Your team works 40-hour weeks, but only 28 hours make it onto client invoices. Sound familiar?
For professional services firms; accounting practices, law offices, consulting agencies, the gap between hours worked and hours billed represents serious lost revenue. According to Statista's 2023 industry analysis, billable utilization in consulting management averages just 67.7%. Meanwhile, Clio's 2023 Legal Trends Report found that lawyers spend only 37% of their workday on billable tasks - roughly 3 hours out of an 8-hour day.
It's not that your team isn't working. Those hours are simply slipping through the cracks of poor time tracking habits.
The good news? With the right approach, you can close that gap. This isn't about becoming the micromanager nobody wants to work for, it's about giving your team practical ways to accurately capture the billable hours they're already working, making client billing smoother, and understanding where time actually goes.
Whether you're running an accounting firm during tax season, managing a busy legal practice, or coordinating consulting projects, these time tracking best practices will help your employees capture more accurate data while spending less time on the actual tracking process.
Why Time Tracking Matters for Your Practice
Before diving into specifics, let's talk about why this matters for your firm.
Protecting Revenue (That's Already Yours)
Every unbilled hour is money left on the table. When attorneys forget to log client calls or accountants don't track advisory time, that work vanishes from invoices. Over a year, those missed entries add up to thousands in lost billable hours, revenue you earned but never captured.
Building Client Trust Through Transparency
Accurate time entries create detailed records for client billing. When a client questions an invoice (and they will), you have clear documentation showing exactly what work was performed and when. This transparency builds trust and reduces those awkward billing disputes.
Making Smarter Business Decisions
Understanding where your team spends time helps you make informed decisions. Are junior staff taking too long on routine tasks? Is a particular client consuming more resources than their fee justifies? Good time tracking data answers these questions without guesswork.
Monitoring Utilization Rates
The AICPA's 2023 National MAP Survey found that accounting firms reported a median utilization rate of 59.6%, while professional consulting firms typically target 70-85% depending on role seniority. This metric, the percentage of available time spent on billable work, helps you understand profitability and capacity planning.
Now let's look at the specific practices that make time tracking work for your team.
8 Essential Time Tracking Best Practices for Employees
1. Track Time as You Work (Not After the Fact)
Here's the thing: your memory is terrible at reconstructing how you spent Tuesday afternoon. Was that client call 15 minutes or 35 minutes? Did you spend an hour on that research or closer to 90 minutes?
Using a timer to track work in real-time is the single most important practice for accurate billable hours. When you start a task, start the timer. When you're done, stop it. Simple.
Law firms operating under six-minute billing increments need precision. A 7-minute call rounds to 12 minutes (.2 hours), but if you're reconstructing it from memory three days later, you might log it as 6 minutes or skip it entirely. That's revenue lost, or worse, systematic underbilling that costs your firm significantly over time.
Consider a bookkeeper juggling multiple client accounts. With timer-based tracking, she clicks "start" when she begins reconciling Client A's accounts, clicks "stop" when interrupted by a phone call from Client B (starting a new timer), then resumes the Client A timer when she returns to reconciliation. This approach captures every minute accurately across multiple clients without relying on end-of-day memory.
Most quality time tracking apps let you edit entries when you genuinely forget to stop a timer. That flexibility is important, but it should be the exception, not your daily routine.
2. Find the Right Level of Detail for Your Billing Model
Not all time tracking looks the same across industries. The level of detail you need depends on how you bill clients and what insights matter for your practice.
For law firms: Many attorneys work in six-minute billing increments (0.1 hours), the standard for legal time tracking. Your time entries should align with this model. A 4-minute task gets rounded up to 6 minutes; an 8-minute task rounds to 12 minutes.
For accounting and bookkeeping practices: You might track at the task level (e.g., "Bank reconciliation - Client A" or "Prepare sales tax return - Client B") without worrying about rounding to specific increments. What matters is having clear, descriptive entries that explain what service was provided.
For consultants and agencies: Project-based work often requires tracking against budgets. You might log time in broader categories like "Strategy Development" or "Client Presentations" while still associating those hours with specific client projects.
