All You Need to Know About Billable Hours

billable hours

As a result, you will gain your client’s trust, which will enable you to attract more potential customers in the future. Tracking will help you know how much time you spent on a project and what tasks took up the most time. This will help you create better estimates for future projects, and reduce the chance of unhappy clients. You’ll also be able to identify which clients or projects use more of your time than others and adjust your rates accordingly. Billable hours are the total amount of time you spend working on a particular project. These hours are charged to a client according to an agreed hourly rate. In other words, they’re the number of hours a company can charge its clients for doing work on their behalf.

billable hours

In other words, they are the hours that you bill clients for and they pay directly. Lawyers can track billable hours with a billable hours chart, which will save them the time, effort, and frustration of calculating the hours manually.

How do lawyers keep track of billable hours?

Understanding individual billing rates helps you ensure that your projects are actually profitable. Measuring billable hours also makes it easier for organizations to determine if their employees are working efficiently or not. To charge by the billable hour, workers need to track the amount of time they spend on each client’s case or project every day. But knowing how to keep track of billable time can be a tricky business.

What is meant by billable hours?

Billable hours are the amounts of an employee's work time that can be charged to a client. Employers charge clients at sometimes varying rates for different employees.

According to research firm McKinsey, 45% of the activities people are paid to do — from entry-level workers to those in the C-suite — could be automated with lower-cost technology. Using software and tech to perform those tasks will not only cost less. It will also allow all of your employees to spend more time on higher-level, more profitable tasks. This blog post will explore how a billable hours chart can help lawyers better track time for invoicing.


Field on its own to track billable hours is very easy to set up, it doesn’t allow for more metadata that is useful when running reports, as you have with billable accounts, as mentioned above. It’s generally good practice to use Tempo accounts to organize the different types of work that your company does.

  • You may end up with a smaller count of hours than you were expecting for a workday.
  • Between Curdbee & their new version, Hiveage, I’ve brought in more than $310,000 than I would otherwise not have.
  • But what happens when your agency starts haemorrhaging talent?
  • Whether you’re a business owner or an employee, not every task constitutes billable hours.
  • If documents must be delivered by courier, these fees are charged to the client.

The hourly rate is multiplied by the amount of attorney time dedicated to a client, which equals the client’s total fee for legal services. For one, it largely depends on the kind of business you run. While a cleaning company may only spend a few hours on the job, they’re normally charging a flat rate to their clients while a law firm might charge by the hour. Accurate management of your billable and non-billable time as well as costs is the answer. Set employees’ billable and cost rates, mark all tasks as billable or not, accurately track time and availability.

Want More Helpful Articles About Running a Business?

In addition, there should be a monthly report that makes a comparison between the billable hours that are recorded, and fees collected. In general, when lawyers have less than 100 percent of their billable hours, this could be an indicator of a problem. These issues could happen due errors in pricing systems, or due to duplicate work, and etc. Next, you’ll need to create a time log to track your billable hours by client. You can do that manually, by setting up a spreadsheet with separate columns for the client name, a description of the work performed, the date and the time spent working on the project. Because developing a manual time log can be cumbersome, you can also track your billable hours digitally.

billable hours

If you are more accurate in the number of hours, then you can see a build-up of time at the end of the day. The last thing relevant to tracking billable hours is sending the invoice. Calculate the total hours for each customer and send out a professional and accurate invoice. Download the billable hours’ template for Excel to record your hours worked and hourly pay rate for each client or project in a day. For best results, enter values on your desktop to calculate your total for invoicing automatically. As you work on a client or project, enter your times in and time out. The billable hours’ template does not account for non-billable hours.

Step 3: Track your team’s time

Skilled workers may need to be onsite to track billable hours while consultant workers can track work from the office or remotely. When employees fail to track their time properly, it can wreak havoc on company finances. One study revealed that companies that don’t track billable hours accurately lose up to $50,000 in annual revenue. A billable hours model will help you benchmark employees’ performance, cut down on non-billable hours, and help forecast your team’s capacity and revenue. Billable hours are the amounts of an employee’s work time that can be charged to a client.

  • So while you’re attempting to minimize non-billable hours, you’ll want to remember that not all non-billable hours are the same.
  • As a result, it is most productive to charge clients based on their time spent working rather than charging them for each activity.
  • Just because you won’t charge your clients for these periods, it doesn’t mean that non-billable hours don’t have any value to your business and your employees.
  • The tools and resources you need to get your new business idea off the ground.

Time is money—especially when it comes to how many in a year an attorney can accumulate. The amount of time spent on a job varies from each assignment and the number of tasks they require. Thus, this can seem like a lot, considering that a full-time worker typically works about 40 in a week. However, the time that you spend could also lead to a bonus. Tracking and recording that time, invoicing for that time, and determining the productivity of that time is far more challenging. That’s the kind of schedule an attorney would need to keep up to hit 1,892 billable hours in a year.

Posted in Bookkeeping.