Billable Hours vs Non-billable Hours and Expenses

what are billable hours

The goal is not to have profits nibbled away by non-recovered expenses that were never billed to the client. 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. Use detailed but succinct descriptions to ensure clear, transparent billing. Descriptions should provide enough essential information for clients to understand what they’re paying for. Get Clio Grow and law practice management with Clio Complete.

What’s the average number of billable hours in a year?

The average number of billable hours differs based on the industry and role. However, according to the Agency Management Institute, the average billable time for Agency Production Managers is 1,504 hours a year and 1,410 hours a year for Creatives.

For example, the total number of hours in an eight-hour work week approximately adds up to 40 hours. Asking yourself these questions may help you better determine whether or not you accurately bill a client. With Hiveage you can send elegant invoices to your customers, accept online payments, and manage your team — all in one place. There are many, many apps which all offer slightly different features. Often a client will have an app that they ask you to use and this can make the process easier. If a task is going to take much longer than the agreed time, talk to your client about it.

What is the Difference a Billable Hour and Non Billable Hours?

You need to make sure that you are only charging for work performed and not for personal time spent on non-related tasks. A billable hours chart will help project managers, clients, and yourself to how many billable hours in a year were used in a particular project.

what are billable hours

Stop goofing off during business hours and you may be amazed to see how much your billable hours increase. Install a browser extension that limits the time you spend on time-sucking sites or completely blocks you from accessing them. Social media sites and even news sites are common culprits to target first. If you take away the temptation to procrastinate, you’ll encourage yourself to spend more time working.

Determine an invoicing system

Invoices not being paid can be a huge issue for freelancers. Trying to chase up your payments can take up a lot of time which is why you should agree on a billing cycle. This could be a monthly billing cycle or perhaps you agree that the client will pay by a certain date. You can’t ask for more money in the middle of a task, and nor should the client be surprised when they get your invoice. Make sure you get paid properly for your work and lock in your billing rate before you do anything. By monitoring all working hours, you’ll be able to learn how to make the most out of your non-billables. One of the ways to do that is by organizing education sessions for your employees.

Was the time spent by the lawyer the result of an avoidable mistake? For example, if a file is inadvertently deleted by the lawyer while moving files on their hard drive, time spent recreating the file may not be billed to the client. Finally, we explained the value of utilization rate – the metric that shows the average number of productive hours . Since the utilization rate is various in different what are billable hours businesses, we covered a few examples in this blog post. When it comes to productivity levels in PR agencies, which is expressed by the utilization rate, it seems like productivity levels are still below perfect. For instance, the average utilization rate of presidents/CEOs of PR firms was 32.6% in 2017. While their utilization rate was 87.4% in 2017, their productivity reduced in 2018 – 85.4%.

Non-billable activities that can end up making you more money include:

This is not only because giving away hours and over-servicing clients costs your organization a great deal. It’s also because as a for-hire organization, word of mouth is everything, and you don’t want to put yourself in a position where the client is giving you bad reviews. If you’re asking yourself whether your law firm needs legal project management ,… Whether you have an office-based team or work closely with freelancers, when planning your business activities, you need to know who you need and when.

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