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Billable Hours

These are the hours that law firms want to maximize so that they can run a profitable business. If you run a company like a landscaping or delivery business, you and your team members are often on-the-go. This can mean that it’s sometimes hard to keep track of who’s working, how long they’ve worked for, and when they worked. By tracking everyone’s billable time accurately, you can better bill your clients for the work they need to be done. Additionally, by keeping a log of these hours, you can see if you need to start increasing rates or cut down on any non-billable time.

Billable Hours

See how ClickTime can help you make all your hours profitable by starting your 14-day free trial. If the attorney or a member of his or her staff must travel to attend depositions or court hearings, mileage costs and hotel expenses are usually charged to the client.

List Project Updates At The End Of The Day

However, there is a growing list of smart software or AI-powered software that can help lawyers work far more efficiently than ever before. When we look at findings from these reports together we can see that achieving more efficient workflows is critical to reducing write offs and improving profitability across firms. You’ll need project or resource managementpermissionsto use this report. If a non-administrator needs access to this report, create an Administrator permission template with only Target Billable Hours assigned, and assign it to the user.

  • For example, even if a phone call with a client lasts less than five minutes, record it in your time log.
  • For a manual time log, you can create a spreadsheet to track the projects you worked on, the dates and hours you worked on them and the tasks you completed during that time.
  • Billable hours “create an economic incentive for lawyers to charge for every hour of work that can be identified”.
  • Tracking non-billable hours shows you exactly how long your company devotes to employee development and business growth.
  • Ruffling client feathers is something many lawyers hope to mitigate by underreporting valid billable work.
  • Find the right workshops for you, enroll and start learning today.
  • At any rate, there seems to be a consensus that in real life, an attorney is only spending less than three hours on billable work per day.

Some positions require the use of billable hours, and your company may have specific policies or requirements in place. These policies may provide guidelines to help you determine what constitutes billable time. Your client contracts may also outline the scope of your project responsibilities and demonstrate which tasks count towards billable hours and which do not.

Research Inefficiency A Big Problem For Law Firms

Billable hours simplify cooperation between two parties, bringing some definition as to what tasks should get invoiced and compensated and what tasks shouldn’t. Are you struggling to keep track of your time and billable hours? Billable hours are the driving factor behind the profitability of any service business, whether productized or not.

  • You already know that no two employees work at the same speed.
  • With excessive non-billed work, the profitability for a firm is undercut, and the profitability of law practices is also reduced.
  • With this in mind, there are tools that lawyers can use to make it faster and easier to calculate and log their hours—like a billable hours chart.
  • Once you have calculated your total billable hours, put together an invoice to send to your client.
  • Some things, like attending to correspondence and talking to co-workers are harder to either include or exclude.
  • So, in the PR industry, the utilization rate depends on position within the business.
  • Track your billable time accurately—and in real time, if possible.

Both billable and non-billable hours should be treated like a precious resource and tracked and scheduled accordingly. Business professionals with a proven track record of working for large professional services firms offer their knowledge on our platform. Most sessions are on demand so you can join the workshops when it is most convenient for you. Inside Hubstaff, you can set up individual projects based on your unique clients. If you’ve been using Hubstaff, then you’ve probably already done this.

Indicator 4: How Cost

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. If a consultant has a total of 2,500, we’ll divide this number by 2,000 . For instance, if there are too many internal meetings, this can result in more non-billable hours. No matter the type of your industry, be sure to accumulate enough billable hours because they’ll cover your non-billables. Ideally, you should have more billable than non-billable hours.

You might find that a particular type of project would be better billed at a fixed price to better reflect the overall work and effort put in by your team. 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. You can figure this out by reviewing the non-billable hours of your employees. For instance, let’s say that client A has requested numerous updates during the project, which is why your staff had 20 non-billable hours last month. On the other hand, client B only had minor changes, which resulted in 5 non-billable hours for your employees.

