How To Track Billable Hours So Clients Pay You

Custom packages are increasingly common for service providers and freelancers. However, tracking billable hours is still one of the easiest ways to implement fast, flexible client billing. 

Billable hours are any work you or your team do that you can charge clients for at an hourly rate. Obviously the easiest way to increase profits is to increase your billable hours. 

But how do you know what you can charge for? And how do you increase billable hours without reducing the quality of your services? This article will answer all of those questions and more! 

What is Billable Time?

So what are billables

For freelancers and contractors, billables are any work that you complete for a client that you can charge at your agreed upon rate. 

This is usually time spent completing a service, but it can also cover time spent collecting data, researching, and communicating with the client. 

The two most important factors in charging for billable hours are

Tracking your hours and getting an agreement in writing will ensure that you get what you are owed when the work is done.

Billable Hours vs. Non-Billable Hours: What's the Difference?

If you are getting paid by the hour, you will obviously track your billable hours to turn them into a client invoice. 

But what about all the work you do that isn’t necessarily part of the project? Tracking your non-billable hours is just as important as project tasks. 

So what’s the difference? 

  • 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.
  • 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, getting to know your client and updating them on progress.

Tracking non-billable hours gives you a better idea of what tasks are inefficient, where you are spending more time on your business than in it, and whether something could be included as a billable hour in the future. 

No matter how you define them, you should outline your billable vs non-billable hours clearly in all client agreements.  

How to Tell if Your Time is Billable

Tracking billable hours starts with knowing what tasks you can reasonably charge clients for. 

So how do you tell which tasks are billable? Here’s a few questions you can ask the next time you are time tracking on a client project: 

  • Does this contribute to the final project outcome? 
  • Is this part of the actual planning process for getting work done? 
  • Is this part of the pre-project phase (e.g. proposals for clients, meeting to discuss the clients needs before signing an actual agreement) 
  • Am I researching for the project itself or to get a better idea of who the client is?
  • Does this meeting involve the client in a way that helps me complete the project better or am I touching base with team members?
  • Is this a complimentary service that we add to packages to improve the client experience?
  • Am I completing a task that I am uniquely qualified or paid to do?
  • Is this service covered in the contract or have I added it on? 
  • Is this training/resource for a specific client project or for my own development beyond the scope of the client agreement? 

Tracking Billable Hours Effectively

Billable hours accounting and time tracking mean the client is happy and you get paid. That’s why it’s so important to have a system for tracking fast and accurate client invoices! Below are a few ways you can cover yourself and track billable hours more effectively. 

Set Your Hourly Rate

Time tracking can help you set a profitable hourly rate. Keeping track of how long tasks actually take will show you how much you are paying yourself per hour and whether that is profitable over time. This will also help you show your worth to clients and back yourself up with quantitative data. State your set hourly rate before starting any work, and don’t forget to add any taxes and fees so that you are not undercharging yourself by accident!

Determine an Invoicing Schedule

Your invoicing schedule will depend on how you run your business. Here are a few things to consider for your invoicing schedule:

  • Do you have monthly utilities? 
  • Do you need a deposit prior to projects starting?
  • Do you have staff that you pay weekly? 
  • Are you able to pay yourself? 
  • Will you be working based on milestones/work completed instead of weekly hours? 
  • Does your client have an accounts department that only pays contractors monthly?

All of these terms should be clearly stated in your client agreement. 

Create a Time Log

Don’t underestimate how valuable your time is! Keep track of both billable and non-billable hours to give an accurate representation of your projects. This will both keep your clients informed of the timeline, and let you raise your prices in future if needed. Creating time logs is the easiest way to budget in project management.

Track Your Hours by Project

Each project should have its own time log so that you can accurately bill each client. Using a time tracking software that integrates with invoicing is the easiest way to tag each project and track your billables with ease. 

Calculate Your Total Hours

With an hourly rate and a time log for each project, you can quickly calculate your total hours (either weekly or monthly). This will help you stay within your clients budget as well as ensure you get paid what you are owed. 

Create a Detailed Invoice

Make your invoices transparent. Clients should be able to see what they are paying for in your billable hours! This builds trust and accountability with your clients, which will build a more sustainable business in the long run. 

Create a Spreadsheet or Start Using Time Tracking Software

If you are just starting to track your billable hours, an excel spreadsheet can be an easy manual way to track your time. For more accurate timestamps and automatic invoicing, a time tracking software is the easiest way to make sure you get paid for your billables. 

Increasing Your Billable Hours

Now that you have learnt to streamline your billable hours invoices, it’s time to increase them. Business growth is all about getting more work done in less time so that you can serve more clients at a consistently high level. Let’s talk about how you can maximize your billable hours as a freelancer

Track all Your Billable Time

Approximate time won’t cut it if you are charging by the hour. For hourly rates, you should be able to tell clients exactly where their money is going if they happened to ask. This starts with tracking your billable hours

Track in Real Time

The best part about using time tracking and billing software for projects is that you can track your progress in real time. MinuteDock lets you set a budget and an hourly rate so that every hour you track is added to the client’s project. No more going way over budget! 

Record Your Non-Billable Time

Recording your non-billable time is just as important as your client work. It will give you an insight into what you could be automating, what you could outsource, and what you do consistently in client packages that you could be charging for in the future. 

Stop Procrastinating

Now that you have a system for efficiency, it’s time to actually get the work done! Using a time tracker is a good way to get more work done in less time and keep yourself focused on one task at a time. 

Take Home Message

The bottom line? You deserve to be paid for your billable hours. Through time tracking, fast and flexible client billing, and a little bit of hard work, you can increase your billable hours and keep clients happy at the same time. For the easiest billable hours invoicing, check out MinuteDock!

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