Non-Billable vs Billable Hours: What They Are and How to Track Them

However, say your accounts payable reduce relative to the previous period. This implies that you are meeting your short-term obligations at a faster rate. The content within this article is meant to be used as general guidelines and may not apply to your specific situation. Always consult with a professional accountant before deciding on using billable hours and ensuring that you meet accounting standards for your company’s industry. While non-billable work plays a vital role in the success of your business, it can waste precious time that can be redirected to more productive work. By automating non-billable tasks, like creating invoices, performing administrative work, and writing reports, you’ll spend minimal time on non-billable work and more time on billable work.

• When you spend time and resources training workers so that they can handle the project effectively, is a non-billable time that clients need to know about so that they can pay for it.
• Record your start and end times for each project as they happen, rather than looking back at the end of the day and trying to add up all the billable hours you spent on a client’s project.
• An Online Invoicing Software like Quickbooks helps you to automate your accounts payable process by going paperless.
• Visual dashboards and real-time reporting provide quick insights, while integration with project management tools minimizes manual data entries.
• A good time-tracking software like Runn works wonders for your billing process and your entire firm’s well-being.

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. If you’re a business owner and you want to generate more billable hours, you and your team should start following these simple steps. Billable hours are the hours you spend doing tasks for a particular project.

What counts as non-billable hours, exactly?

You also get to see how much time your employees spend on revenue-generating work. This can eventually help you cut back on non-billable tasks and increase your productivity. However, tracking the times you start and end tasks for each project as they happen will be more beneficial at the end of the month. If you’re easily distracted, you can use a timer to set smaller chunks of time for a task.

In the consulting industry, anyone who has the utilization rate of 150% or more is considered as a top performer. So, the utilization rate presents the number of hours an employee has been productive. If you believe that there are some unneeded non-billables, you can reduce them.

How to keep track of billable hours

Ivana is always exploring new methods of how time management can help you organize your workflow more effectively, as well as how you can increase your productivity. So, in the PR industry, the utilization rate depends on position within the business. As stated in an annual survey by PR merger and acquisition consultancy Gould+Partners, PR firms improved their average hourly rates in 2018, compared to 2017. When we multiply the quotient by 100, we get the utilization rate of 125%.

That is, all your company’s bills can be created and sent via the invoicing software. An ideal accounts payable process begins with a proper chart of accounts. A chart of accounts is a statement or report that captures all your accounting what are billables transactions including accounts payable. Quickbooks online accounting software categorizes your transactions and breaks them down into various categories. Accounts payable management is essential for you as a small business.