A job can look well priced until you count the follow-up calls, extra revisions, and time spent chasing information. You might be happy to include some of that work in your fee. It becomes harder to judge whether the arrangement still works when you can’t see how much time it takes.
Recording billable and non-billable hours gives you a basis for that conversation: whether to adjust the fee, agree on clearer limits with the client, or change how you handle the work. It also helps you leave room for the administration and business development that keep your practice running.
What are billable hours?
Billable hours are the time you can charge to a client under your agreement. Non-billable hours cover work you don’t charge separately, such as preparing proposals or running your practice.
For a bookkeeper, billable hours might include reconciling accounts, processing payroll, or preparing monthly financial statements. For a lawyer, they might include drafting contracts, appearing in court, or conducting legal research for a specific case. For a consultant, they might include running workshops, analysing data, or preparing strategic recommendations.
You can attribute billable time to a specific client engagement. When you’re billing accurately, these hours become line items on your invoices.
What are non-billable hours?
Non-billable hours are working hours that are not charged to any client. They cover the work that keeps a business running, such as administration, invoicing, internal meetings, training, and business development, none of which appears on a client’s invoice.
Common examples of non-billable time include:
Internal operations and administration:
- Staff meetings and team catch-ups
- Business development and networking
- Internal accounting and bookkeeping for your own firm
- Hiring, onboarding, and HR activities
- IT troubleshooting and system maintenance
- Invoicing and collections
- Filing and documentation
- Email management
Professional development:
- Training sessions and continuing education
- Industry conferences and seminars
- Studying for certifications or credentials
- Mentoring junior staff
Client relationship activities (often non-billable):
- Initial consultations and scoping calls
- Proposal and pitch preparation
- Progress update meetings (depending on your billing practices)
- Relationship-building conversations
- Travel time (policies vary by firm)
Each firm sets its own policy for billable work. Some law firms bill for travel time; others don’t. Some consultancies bill for client calls; others treat them as relationship management. Define your boundaries and explain them to clients instead of relying on a universal rule.
Billable vs non-billable examples by profession
The same activity may be billable in one engagement and non-billable in another, so the client agreement and firm policy always decide the final classification. These are common starting points:
| Profession | Common billable work | Common non-billable work |
|---|---|---|
| Lawyers and law firms | Legal research, drafting, client advice, court preparation | Firm administration, training, general business development |
| Accountants and bookkeepers | Reconciliations, payroll, tax work, client reporting | Practice administration, internal finance, software training |
| Consultants | Workshops, analysis, recommendations, implementation | Proposals, internal methodology, general networking |
| Agencies | Client strategy, design, development, campaign delivery | Internal meetings, marketing the agency, staff development |
How billable hours affect utilisation
Billable utilisation is the share of available working time recorded as billable client work. You can use it to check whether people have enough client work. Set targets that also leave room for review, training, and business development.
Clio’s 2025 benchmarks put lawyers’ average billable time at 3.0 hours in an eight-hour workday, a utilisation rate of 38%. That measures the share of the day recorded as billable work; it doesn’t tell you how much billable time someone forgot to record.
A simple billable utilisation example
Billable utilisation rate = (billable hours ÷ available hours) × 100
If you record 28 billable hours in a 40-hour week, the result is:
(28 ÷ 40) × 100 = 70% utilisation
Whether 70% is low, healthy, or too high depends on the role, the hours included in the calculation, and the type of work. The dedicated billable utilisation rate guide covers current benchmarks, role-sensitive targets, and a worksheet you can reuse each month.
Realization rate
Utilisation and realization measure different parts of the path from working time to revenue.
Realization rate measures how much of the value of billable work reaches an invoice after discounts and write-offs. Collection rate measures how much of the invoiced amount gets paid.
How to calculate realization rate
Realization Rate = (Revenue Billed ÷ Value of Billable Hours Worked) × 100
For example, if you tracked 100 billable hours at $150/hour ($15,000 value) but only invoiced $12,000 due to write-offs and discounts, your realization rate would be 80%.
