How to Calculate Billable Hours the Right Way Step-by-Step

Asana is a great tool for teams looking to “organize, track, and manage their work.” Plus, Asana integrates with hundreds of apps to create a suite of business tools. The worst thing you can do for a client is to forget a project or miss a deadline. Asana keeps your task list straight, so you and your team can do the best work of your life. Mastering the management of billable hours is essential for professionals who depend on accurate time tracking to ensure fair compensation. Understanding the concept and using tools like TeamBoard TimePlanner ensures you account for and bill every minute of your work correctly. This not only maximizes your revenue but also enhances client trust through transparent and detailed reporting.

Inaccurate time tracking

Mada’s sweet spot is AI tools and what are billable hours leveraging them for productivity, but she’s not shy about offering fresh perspectives on work habits. By integrating these tips, you can make your hourly invoicing process more efficient, allowing you to focus on providing great services to your clients while staying on top of your finances. Be sure to track time accurately for every task and project, and consider using timers to make sure you’re capturing time as it happens.

• Tracking billable and non-billable hours is critical for several reasons.
• The main difference is that billable hours are spent working on a client’s project, while non-billable hours represent time spent on administrative tasks such as meetings, training, etc.
• Ultimately, you can privately track detailed time entries for internal reference and generate client-facing block-billed invoices.
• Tracking non-billable hours is just as crucial as tracking billable hours, even though these activities don’t directly generate income.
• One exception is the legal industry, where many attorneys are required to work a certain number of billable hours each year.
• Use Fill Handle to copy this formula down and calculate the totals for each client.

Do you get paid for non-billable work?

This model allows MSPs to spread their services to a wider range of clients with different IT requirements. Billable hours also have their fair share of advantages and disadvantages, so it’s key that you take these into account when deciding what method of compensation to use. This means using the same tracking method every day, so that you can easily compare days and weeks, and see Online Accounting how much progress you’re making. By batching similar tasks together, your team doesn’t have to switch their context often. This technique helps them focus on similar tasks and finish more quickly. They then meet to determine why the limits were exceeded and devise optimal ways to reduce that non-billable time.

Improve Time Management

• This is where you would agree to pay someone a fixed amount for completing a specific project.
• You can also do this on a per-project basis if your project load tends to fluctuate more frequently.
• Where there is overtime clocking by more employees for a task, and it still shows little progress, the company can effectively mobilize more resources to speed things up.
• Whether you’re working on a rebrand, a product launch, or a logo design, tracking both billable and non-billable time helps identify trends in how long projects take.
• To highlight the importance of tracking all your hours, we consulted industry experts for their insights.
• There are certain distinctive differences between billable and non-billable hours that make both of them an important part of a company’s revenue.

Billable hours are the time that you invoice a client for, meaning they have to be directly related to client work. The following table outlines common tasks that qualify as billable hours, as well as some non-billable work tasks for comparison. Whether you’re tracking strategic initiatives, measuring team efficiency, or ensuring resource optimization, Tackle transforms time tracking from a chore into a powerful decision-making tool. Automated time tracking gives you a detailed backup of every minute spent on client work – while letting you keep the simplicity of block billing.

Line items are the heart of an hourly invoice, providing a clear breakdown of the services rendered and justifying your total charges. Setting clear expectations for both billable and non-billable tasks ensures transparency and fairness in evaluating employee performance. Recognizing non-billable contributions creates a more balanced view of an employee’s value and encourages a culture of growth. Finally, tracking non-billable time also offers a more accurate picture of upcoming capacity. For example, in professional services, a utilization rate of 85% is often considered ideal, while for IT service providers, 80% is Law Firm Accounts Receivable Management seen as top-tier.