By tracking both billable and non-billable hours, you can better understand how much each of your clients is costing you and which ones are the most profitable. This can help you better quote clients in the future and possibly help you balance the time spent on certain types of work to foster growth.

You Can Boost Employee Engagement

Ask your firm if there are billing codes for “extra-curricular” activities — e.g., bar association work, marketing, client development, community service, etc. Even if these activities do not go to your actual billable requirement, log them if you can. Doing so will show that you are allocating time for these important activities and spending your time wisely.

Billable Hours

It’s important that law firms devise effective strategies for getting the most out of their billable hours while helping lawyers and clients understand just how law firms bill. As a freelancer, you typically have several on-going projects you’re working on at once. Making sure you’re tracking your billable hours accurately means you’ll be able to bill your clients appropriately. Additionally, by seeing how many non-billable hours you accrue each week, you can better estimate how much bandwidth you might have for starting new projects or taking on new clients. Any administrative tasks you complete will not count toward billable hours, but you can often find software to automate these tasks. This method eliminates manual tasks, providing more time to complete billable tasks. Automation can also simplify day-to-day tasks or help ensure invoices get sent to clients on time.

With this component assigned, they’ll see a graph in their timesheet showing their progress toward billing targets and, optionally, the progress of groups they belong to. Be sure to account for disruptions in employee schedules, such as vacations, holidays, and shorter months. Billable Hoursmeans the number of hours each Contractor’s staff has worked and expect to be compensated for. Billable Hoursmeans the time, in hours, consumed to perform the Retainership Services by the Legal Adviser. These basic means of collecting time data are useful and already provide a fair share of transparency.

What Are Billable Hours?

Next, you must determine when you will send invoices to bill clients for the work you completed. You can choose whatever schedule best fits your needs, but two common options are monthly or bi-weekly.

Billable Hours

Balancing billable and non-billable hours is a constant challenge for agencies, consultants, and contractors. Block billing is often frowned upon by clients and can be seen as a way to disguise a lack of organization. Worse, clients might think you’re not transparent or genuine and are trying to overcharge them. Make sure to use free real-time billable hour trackers such as Toggl Track or ClickUp. They’re important because they contribute to the overall success of the business but aren’t related to a single project. Therefore, you can’t charge these hours to a particular client. Leave behind messy spreadsheets, forgotten time-cards, and disorganized time systems.

If possible, you can reorganize workload so that no one is overwhelmed with work. Also, these insights can help you make plans for future projects. As you can see, non-billable hours can be beneficial for your company and your employees. The key is to pick the right amount of non-billables, which you can do by tracking the hours and analyzing the results. So, this is what we suggest you do, to increase your billable and decrease non-billable hours. Of course, since every business is unique, it’s likely that you’ll discover some new practical ways to reduce non-billables yourself. So while you’re attempting to minimize non-billable hours, you’ll want to remember that not all non-billable hours are the same.

Start Tracking Time Today!

While service providers would love to have as many billable hours as possible, this is easier said than done. When it comes to billing a client, you will need to justify the time spent on a project, or if you have a fixed budget, you’ll need to manage your staffing hours as effectively as possible. Finally, tracking non-billable time gives you a more accurate picture of upcoming capacity. When managers and project leads understand that they can’t book employees at a 100% utilization rate, they’re less likely to burn out their teams. But as we already discussed, you have to track both billable and non-billable time to calculate a reasonable utilization rate for your staff. Every industry is different, but for professional services — where most organizations run on a billable hours model — a good rule of thumb is that your agency’s utilization rate should be around 85%. For IT service providers, though, an 80% organization-wide utilization rate makes your company an industry leader.

But, at the end of the day, it’s the frame that’s holding that photo and making it visible to others. So, non-billable activities, like administration tasks, will keep your business running smoothly. The amount charged to clients has to be adequate to cover the employee’s salary and other business expenses. Calculating an appropriate rate is essential, particularly for companies that depend on income from clients for most or all of theirrevenue. Typically, employees are expected to have billable hours equivalent to at least three times their salaries. Tracking both billable and non-billable time helps you understand the true costs of running your business, assign realistic workloads to employees, and provide more value to your clients. First, you’ll be able to play to each of your employees’ strengths.

