Billable and Non-Billable Hours Balance Guide

billable hours example

However, it’s possible to keep track and automate some tasks that consume much of your time or that of your employees. For example, if you spend too much time taking care of administrative tasks, it would be prudent to hire another person to do them. This will give you sufficient time to focus on the core issues of your current project. There, for example, the creation of a list of potential customers can be obtained without collecting it manually, but by installing a high-quality email finder tool for lead generation.

  • As we just explained, billable hours are spent working directly on client projects.
  • While their utilization rate was 87.4% in 2017, their productivity reduced in 2018 – 85.4%.
  • Junior staff members or those who are at the lowest level of hierarchy in a consulting firm, usually have minimal chance to choose their work tasks.
  • The advantage of billing time to clients with set billing rates is that it gives your client a clear picture of how you spent your time and why it is worth their money.
  • To make sure you don’t overlook any of your billable hours, track them in real time.
  • At least if everything else gets hard, I know I’ve got a system there that’ll let me get paid.
  • Instead, it usually covers the things team members do for your company, other internal projects, or just when going about their day.
  • If you spend four hours balancing a client’s books, and you’re paid by the hour, you have four billable hours.

Finally, we explained the value of utilization rate – the metric that shows the average number of productive hours (billable hours). Since the utilization rate is various in different businesses, we covered a few examples in this blog post. But, there’s also a certain weakness of a utilization rate system, especially applicable to consulting businesses. Junior staff members or those who are at the lowest level of hierarchy in a consulting firm, usually have minimal chance to choose their work tasks.

Improve productivity

When you know the difference, you’ll track both of them, which helps to ensure accurate pricing, profitability, and effective time management. We’ve built the best easy to use time tracking software for individuals and teams. That’s because the number of billable hours is also affected by several other factors, including time offs, public holidays or other duties.

In other words, any time you spend on a task directly related to a project. In this guide, we’ll talk about some of the exact methods Sweat+Co used to track their billable hours, increase their efficiency, and boost their profits. You can use spreadsheets to do so, but you might end up throwing in more non-billable hours. That means it’s good to try and reduce non-billable hours as much as possible while ensuring you increase billable hours. As much as such activities are vital to how an organization functions, they’re not directly linked to an ongoing project.

Increase billable hours

The illegal crossing of dangerous species, the mysterious shopping trips that take him to shady places, and letting students get nipped by magical creatures. He spends so much time collecting material for his classes but those hours are also examples of nonbillable hours. Assuming the project has different tasks, it would be best to work with Task hours. This way, time tracking by task and billing accordingly would be easy. It’s important to note that you should only charge for the time you actually spend working on a task.

billable hours example

Start by installing browser extensions that limit how much time you spend on time-wasting websites. A study shows that the average Brit spends 218 minutes a day procrastinating. In another survey, 88 percent of the workforce admitted to procrastinating at least one hour every day. This will help you determine what needs to be done first, what can be delayed, what needs to be done by you, and what can be delegated.

Time Tracking

This would involve adding formulas if you’re using Excel or Google Sheets, but if you’re using Toggl Track, this can be viewed within the reports dashboard. It can also be tedious, especially if your team is a decent size and/or you’re working with contractors. See why remote-friendly organizations globally love using timegram for their teams.

To capture the hours spent on a project, you’d better use time tracking software to make the process easier and more convenient. Time tracking software or tools help register time where it actually belongs while saving time. It makes it easier to know how many billable and non-billable hours are invested in a project. Billable hours are how long you spend doing a project or activities directly related to a specific client. The client is going to be charged based on an agreed hourly rate.

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