Clio’s 2025 benchmarks report an average realization rate of 88% for law firms, meaning 12% of recorded billable value does not reach an invoice. The average collection rate is 93%, so a further 7% of the invoiced value goes unpaid. These percentages apply to different stages of billing and should not be added together. Time tracking for lawyers makes that time and its billable value easier to review before write-downs become permanent.
Together, utilisation and realization show how much available time is recorded as billable work and how much of that recorded value reaches an invoice.
Billable hours by industry
Your approach to billable and non-billable hours should reflect the norms and expectations of your industry.
Accountants and bookkeepers
Accounting and bookkeeping firms often work with a mix of recurring engagements (monthly bookkeeping, payroll) and project-based work (tax preparation, audits).
Monthly retainer clients may have hours “included” in their fee, making utilisation tracking more nuanced. Tax season creates dramatic fluctuations in billable hours. Continuing professional education (CPE) requirements mean regular non-billable training time. Software setup and data migration for new clients is sometimes billable, sometimes not.
Tracking all time, including time spent on fixed-fee engagements, helps accounting professionals understand project profitability and price future work with better evidence.
Lawyers and law firms
Legal professionals often face the most rigorous billable hour requirements. According to NALP’s research, billable hour requirements at law firms typically range from 1,700 to 2,300 hours annually, with most offices requiring either 1,800 or 1,900 hours. The Yale Law School Career Development Office notes that larger firms often push toward 2,000-2,200 hours for associates seeking top compensation. To see what one of those annual targets means per week and per working day, use our billable hours calculator.
Key considerations for legal billing:
- Ethics rules require accurate time records and reasonable billing
- Many jurisdictions have specific requirements for how time must be documented
- Pro bono work is tracked separately but still represents important time allocation
- Travel time billing varies significantly by firm and client agreement
Reliable time tracking for lawyers helps them manage the pressure of billable targets without reconstructing their work later.
Consultants and agencies
Consulting work often involves significant non-billable time for proposal development, thought leadership, and client relationship building. Common approaches include:
- Proposal and pitch time is typically non-billable but tracked for business development analysis
- Internal research and methodology development may be non-billable but creates future value
- Some firms have “investment time” budgets for building expertise in new areas
- Client entertainment and relationship management hours are tracked but not billed
Consultants using time tracking software can see whether client delivery leaves enough capacity for business development. A team at 100% utilisation has no time to win its next project.
Why track non-billable hours?
Tracking only the hours you bill leaves out the extra calls, revisions, and administration involved in serving each client. Include that time when you review your fees and decide how much work to take on.
Identify profitable clients
Suppose two clients each pay $1,000 a month. One takes eight hours to serve; the other takes twelve once you include extra calls and revisions. That works out to $125 versus about $83 per hour before costs.
With those hours in front of you, you can decide whether to change the second client’s scope, agree on charges for additional work, or adjust their fee at renewal.
Find unrecorded billable hours
When you track everything, you may find work that should have been billable. A quick client call can turn into a 45-minute strategy session. An email chain can contain detailed advice. You may bill for that work or account for it when you set your rates.
Find inefficient processes
Tracking non-billable time helps you see where your firm spends its hours. If your team spends 15 hours a week in internal meetings, the time record gives you a basis for deciding which meetings to shorten, combine, or replace with written updates.
Price fixed-fee work with evidence
If you offer fixed-fee or retainer-based services, record both billable and non-billable hours. Otherwise, you have to estimate project profitability without knowing how much time the work consumed. Accounting practices can track time against clients, jobs, and budgets to spot underpricing before the next pricing decision.
How to reduce non-billable hours
Reduce non-billable time by removing avoidable work while protecting the administration, training, and business development your firm needs.
Automate administrative tasks
Invoicing, payment reminders, and data entry consume time each week. With MinuteDock’s billing integrations, you select tracked time, create an invoice, and send it to Xero, QuickBooks Online, or MYOB. You then send the invoice to your client from your accounting software, without retyping the billing details.
