your Total Hours

Additionally, a customer may also pay more money for a more experienced worker rather than a new employee when they may end up with the same quality of service. Again, this is an instance where the rate can be disproportionate to the quality. While TimeCamp will automatically track the time spent on any computer activity. Sometimes you might need to work on a project that is billed differently from your normal fees, requiring you to calculate it’s price separately. GPS location trackingBuilt-in efficiency tools to help teams work smarter. So you can take action for future projects to make sure you communicate better with the client. Or, you can simply set better communication rules with your client to avoid drowning in the endless sea of email.

Billable Hours

If you’re a salaried employee or if you spend time working on projects that aren’t billable, it’s important to show how much of your time is spent doing billable work. When it is time for a raise or promotion, this information can ensure that you’re getting paid fairly for your efforts. Non-billable work means lower profits and higher labor costs. When your employees spend most of their time on non-billable activities, it’s hard to grow your business without adding more people .

Step 5: Invoice Your Clients And Pay Your Team For Hours Worked

Runn is a time-tracking resource management solution that will save you both time and money. Prove how much time you spend working, so it can be easy to negotiate a higher salary or billing rate. It’s difficult to argue with numbers — if you can show you are spending 40 hours working each week instead of the 35 you had earlier agreed to, then your client will be willing to add 5 more hours.

  • When it comes to billing a client, you will need to justify the time spent on a project, or if you have a fixed budget, you’ll need to manage your staffing hours as effectively as possible.
  • Below we’ll uncover how billable and non-billable hours work for businesses and how you can make those working hours even more valuable.
  • Toggl Track has a powerful integrated reporting system, and all your time is automatically sorted and can be instantly viewed in different reports.
  • Now, as an extra tip, once you’ve calculated your billable hours, use the utilization rate as a reference to better assess your profitability as a business.
  • After you’ve started tracking your billable time, make sure to keep track of how much you have already invoice your client, and how much is left.
  • This is also the time that most law firms spend a lot of energy measuring and tracking.

“Clients love to feel like they’re getting something for a better value. Eboni Moss, is a CPA and the owner of The Master Resource, LLC, a firm that helps businesses identify resources and opportunities to scale their businesses. First, you’ll be able to play to each of your employees’ strengths.


You already know that no two employees work at the same speed. However, you won’t know how long it takes each employee to complete various tasks unless you track their time on them. 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. Track your billable time accurately—and in real time, if possible. If you track your hours as you go, you’re less likely to lose out on hours that you forget about when tracking at the end of the day . The most effective way to keep highly organized client files is tomaintain completely electronic client and matter files. Again, cloud-based legal practice management technology makes this all possible.

By tracking time spent outside of the office, you may discover you are actually missing out on some hidden billable hours. From business calls you received in the taxi, to late-night work requests and travel for clients, tracking non-billable time ensures you get the complete picture of everything you work on. One study from Affinity Live revealed that US firms could be losing approximately $50,000 each year due to hidden billable time spent on client email. Automating dull, repetitive tasks is another way to reduce time spent on non-billable hours. According to research firm McKinsey, 45% of the activities people are paid to do — from entry-level workers to those in the C-suite — could be automated with lower-cost technology.

Track Billable Hours Without Effort

It’s one thing to track and understand billable and non-billable time. It’s another to know how much billable time each employee on your team should be working.

Billable Hours

Guides for Lawyers How Legal Practice Management Software Supports Hybrid Work Models at Law Firms As law firms navigate our post-pandemic world, it’s important that we have more conve… Gaining a more holistic view of how each team member’s time is spent helps you assign the right work to the right employees at the right times. This will help you allocate work in a way that maximizes profitability on each project.

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Although policies for billable hours vary from one company to another, the idea is that the client is only charged for time that the employee is performing work for them. So, for example, breaks, personal time, vacation time and meetings about unrelated matters are not billable. Some things, like attending to correspondence and talking to co-workers are harder to either include or exclude. Tracking makes it easier to uncover what you need to do to make future collaborations and projects more profitable and successful. It gives you this baseline you can look at later on to predict what kind of planning will give you what outcome.

You can also automate the gross pay calculation by using an Excel formula. Billing and onboarding Set clients up for success from the start. Automations Automate your agency by integrating or connecting your favorite tools. Sign up for our newsletter for the latest industry updates, news on Replicon products and tips to better manage projects and time. Group totals include all users who have a billable target set, regardless of whether or not they have the Target Billable Hours component assigned. If you’d like resources to view their progress, you can assign them the Target Billable Hours component in their configurable timesheet template.

  • If you find yourself in a position that requires billable hours, you must ensure that you understand what types of tasks you can and cannot track to bill your clients properly.
  • Get Clio Grow and law practice management with Clio Complete.
  • Consultants and temporary workers are two other groups that use billable hours frequently.
  • You can use tools such as calendars and spreadsheets to help track your progress and make sure you are meeting your goals.
  • Luckily, ActivityTimeline may help users with this issue as it allows them to log billable & non-billable hours.
  • These details may include your client’s name, email address, phone number and business name and address.

By making an effort for tracking, you can get the real picture of just how much time your team invests into projects. Non-billable time includes administrative work, invoicing, office management, business marketing activities, vacations, sick time, and other time-consuming things that are not related to projects. Not to mention the regular daily activities like having lunch or taking a short break from work.

Try Everhour For Free And See If It Works For Your Business

Often, these tools enable you to clock in or set a timer for specific projects. The software can range from simple to more complex, with some providing reports detailing how much time you have spent on each project that day. When logging your time, make sure to track the hours worked on each project separately. Taking this step ensures that you Billable Hours bill the proper amount to each client when working on multiple projects. You have various options for logging time, either manually or through the use of digital software. For a manual time log, you can create a spreadsheet to track the projects you worked on, the dates and hours you worked on them and the tasks you completed during that time.

And the best way to do that is to meticulously keep track of your billable hours. The last thing relevant to tracking billable hours is sending the invoice. Calculate the total hours for each customer and send out a professional and accurate invoice. For people working in professions where their clients are billed by the hour, keeping an accurate log on the time spent on clients can mean the difference between success and failure. Rightsizing your fees is key, as unreasonably high prices can drive away customers, while selling your services too cheap can crush your resources.

Finally, tracking non-billable time gives you a more accurate picture of upcoming capacity. When managers and project leads understand that they can’t book employees at a 100% utilization rate, they’re less likely to burn out their teams. But as we already discussed, you have to track both billable and non-billable time to calculate a reasonable utilization rate for your staff.

Determine An Invoicing Schedule

Without understanding how much non-billable work you have to do before you can even start working on billable activities, you can’t understand the real value of your time. With this in mind, there are tools that lawyers can use to make it faster and easier to calculate and log their hours—like a billable hours chart. By billing in standard time increments and using an attorney billable hours chart, you can spend less time trying to calculate your billable hours manually. 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 over the span of an entire project. Track every minute you spend working on a client’s project to increase your billable hours.

However, it will impact the project’s overall timespan and how much revenue will be generated monthly. Let’s say that you have a software team of 4 full-stack developers, two designers, and one QA tester their work is billed differently. Field, so remember to adjust the number of Billable hours if necessary – for example, only 6 out of 8 hours worked might be actually billable. All plans come with a free, 30-day trial of Toggl Track Premium—no credit card required. Upgrade at the end of the trial or continue using Track for free.

Non-billable is time spent related to work in general but which does not contribute to a specific project. A client should not have to pay for something that does not directly involve their case, product, or service. General administrative tasks, networking, or furthering your education in the field do not count as billable time. Are you looking to figure out how to calculate billable hours for your business?


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