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What Are Billable Hours? Time Tracking Tips To Get You Paid

These agreements can prevent any disagreements on the time spent. Excel has a template specifically designed for managing your billable hours. You can input hours worked and pay rate for each client on any given work day, with time-in, time-out tracking. Here are some ways to use software and solutions to help track billable hours accurately. DeskTime is a popular automatic time tracking software for teams and freelancers. It has got both mobile and desktop app for effective time tracking, attendance, and workflow management.

What Are Billable Hours? Time Tracking Tips To Get You Paid

It’s known that procrastination is prevalent among individuals, with some even taking up to 2 hours procrastinating on a task. It’s fine to have queries, but employees might end up wasting time. Before automating non-billable work, you need to take your time to monitor and analyze them to know which ones consume a lot of time. Using a spreadsheet or pen and paper can be such a painstaking experience. Going in this direction can result in differences in pay rates, and there’s a high chance of a human error occurring. Thus knowing how, where, and when an organization is spending its resources is important. Equally important is how much of these resources are utilized in creating deliverables.

Creating A Record Of Your Work

This time savings equals $5 to $6 thousand dollars a month versus our previous method. Maximize the value of your current billing and payroll software investments. You need to upgrade to a paid version to enjoy all the benefits as an independent contractor, and the pricing is a bit higher in the case of Desktime. Most of the cons that other users and we have noticed revolve around its Windows app. Apparently, users have a hard time adapting to the Windows platform. Although the software does provide a detailed report, it does not offer a concise summary that most users seek.

What Are Billable Hours? Time Tracking Tips To Get You Paid

Fortunately, you can use software to ease this entire process. Then, take the salary you have in mind and divide it by the number of working hours in a year.

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Not to mention the regular daily activities like having lunch or taking a short break from work. To get paid for services, many agencies, software shops, and consulting companies turn to billable hours, and for good reasons. As they say, time is money, and billable hours are clearly the bridge from one to the other. Look back at what you or your team have accomplished each day or week, especially if there is a large gap in time between projects or clients.

You can then integrate it with your payroll software to automatically compensate your employees once the money lands in your account. Here’s your guide on tracking time for billing purposes and what you can do to increase revenue and client satisfaction. Speaking of lawyers and legal professionals, their ideal utilization rate is 100 percent. So, their goal should be striving to achieve as high utilization rate as possible. 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.

Free Time Tracker

Try to track your time spent on non-billable tasks in addition to billable tasks. You can later review your non-billable time to find inefficiencies in your workdays. For example, you may realize that you spend too much time taking coffee breaks. If you cut down your coffee breaks, you can use that time to work on billable tasks.

For instance, this is what the task involved and which team members were assigned. Include the date you wrote or sent the invoice to demonstrate the billing cycle’s end. If you and your client agreed on a specific timeline for payments, it also starts the timer of when they need to pay you. First, establish how much you plan to charge clients for the hours you work.


As much as you need to know how to calculate billable hours, you also need to know how to set your billing rate. The hourly rate definition is the amount of money that a professional charges for an hour’s work. Each industry has different billing rates for its professionals.

  • So, to help you decide what’s best for your business, I’ve detailed below the pros and cons of using the billable hour method.
  • However, the activities they’ll participate in to grow your company over time are likely non-billable.
  • It’ll give you clarity on outstanding invoices and allow you to send reminders.
  • So, their goal should be striving to achieve as high utilization rate as possible.
  • Which makes it easier to generate client invoices and keep accurate records.

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. You can develop a time log by using a cloud-based accounting solution. It offers a time tracking feature which helps you to track the billing hours of a project.

For instance, how many hours did you devote to their case this week? Do you need to bill them for additional fees, such as filing court documents? If you use an accounting integration, like QuickBooks, you can even view the status of client payments. For instance, the software you need for the project or outsourced tasks that fall outside the client agreement.

Why Do Independent Contractors Need Time Tracking App?

This article will cover everything you need to know about tracking billable hours successfully. We’ll highlight what billable hours are and even take you through the process of how you go about tracking them. Lauren Soucy is the VP of Marketing for Time Doctor, the world’s leading time tracking and productivity software. She has 15+ years of experience in marketing at fast-paced companies. Her first passion is SEO, she can’t start her day without coffee, and she enjoys spending time at the beach with her two boys and her husband. With the billable tasks lined up for the next day, you’ll know just how much time you can allocate to non-billable items. Finding a balance between billable and non-billable hours can be tough, especially since non-billable tasks are as essential to running your business as your core tasks.