The key is consistency. Whatever level of detail you choose, apply it uniformly across your team so your time tracking data remains comparable and useful for analysis.
3. Track ALL Your Time (Not Just Client Work)
Let's be honest: nobody loves tracking administrative time. But here's why it matters.
When you only track billable client work, you're missing half the picture. Understanding the full scope of where your workday goes, including non-billable activities like internal meetings, professional development, and administrative tasks, helps you identify inefficiencies and understand true profitability.
What to track beyond billable hours:
- Business development and client prospecting
- Internal team meetings and training
- Administrative tasks and email management
- Professional development and continuing education
- Practice management and leadership activities
Imagine analyzing profitability for a consulting engagement. The project looks profitable based on billable hours, but when you factor in the 8 hours of internal coordination meetings and 5 hours of proposal revisions, suddenly the margins look different. That visibility helps you adjust processes, scope future projects more accurately, and identify where operational improvements could create capacity for more billable work.
Many professional services firms track utilization rates, comparing billable hours to total hours worked. Target rates vary by role: junior staff typically aim for 75-85%, senior consultants target 70-85%, while practice leaders and partners operate at 50-65% due to their leadership and business development responsibilities. Without tracking all your time, you can't calculate this crucial metric or identify opportunities to shift time from non-billable to billable activities.
4. Write Clear, Specific Task Descriptions
"Work on Smith account" doesn't cut it for client billing. Neither does "Email" or "Meeting."
Your time entry descriptions serve two purposes: creating defensible invoices for clients and providing useful data for internal analysis. Both require specificity.
Good vs. Bad Time Entry Descriptions:
❌ Vague: "Email"
✅ Specific: "Correspondence with client regarding Q4 tax planning strategies"
❌ Vague: "Meeting"
✅ Specific: "Conference call with opposing counsel re: settlement negotiations"
❌ Vague: "Bookkeeping work"
✅ Specific: "Bank reconciliation and expense categorization - March 2024"
Best practices for task descriptions:
- Include the deliverable or outcome when relevant
- Name the specific client matter or project
- Use consistent terminology across your team
- Follow any firm-specific billing guidelines or client requirements
- Front-load the most important information (clients often see truncated descriptions on invoices)
For law firms, many clients specifically request narrative time entries that justify the work performed. An attorney billing $400/hour needs clear descriptions that demonstrate value, not generic phrases that invite billing disputes.
5. Use Client, Project, and Task Hierarchies to Organize Your Work
Getting valuable insights from your time tracking requires organizing that data logically. Most professional services follow a three-level hierarchy:
Level 1 - Client: Who are you working for?
Level 2 - Project/Matter: What major initiative or case?
Level 3 - Task: What specific activity?
Example for an accounting practice:
- Client: Tech Startup Inc.
- Project: 2024 Tax Return Preparation
- Tasks: Gather documentation, Review financials, Prepare Form 1120-S, Client review meeting
- Project: Monthly Bookkeeping
- Tasks: Bank reconciliation, Accounts receivable, Accounts payable, Financial reporting
- Project: 2024 Tax Return Preparation
Example for a law firm:
- Client: ABC Manufacturing
- Matter: Employment Contract Dispute
- Tasks: Legal research, Draft motion, Client communications, Court appearance
- Matter: Corporate Governance Review
- Tasks: Document review, Draft policies, Partner consultation
- Matter: Employment Contract Dispute
This hierarchy lets you answer important questions: How much time are we spending on Client X overall? Which types of projects consume the most resources? Are certain tasks consistently taking longer than estimated?
The structure also simplifies invoicing. Many accounting software integrations automatically organize billable hours by client and project, transforming your time tracking data into ready-to-send invoices.
6. Make Timely Corrections When You Forget to Track
You're going to forget to start your timer sometimes. Maybe you jumped into a client call without clicking "start," or you got pulled into an urgent matter and didn't log it until hours later. That's human.
Here's what matters: make those corrections as soon as you remember, preferably the same day. The longer you wait, the less accurate your estimate will be.
