Billable vs non billable hours

Billable hours and non billable hours are terms that are commonly used in professional service industries, such as IT, law, consulting, and accounting. These terms refer to the time that employees spend working on tasks or projects that are either billable or non-billable to clients.

Billable hours

Billable hours are the hours that an employee works on tasks or projects that are directly related to a client's needs. These hours can be billed to the client at an agreed-upon rate and are typically the primary source of revenue for professional service firms.

Examples of billable hours might include time spent working on a client's project, attending meetings with the client, or preparing reports or other deliverables for the client.

Non billable hours

On the other hand, non-billable hours are the hours that an employee works on tasks or projects that are not directly related to a client's needs. These hours cannot be billed to the client and are typically considered overhead costs for the business.

Examples of non-billable hours might include time spent on administrative tasks, training, or business development activities.

Does it matter?

It is important for professional service firms to accurately track both billable and non-billable hours in order to accurately measure the time and resources that are being spent on each project. This information can then be used to improve project estimates, identify areas of inefficiency, and ultimately improve the bottom line.

Accurate tracking of both types of hours is essential for professional service firms in order to improve efficiency and profitability. It's not only important for employees but even more so for project managers and clients. Keeping track of billable vs non billable hours is key for both effectively managing time spent on the project and showing the client what the actual workflow is.