What are billable hours? Time tracking guide and tips

Of course, you’ll get the most accurate picture by using a time tracking app, but it’s not strictly necessary in the same way it is if you charge per hour. After all, these records are just for your own use and to get a better idea of how you’re spending your time — you’re not going to charge anyone for them. By tracking both billable and non-billable hours, you can better understand how much each of your clients is costing you and which ones are the most profitable. This can help you better quote clients in the future and possibly help you balance the time spent on certain types of work to foster growth.

Maintaining a template to track your billable hours accurately is also a useful idea. After all, anything that isn’t tracked didn’t really happen. In other words, it gets wasted and that means hours or days of productivity lost. When I hear reports of big billable-hours numbers I don’t know whether those numbers include non-billable time, pro bono work, firm hours, etc. The mega-law firms work in a world apart from most of us, and their billing practices aren’t particularly relevant to what we’re doing. It’s important to remember that big firms are different from other firms when we hear their billing stories.

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There are many cases where employees claim to waste a lot of time. They include performing administrative work, writing reports, and creating invoices.

• With PracticePanther, it’s never been so easy to track time.
• For one, it largely depends on the kind of business you run.
• This way, you can identify where you or your team can improve and how to maximize earning potential.

It is also possible to monitor the utilization rate of employees working billable hours. Billable hours are those hours worked that require compensation. In other words, they are the hours that you bill clients for and they pay directly. Tracking time is not difficult and once you get a hang of https://www.bookstime.com/ it, you will find it to be more useful. Time tracking software like Runn will help you track billable hours more efficiently and accurately. You’ll know exactly how many hours each employee spends on a project and will be able to determine if they could be working faster or more efficiently.

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As we mentioned earlier, the billable hours are the hours invested on assignments that are directly related to a project. As such, billable hours must be included in the invoice – a document that serves as an agreement between the buyer and the seller . But you can only get there by analyzing all non-billable time to understand the tasks that take too much time. This includes creating invoices, taking care of administrative duties, and writing reports, among others. An organization that monitors and examines non-billable hours can easily discover trends within the bigger picture. It’s also easier to see the trends in the finer aspects of the business. You can use spreadsheets to do so, but you might end up throwing in more non-billable hours.

How much time does your team spend looking to better themselves for the company? Non-billable hours are an excellent way to determine that. You can better track billable hours how much time everyone spends cracking away on projects versus how much time they spend researching industry trends and studying up on their specialty.

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Sometimes their bonuses are even based on their hours logged per year. So, as you can imagine, keeping track of your hours as a lawyer is extremely important. As a freelancer, you typically have several on-going projects you’re working on at once. Making sure you’re tracking your billable hours accurately means you’ll be able to bill your clients appropriately. Additionally, by seeing how many non-billable hours you accrue each week, you can better estimate how much bandwidth you might have for starting new projects or taking on new clients. Many lawyers are “old-school” and prefer manual time logs, but that’s not the most efficient or accurate way to track your time. The software also retains all your important client data in a secure, centralized location, so you can access it quickly and easily, no matter where you are.

The monthly invoicing schedule is the most common option, especially for small business owners, who pay their invoices at the end of each month. Tracking time allows you to access productivity and how well and accurately the team evaluates its work and adhere to the agreed time frame. This is how you can assess key areas where you need extra staff or additional training. In addition, you’ll have other expenses to consider – employee development and training, invoicing and bookkeeping activities, company meetings, and more. As a business, you’re responsible for your staff, and that means covering days off and their salary, regardless if their time was marked as billable or not.