Creating accurate estimates:
- Review your calendar to see what meetings or commitments you had
- Check your email sent times for clues about when you worked on tasks
- Account for interruptions and context-switching (these add up)
- Be honest (underestimating hurts your firm's revenue, but overestimating damages client trust)
If you find yourself frequently creating estimated entries, that's a signal to adjust your tracking habits. Set reminders, create tracking routines tied to specific activities, or use mobile time tracking so you can start timers even when away from your desk.
Some professionals review their time at the end of each day to catch any gaps before they forget. This daily reconciliation habit prevents the nightmare scenario where you're trying to reconstruct an entire week's worth of work from memory.
7. Set Time Budgets and Track Against Them
After you've accumulated time tracking data, you'll start seeing patterns: Tax returns typically take X hours to prepare. Contract reviews usually require Y hours. Discovery for a case of this type runs about Z hours.
Use that knowledge to set time estimates for future work. These estimates serve multiple purposes:
For project planning: If you know a comprehensive audit typically requires 80-120 hours, you can scope projects realistically and allocate staff appropriately.
For client communication: Fixed-fee arrangements work better when you have historical data showing typical time investment. You can price engagements profitably while remaining competitive.
For performance management: When a routine task takes significantly longer than the established benchmark, that's valuable feedback. Maybe the employee needs additional training, or perhaps the client's situation is more complex than initially assessed.
For profitability analysis: Comparing estimated time to actual time reveals which project types or clients consistently exceed budgets, helping you adjust pricing or scope for future engagements.
According to PMI's 2018 Pulse of the Profession report, organizations using effective project management practices saw 70% of projects meet their original goals and 60% complete within budget—up significantly from 62% and 50% respectively in 2016. Setting time budgets and tracking against them is a core component of this success, helping firms scope work accurately and identify when projects are trending over budget before it becomes a crisis.
Many time tracking tools let you set budgets or retainers at the client or project level, giving employees real-time visibility into how their hours impact the overall engagement scope.
8. Review and Submit Your Time Regularly
Don't let time entries pile up. Establish a clear cadence for reviewing and submitting tracked time—ideally daily, at minimum weekly.
Why regular submission matters:
Faster invoicing: The faster time entries are submitted and approved, the faster invoices go out. For firms operating on net-30 payment terms, shaving even a few days off your billing cycle improves cash flow significantly.
Higher accuracy: Daily review means you can catch mistakes or missing entries while details are fresh. Weekly review lets errors compound.
Better project visibility: Partners and project managers need current time data to monitor budgets and client profitability. Delayed submissions create blind spots in project management.
Simplified corrections: Fixing a wrong project code or missing description takes seconds when you catch it same-day. Weeks later, you might not even remember what you were working on.
Professional workflow example: A consulting firm might implement a policy where all time entries are submitted by end-of-day Friday. Project managers review and approve entries Monday morning, and invoices go out Tuesday. This consistent rhythm creates accountability and keeps the billing cycle moving.
Consider building time review into your daily routine, perhaps the last 5 minutes before leaving the office. This small habit ensures your tracking stays current and reduces stress about reconstructing past work.
Industry-Specific Time Tracking Tips
For Accounting and Bookkeeping Practices
Busy season preparedness: Tax season demands efficient time tracking. Consider creating standard task templates for recurring work (tax preparation, review, filing) to speed up entry creation while maintaining detail.
Advisory vs. compliance: Many firms struggle to capture advisory time. Create clear project codes distinguishing between compliance work (tax prep, bookkeeping) and higher-value advisory services (consulting, planning). This data helps you understand your service mix and identify opportunities to shift toward more profitable work.
Client portal access: Some accounting practices give clients limited access to time tracking data for transparency. When clients can see work performed in real-time, billing conversations become easier.
For Law Firms and Legal Practices
Six-minute billing: Remember that legal industry standard. Configure your time tracking software to round appropriately, and train your team on the .1-hour increment system.
Narrative descriptions: Many corporate clients require narrative billing that explains what work was performed and why. Make description quality a priority in your time tracking practices.
