What Are Billable Hours? Time Tracking Tips To Get You Paid

billable hours

The time businesses take to complete the project for clients refers to the billable hours. The charges depend on the prior agreement between the company and the client. Freelancers, businesses, and entrepreneurs are using billable hours to charge their clients for the services they offer them. For this purpose, they need to record the time they are spending on a project for a client in order to charge them accordingly.

This article covers:

What Is Billable Time?

Billable time refers to the time spend on a project for a client. It includes the time spent on any task linked directly with the client’s project. It depends on the type of business and work you are doing for a client. The tasks which businesses and freelancers should consider billable for a client are:

Billable Tasks:

  • Actual work for completing the project
  • Project planning
  • Developing project timelines
  • Conducting research
  • Attending meetings
  • Reading and responding to work emails
  • Revising work submitted to the client at the client’s request

The Non-Billable Tasks:

In the case of small businesses and freelancers, you perform some tasks for a client’s project but that are not billable. Some of these tasks are:

  • Making proposals for new work
  • Pitching new work to clients
  • Consultations and meetings before signing a contract
  • Training courses that apply to your business beyond a single client’s project
  • Social and team-building events
  • Networking events
  • Work that is beyond the scope of the project, according to your contract
  • Fixing your avoidable errors
  • Invoicing, processing payments, and performing other administrative tasks

How Can I Tell If My Time Is Billable?

Deciding for billable hours becomes difficult for some businesses in certain situations. These questions may help you to evaluate whether you can charge your client for certain tasks or not.

  • Does the time spend on this task help move the project closer to completion?
  • Does the time spend on the task benefit me more than it benefits the client?
  • Is the task I’m working on specifically indicates the work outlined in the contract?
  • Does time spent completing the task related to a client’s request, or is it a mistake on my behalf?

How To Track Billable Hours?

You can easily track billable hours by following the steps we are sharing with you. These are:

  • Set your hourly rate
  • Choose and determine your invoicing schedule
  • Create a time log
  • Track your hours  by project
  • Calculate your total hours of a project
  • Create a detailed invoice

1.Set Your Hourly Rate:

Whenever you offer your clients any service, you first need to set an hourly rate that you can charge per hour to your client. You can set the target of your annual earnings and then proceed accordingly to chase your target. After determining the annual salary, you can divide it by the number of hours in a year, i.e., 2080.

Once you set the hourly rate, you can adjust it for the non-billable tasks accordingly. These non-billable tasks may include administrative tasks and client pitches.

2.Choose and Determine Your Invoicing Schedule:

The next step is to choose a proper invoicing schedule for sending your invoices to the clients. Many small businesses and freelancers go for monthly billing cycles. It helps you to synchronize with your billing cycle by adjusting your time tracking.

3.Create A Time Log:

The next step is to create a time log to track your billable hours. You can create a time log by two methods:

Manual time log:

You need to make a spreadsheet with different columns for the client’s name, work description, date, and time spent working on the project.

Digital time log:

You can develop a time log by using a cloud-based accounting solution. It offers a time tracking feature which helps you to track the billing hours of a project.

4.Track Your Hours By Project:

Tracking the billable hours for a project helps you make an invoice for the work you are doing for a client. It allows you to track the time you spend on each client’s project for each billing cycle.

5.Calculate Your Total Hours:

Upon completing your project for a client, you can review your time log to calculate the project’s total billing hours.

6.Create A Detailed Invoice:

The last step is creating an invoice for sending it to your client. You must add the following details to your invoice:

  • Your complete business information, including:
  • Logo
  • Name  
  • Address
  • Phone number
  • Email address
  • Your client’s contact information
  • A list of the services provided
  • The billable hours for each service
  • The due date for payment
  • Your payment terms
  • The total amount due for the invoice, including applicable taxes

How To Increase Billable Hours?

Small businesses and freelancers are usually looking for ways to increase their earnings. The best way is to increase the billable hours ethically. Some of the tips to increase the billable hours are:

  • Track your billable time
  • Track in actual time
  • Track your non-billable time
  • Stop procrastinating

Track Your Billable Time:

Tracking every minute you are spending on your client’s project is a tough job, but it helps you maximize your billable hours. You should record the time of phone calls you make and emails you are sending for a project. It adds up the total time you are giving to the project that affects the billing hours directly.

Track In Actual Time:

You should record the billable hours for a project right at the moment when the work is progressing. Adding up the time by the end of a day is not the accurate way to calculate the billing hours. Tracking the billing hours in that specific period minimizes the chances of overlooking any billable time.

Track Your Non-Billable Time:

Many non-billable tasks affect your actual task performance. These tasks may include invoicing and other administrative tasks. To manage your time effectively for the billable hours, you can hire an assistant or take help from accounting software to look after these extra tasks, such as invoicing.

Stop Procrastinating:

It is one of the most difficult things to do to increase your billable hours. First of all, you need to identify the distractors around you that are affecting actual task performance. You should eliminate all such distractors by putting them away from your workplace. In the case of social sites, you can use the browser extension to block the distracting sites. It helps you to focus on your task and become more productive to increase your billable hours.

What Industries Bill By The Hour?

Many industries set their hourly rate and charge their clients according to that hourly rate. These industries include:

  • Legal advisors, law firms, and other legal professionals
  • Consultants
  • Advertising agencies
  • Web developers
  • Freelance creatives, including copywriters and graphic designers
  • Public relations firms

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