All You Need to Know About Billable Hours

define billable hours

While they were tracking their working hours for the last month, they realized that, out of the total hours, 30% were non-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.

The only thing you need to do to get this data is to make time registrations a staple in your routine. There are many software options out there, designed to aid resource and practice management. This software not only helps offices keep track of billable hours, but also makes other useful tasks easier, like productivity analysis, costing, reports, invoicing, and accounting. In numerous industries, companies charge their clients on an hourly basis, for the services they provide. If this applies to your business, it’s vital that you understand how to reduce non-billables. Besides, this article explained the importance of tracking both billable and non-billable hours.

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Momentem empowers users to flag calls as billable time and cost, and type notes about the call for follow-up or an audit trail. Recording all the hours you work, whether you bill them or not, will let you identify work hours which you perhaps should be billing for, but currently aren’t. It’s important to the long term health of any business to make sure that your work is being appropriately compensated. If you’d like to learn more about time management and its benefits, go to our Blog or visit our Resources section, where you can read articles, guides, download templates, and more.

What is difference between billable and non-billable hours?

Billable hours include those tasks where an attorney is working on an actual matter for a client. Non-billable hours include tasks that must be done but aren't directly attached to a matter, such as administrative tasks.

The data filled in a timesheet may not always be accurate — human errors may pop up from time to time. A billable hour may not cover every administrative task on your daily to-do lists. She has always been passionate about writing, which is why she has finished her BA in Journalism, at the Faculty of Philosophy, Novi Sad. Ivana is always exploring new methods of how time management can help you organize your workflow more effectively, as well as how you can increase your productivity. So, in the PR industry, the utilization rate depends on position within the business. When we multiply the quotient by 100, we get the utilization rate of 125%. In the consulting industry, anyone who has the utilization rate of 150% or more is considered as a top performer.

Example of an attorney’s billable and non-billable hours

By monitoring all working hours, you’ll be able to learn how to make the most out of your non-billables. One of the ways to do that is by organizing education sessions for your employees. In 2017, their average utilization rate was 78.8%, but in 2018 – 79.3%. Aside from account managers, account coordinators also did well. When it comes to productivity levels in PR agencies, which is expressed by the utilization rate, it seems like productivity levels are still below perfect. For instance, the average utilization rate of presidents/CEOs of PR firms was 32.6% in 2017.

Some industries implement billable hour requirements or quotas. Legal professionals, for example, are sometimes required what are billable hours to work a minimum number of billable hours. Excel has a template specifically designed for managing your billable hours.

Prepare a detailed invoice

Most lawyers bill in standard increments, with 1/10 of an hour as a common increment. 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 . ClickTime’s timesheet solution can speed up your timekeeping process. With multiple ways to track time, employees have easy options to complete timesheets. Managers can reduce time spent following up with employees using timesheet completion reminders.

How to make precise work time estimates Check out these 7 tips that will help you set fast, precise, and functional time estimates for any project…. Education and training are essential, but these periods should be limited to only a few hours per week or per month. Attending any meetings with people who aren’t yet contracted clients. Spend an hour creating an email campaign you plan to use to market your services.

What is Billable Time?

These hours are charged to a client according to an agreed hourly rate. In other words, they’re the number of hours a company can charge its clients for doing work on their behalf. This is probably the most obvious and the most difficult way to increase your billable hours. Stop goofing off during business hours and you may be amazed to see how much your billable hours increase. Install a browser extension that limits the time you spend on time-sucking sites or completely blocks you from accessing them.

  • Thus, this can seem like a lot, considering that a full-time worker typically works about 40 in a week.
  • You can use a productivity management solution like Time Doctor to track your billable hours and create an invoice effortlessly.
  • Upgrade your account to get job costing features that let you track time against a project’s expected number of hours.
  • The organization ranked firms by billable hours, demographic diversity, and pro bono participation.
  • Again, what is considered as billable time varies between industries.

Both of these options allow for the more mundane tasks of lawyering to be handled by someone other than you, the attorney. 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. Using software and tech to perform those tasks will not only cost less. It will also allow all of your employees to spend more time on higher-level, more profitable tasks. If you are still looking for the best way to track billable hours, you don’t want to miss Forecast’s massive Utilization report either. It automatically tallies up your billable hours from the timesheets, calculates utilization rates as well as tracks hours spent on non-billable work.

While TimeCamp will automatically track the time spent on any computer activity. Now picture that in the context of running a software development company that estimates writing code based on a full 8-hour workday. Using the export button inside the reporting dashboard, you can easily export your total hours (billable and non-billable). For example, for a time-sensitive project, you can delegate the tasks to the most productive team members. Meanwhile, it might be challenging to work with client X as they would require a lot of time and attention — limiting the number of clients you can take up. Clearly, client Y doesn’t drain you of your resources and time so that you can focus on other clients as well.

define billable hours