Matter-centric tracking: Legal work revolves around matters (cases). Ensure every time entry ties to a specific matter number for accurate case costing and billing.
Ethical obligations: Many jurisdictions have rules about reasonable fees and billing practices. Accurate time tracking isn't just good business; it's an ethical requirement for demonstrating reasonable charges.
For Consultants and Advisory Firms
Project-based budgets: Consulting often works on fixed-fee or capped arrangements. Track time against project budgets to monitor scope creep and profitability in real-time.
Multiple service lines: Consultants often provide diverse services (strategy, implementation, training). Use clear task categorization to understand which service lines are most profitable and where your expertise is most valued.
Travel time: Determine your firm's policy on billing travel time and ensure consistent application. Some firms bill travel at full rate, some at reduced rates, some track it but don't bill it.
Common Time Tracking Mistakes to Avoid
Even with best practices in place, watch out for these pitfalls:
1. Batch-entering time at week's end
This defeats the accuracy benefit of time tracking. You're essentially creating a detailed guess and probably leaving money on the table.
2. Using vague descriptions to save time
Ironically, vague descriptions cost more time later when partners question entries or clients dispute invoices.
3. Not tracking small increments
A 5-minute client call still has value. Over a month, those small increments add up to significant unbilled time.
4. Inconsistent project codes across team
When different employees use different project categorizations, your reporting data becomes useless for analysis.
5. Forgetting to track non-billable time
You can't improve what you don't measure. Track everything to get the full picture of utilization and capacity.
FAQ: Your Time Tracking Questions Answered
How detailed should my time entry descriptions be for client billing?
Detailed enough to justify the charge if questioned. A good rule of thumb: if a client saw only this description on an invoice, would they understand what work was performed and why? For legal and accounting work, include the deliverable or outcome. Avoid unnecessary detail that clutters entries, but don't sacrifice clarity for brevity.
Should employees track administrative and meeting time?
Absolutely. Tracking all time, billable and non-billable, gives you the complete picture of utilization rates and where workday hours actually go. According to industry research, about 17% of an accountant's time is spent on non-billable tasks. Many firms discover they're spending 15-20% of time on low-value activities that could be streamlined or eliminated. You can't make these improvements without data.
What's the best way to track time across multiple client projects simultaneously?
Use a time tracking tool that lets you quickly switch between active timers. Some professionals pause Timer A to start Timer B when interrupted, then resume Timer A when returning to the original task. Others log switching time in small increments throughout the day. Choose the approach that balances accuracy with practicality for your workflow.
How often should employees submit their time entries?
Daily is ideal, weekly is acceptable, anything longer creates problems. Most firms implement a weekly submission deadline (e.g., Friday by 5pm) to balance employee convenience with billing cycle needs. Partners and managers should review and approve entries promptly to keep the process moving.
What if an employee consistently forgets to track time?
This is often a habit issue rather than a willingness issue. Try these approaches: automated reminders, morning stand-ups where team members state tracking intentions, end-of-day reviews, or gamification elements that reward consistent tracking. Some firms also tie accurate time tracking to performance reviews, making it clear that this is an essential job responsibility.
Start Improving Your Time Tracking Today
Here's the bottom line: accurate time tracking isn't about watching employees, it's about capturing the value your team creates. Every hour worked that doesn't make it onto a client invoice is revenue lost. Every non-billable hour that goes unmeasured is an improvement opportunity missed.
The practices outlined here work best when implemented as a team effort. Share these guidelines with your employees, establish clear expectations, and provide the right tools to make tracking as frictionless as possible.
Ready to improve your firm's time tracking?
Start with just one practice this week. Maybe it's committing to timer-based tracking instead of manual entry. Or establishing a daily time review habit. Small improvements compound into significant results.
MinuteDock makes accurate time tracking straightforward with intuitive timers, flexible project organization, and seamless integration with the accounting software you already use; Xero, QuickBooks, MYOB, FreshBooks, and Wave. Your time data syncs directly into invoices, reducing administrative overhead and helping you focus on what you do best: serving your clients.