By tracking how much time you spend on tasks that you can’t bill to anyone, you can see how much you are paying your team versus how much you’re accruing. Plus, it helps you see how your team spends their time, meaning you can better minimize hiccups or slowdowns in your process. Accurately tracking billable hours is a common challenge for many businesses. Customers want to do business with organizations that respect the professional relationship and maintain open communication. They also expect transparency in all your business practices. Time tracking and billing apps help you keep everything above board.

However, unlike freelancers, some law firms require that their team members meet a minimum number of billable hours each year. Sometimes their bonuses are even based on their hours logged per year.

Track Your Work In Real

Modern time tracking for work and billing purposes is much more comprehensive. Tracking your client or customer billed hours can be useful in so many different ways. Not only can it help your company save money, it’ll also help you be more productive. There’s nothing like monitoring time to show you how much of it you’ve been wasting. She has always been passionate about writing, which is why she has finished her BA in Journalism, at the Faculty of Philosophy, Novi Sad.

That’s the only way to retain high-quality and high-paying clients. But regardless of which software you end up using for your time tracking needs, the important thing to remember is that Excel is not it. Spreadsheets are great for many things, but they’re needlessly complicated and don’t have the features you need to track billable hours effectively. Drag automatically captured work activities to your public timesheet to log them.

  • Lowering the time you need to spend on administrative work has a consequence of giving you back more time for revenue-producing contracts.
  • They have to practice effective communication, constructing recommendations, and may even conduct research.
  • One of the standout benefits of billable hours tracking apps is that they help you re-evaluate your price point.
  • Apparently, users have a hard time adapting to the Windows platform.
  • In the consulting industry, anyone who has the utilization rate of 150% or more is considered as a top performer.
  • Clio’s software lets you set a running clock to record time while you work on a task.

Below are nine ways you can increase your profit margins when you track billable and non-billable time. Instead of thinking of non-billable hours as time you can’t get paid for, you should think of it as an investment in your organization’s future. You won’t get paid directly for it, but the non-billable effort you put in now will help you increase profits and grow your business over time. When you only get paid for your billable time, you might wonder why you should even track non-billable hours at all. Billable hours also help to avoid any possible misunderstanding with clients as the matter of who is doing what. Billing in such way helps to show what activities are being done under the scope of the project and, therefore, need to be paid for with the client’s money.

What I’ve noticed to work best for me is an automatic time tracker, such as Paymo Plus, that runs in the background. All I have to do at the end of the day is match time entries to their corresponding tasks and projects. Granted, automatic time tracking is best suited for digital work. Now, why is the software development example pertinent to our topic?

When you understand how much time you spend on various non-billable activities, you can identify areas where you could work more efficiently. Ultimately, tracking all your employees’ time helps you see the full picture of how time is spent within your organization. Without knowing where all of your team’s time goes, you miss out on critical data that can help you make improvements and changes to your processes. 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. It will also help you avoid certain pitfalls and risks in your future projects, especially if you choose to use some billable hours software for tracking.

Now it’s time to start tracking the time spent on client work. Homebase helps with free tools to track time and manage your team.

Whether you’re a lawyer, a consultant, or a freelancer, your average billables will be different. There are some repetitive assignments, such as administration, which can consume a lot of your time and you’ll track them as non-billable hours. In this case, the best solution to lower these non-billable hours is automation. As we mentioned earlier, the billable hours are the hours invested on assignments that are directly related to a project.

This method eliminates manual tasks, providing more time to complete billable tasks. Automation can also simplify day-to-day tasks or help ensure invoices get sent to clients on time. Your invoice must include a list of the services or tasks you conducted on behalf of the client during the billing cycle. You also must include the hours worked on each task and the hourly rate of those services. This itemized list ensures that clients understand what they are paying for and whether it is accurate.

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.

The Time zone syncing issue is an old problem in Upwork Time Tracker. Sometimes it provides the users with faulty billable hours calculation that hampers smooth client billing. Furthermore, What Are Billable Hours? Time Tracking Tips To Get You Paid the free version also lacks several essential features that you would typically expect in your chosen best time tracking app. For instance, exporting reports, budgeting and invoicing, etc.

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