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Billable vs Non-Billable Hours

It’s a common misconception when people start using time tracking software: the idea that we should only bother tracking the hours we mean to actually charge the client for. But it’s important to consider whether keeping track of your non-billable hours might be worthwhile. In fact, you might well discover that tracking all of your work hours during a given day is highly worthwhile. Understanding how much of your workday is getting used for certain non-billable tasks, such as staff meetings, will let you identify areas where you might be using an inefficient process. It’s hugely valuable to gain an in depth understanding of which parts of your workday are actually generating income for your business. Knowing how you are spending billable and non-billable time is the first step to streamlining your work processes and making every moment count towards your business success.

What Are Billable and Non-Billable Hours?

Billable Hours

This is the time that is actually being dedicated to work for a given client or on a particular project. It is essentially the time your client will be charged for –the work specifically being done for them. A major use of your employee time tracking service is to get accurate data on work done for a given client in order to make sure you are billing correctly for the work getting done, and that you have comprehensive records to prove when work is being completed.

Non-Billable Hours

Non-billable hours are the work hours you spend which are not going to be directly charged to the client. Some examples of non-billable work hours are things such as team meetings, staff development/training, or networking and attending conferences. These are items which would raise the eyebrows of any client when appearing in their invoice, as they are not specifically for that client. Also non-billable are the hours which are for the client, but aren’t for tasks that would reasonably be considered billable :this might include calls/meetings with a client to go over project progress, or time spent researching the client’s business. Despite being non-billable, these kinds of hours are still valuable in creating community networks, increasing the expertise of staff, and building strong inter-team communications.

Why is it Important to Track Non-Billable Hours?

Learn Which Clients Require More Non-Billable Time

Knowing how many non-billable hours are being put towards clients will allow you to identify the kinds of clients who require more of that time, allowing you to make prudent decisions around the value of a given product to your business. You might find that a particular type of project would be better billed at a fixed price to better reflect the overall work and effort put in by your team.

Identify Potentially Billable Hours

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.

Learn How to Make Non-Billable Hours More Efficient

Keeping good track of your time will help you to figure out where you may be wasting it! You will be able to identify those non-billable tasks which might be taking up more of your time than they should, and make appropriate changes to streamline those processes.

How Can You Reduce Non-Billable Hours?

It’s only natural to prefer to be spending your time on work which you will actually charge for. So how do we try to minimize the number of non-billable hours we accumulate, without sacrificing the benefits that those hours can provide? One good trick is to try to use as much automation in your non-billable processes as you can. Reducing the administrative workload, for example by making payment reminders automated, can be a huge time saver. You can also digitize your documentation whenever possible to make finding what you need as easy as possible.

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