Check your time records for recurring admin before choosing what to automate. Tasks to look for include:
- Invoice generation and sending
- Payment reminders and follow-ups
- Time entry reminders for your team
- Report generation and distribution
- Data syncing between your time tracking and accounting software
Batch similar activities
If your time record shows frequent interruptions for routine emails, try batching them into two or three blocks that fit your client commitments. Give yourself a stretch of time to finish client work between those blocks.
Set clear boundaries for meetings
Review how many hours your team spent in internal meetings last week and what those meetings achieved. For meetings that took longer than they needed to:
- Default to 25 or 50 minutes instead of 30 or 60
- Require agendas for all internal meetings
- Replace meetings with written updates when discussion isn’t needed
- Track meeting time to understand the true cost
Use templates and standardised processes
Review the non-billable tasks you repeat each week. If you keep writing the same client instructions, make a reusable version. If chasing missing documents takes hours, agree on a submission checklist with the client.
Track time as you work
The AffinityLive Time Is Money study found that delayed time entry reduces timesheet accuracy. Record time as you work so you can include the short calls and quick tasks you might forget by Friday. You can start and stop MinuteDock’s timer in your browser as you switch tasks.
Frequently asked questions
What does “billable hours” mean?
Billable hours are the hours spent on work that can be charged to a client under your agreement with them. They usually include direct delivery work such as advice, research, design, development, preparation, or client-specific meetings.
What does “non-billable” mean?
Non-billable means the time is not charged to a client. It may still be necessary and valuable work, including administration, training, internal meetings, business development, and some client relationship activities.
Do you get paid for non-billable hours?
Employees usually do. Most firms pay salaries or wages that cover all working time, and billable-hour targets affect performance reviews and bonuses rather than the paycheck itself. Owners and freelancers absorb non-billable time as a business cost, which is one reason hourly rates need to cover more than the billable work alone.
What percentage of my work hours should be billable?
There is no universal target. Partners need time for review and business development, while delivery-focused roles can spend more of the week on client work. Use the billable utilisation benchmarks and worksheet to compare similar roles and set a range that fits your service mix.
Is 2,000 billable hours a year a lot?
Yes. Most law firms that set annual targets require 1,800 or 1,900 billable hours, and NALP’s research puts typical requirements between 1,700 and 2,300. Recording 2,000 billable hours means averaging about 40 billable hours every week for 50 weeks, which takes considerably more total working time once non-billable work is included.
Should I track time for fixed-fee projects?
Yes. Even when you’re not billing by the hour, tracking time helps you understand project profitability, price future work, and identify scope creep. Many firms discover that they have underpriced certain services once they start tracking time on fixed-fee engagements.
What’s the difference between utilisation rate and realization rate?
Utilisation rate measures the percentage of available hours recorded as billable client work. Realization rate measures how much recorded billable value is invoiced after write-offs and discounts. High utilisation with low realization means the team recorded plenty of client work, but too much of its value was removed before billing.
Is travel time billable?
It depends on your firm’s policy and client agreements. Some firms bill travel at their full rate, others use a reduced rate, and some don’t bill it. Apply your policy consistently and explain it to clients before the work begins.
How do I handle time spent on multiple clients in one day?
Track time as you switch between clients instead of reconstructing your day later. Record brief interruptions and quick tasks as well because they accumulate across a day.
What if my non-billable hours are too high?
Start by analysing where the time goes. Separate necessary work, such as training and business development, from avoidable administration and inefficient processes. Remove or automate low-value activities before cutting work that supports the business over time.
Start tracking your billable hours with MinuteDock
For the next week, record client delivery, client-related work you don’t charge for, and internal work separately. Review one client whose work took longer than expected. Check whether you missed billable time, included too much work in the fee, or spent time on a task you could simplify.
MinuteDock records billable and unbillable time by Contact, Project, Task, and User. Reports and CSV exports give you the underlying data for a consistent utilisation calculation.