Some tools make it easy to track time against clients or jobs, so you can bill more accurately for the work you do. From there, you can take your hours tracked and create an invoice that’s easy to back up with time data. Administrators of law firms should track both realization rates and utilization rate of employees. In addition, there should be a monthly report that makes a comparison between the billable hours that are recorded, and fees collected.

Lawyers Are Missing Out On Billable Hours, Lacking The Right Technology

To make it easier to separate such probjects from your other billable work, Toggl Track lets you assign a custom hourly rate to any project. What’s more, if there are several people working for a project, they can be assigned custom hourly rates of their own. This can be useful for separating the more expensive work Billable Hours from simpler tasks. There are also new technologies that can help lawyers expedite and monetize legal research, which is an increasing source of non-billable overhead due to heightened cost pressures from clients. Both the Clio and Thomson Reuter reports make one thing very clear – lawyers are in a sticky situation.

Track Your Hours By Project

You already know that no two employees work at the same speed. However, you won’t know how long it takes each employee to complete various tasks unless you track their time on them. When you track billable and non-billable time, you can understand all of the activities an employee works on in a day and assign them to the type of work they’re best at.

This is useful when you’re working with people with a wide variety of skills and professions. For example, developers’ time might be considered more expensive than that of copywriters. When you have team member specific rates in place, these will be used instead of your default hourly rate where applicable. Within a billable project, for example, there can also be some activities that you cannot bill the client and include in the invoice. But those activities must end up in your timesheet otherwise you’ll never know about them. 41% of partners rate reducing the amount of hours that are worked but not billed as “extremely important. 94% of partners in total, felt that reducing the amount of hours worked but not billed as important – varying from extremely to somewhat.

Automated reminders and approvals done at the click of a button reduce the amount of time managers will spend sifting through timesheets or tracking down employees with incomplete timesheets. And custom reporting options help you pull the data you need to understand the true value of every employee’s time — whether it’s billable or non-billable. Having tracked billable hours once, you will have the needed information to figure out how much time your team needs to deliver certain tasks and projects. At the end of each billing cycle or when you complete a client’s project, review your time log and calculate your total billable hours for the project. Record your billable hours by project, so you know what client you’ll invoice for the work you’re completing. It will also help you track how much time you’re spending on each client’s project per billing cycle.

Field technicians need to specify if their time entries are billable or not when logging them. While this figure differs between agencies, the average annual utilization rate for your production team should be over 85% (according to Note that if your average utilization rate is under 60%, you might struggle to achieve healthy margins and profitability. Billable hours are hours that can be directly attributed to a specific project and charged to a particular client. In other words, they’re hours invested on certain tasks or assignments that directly contribute to a project.

This itemized list ensures that clients understand what they are paying for and whether it is accurate. In numerous industries, companies charge their clients on an hourly basis, for the services they provide. If this applies to your business, it’s vital that you understand how to reduce non-billables. Besides, this article explained the importance of tracking both billable and non-billable hours. ClickTime’s time tracking software makes it easy for employees to track time throughout the workday, giving you a full picture of their workloads.

Billable hours include those tasks where an attorney is working on an actual matter for a client. Non-billable hours include tasks that must be done but aren’t directly attached to a matter, such as administrative tasks. As far as cleaning up non-billable hours, an attorney can either hire assistance or avail him/herself of technology. Both of these options allow for the more mundane tasks of lawyering to be handled by someone other than you, the attorney. Every freelancer, law firm, professional services firm, or small business owner needs to understand the importance of tracking billable hours. Do your employees actually have enough time to develop their skills or feel they have permission to follow industry news on company time? Do you actively protect space to attract new business and reflect on completed projects?