For service-based professionals — from freelancers to law firms — calculating billable hours accurately is key to getting paid fairly, improving productivity, and strengthening client trust. But if you’re not tracking correctly, you could be leaving money on the table or misrepresenting the work you’ve done.
In this guide, we’ll break down:
- What billable hours are
- Examples of billable and non-billable work
- How to calculate billable hours step by step
- Why tracking matters for small businesses and teams
- How to use tools like Invoice Fly to save time
- Tips to maximize your billable hours and increase profit
What Are Billable Hours?
Billable hours are the hours you spend on tasks that can be invoiced to a client. These typically include work directly related to delivering a product or service as agreed upon in your contract or scope of work.
Common billable activities include:
- Consulting calls or meetings
- Design, development, or production time
- Legal research or court appearances
- Writing, editing, or coding work
- Reviewing or delivering final work
Tracking billable time ensures that business owners are paid for their effort and helps manage the overall billing process.
To better understand how these tracked hours translate into official requests for payment, it helps to know the difference between similar financial terms. Learn more here: Invoice vs. Bill: What’s the Difference?
Billable Hours Example
Let’s say you’re a freelance graphic designer working on a logo project. Here’s what might count as billable:
- 3 hours of design research
- 5 hours of sketching and mockups
- 2 hours of revisions
- 1 hour of final file export and delivery
Total billable hours: 11 hours
If your hourly rate is $75, your invoice would reflect:
11 hours x $75 = $825
What Are Non-Billable Hours?
Non-billable hours are the tasks you perform that are necessary for your business operations but can’t be directly charged to a client. These often include:
- Internal meetings
- Administrative work
- Prospecting or marketing
- Onboarding new team members
- Training or continuing education
Understanding billable vs non-billable hours is crucial for improving how you spend your time and planning better workloads.
For more on what qualifies as a chargeable service and how to include it properly, explore: What is a Proforma Invoice?
How To Calculate Billable Hours
Here’s a simple 5-step process for calculating billable hours accurately:
1. Set an Hourly Rate
Determine your pricing based on:
- Experience
- Industry standards
- Business expenses
- Desired profit margin
Many small businesses and law firms publish hourly rates upfront to ensure clear client communication.
2. Track the Number of Hours Worked
Use time tracking software to monitor all billable activities. The key is consistency — track time daily or in real time so it’s accurately recorded.
Recommended tools: Invoice Fly, Toggl, Harvest, or project management tools like Asana or ClickUp with built-in timers.
3. Add Up Your Billable Hours
At the end of the week or billing period, add up all the time spent on client work. Exclude internal or non-billable hours.
Use categories to track time per project or service type. This helps during audits or disputes.
4. Multiply Your Hours Worked by Your Hourly Rate
Use the formula:
Number of billable hours × hourly rate = billable amount
This is your base for invoicing. Add notes to explain what each time block covered, especially for longer projects.
5. Add Any Extra Fees or Charges
If you include additional costs (rush fees, printing costs, licensing), itemize them on the invoice. Transparency builds trust and helps avoid client confusion.
Need help building accurate invoices? Check out: How to Write an Invoice?: Includes Template and Examples
Why Should You Track Billable Hours?
Ensuring Accurate Client Billing
Tracking billable hours helps you avoid overcharging or undercharging. Every hour should be accounted for and clearly documented — protecting both you and the client.
Improving Project Management
By analyzing time logs, you’ll identify which types of projects take the most effort. This helps refine proposals, timelines, and project scoping.
Tracking Efficiency
Time tracking lets you see how long tasks actually take. This is especially helpful for identifying bottlenecks or repetitive tasks that eat up your day.
Determining Profitability
Knowing the ratio of billable to non-billable hours helps you understand your profit margin — and what’s dragging your bottom line.
Improving Team Management
When each team member logs their time accurately, it’s easier to assign workloads fairly, avoid burnout, and improve the billing process.
How to Track Billable Hours Using Invoice Fly
Invoice Fly’s time tracking and invoicing tools help small businesses and freelancers:
- Track time by client or project
- Auto-generate invoices with logged hours
- Record both billable and non-billable time
- Accept payments online and monitor what’s outstanding
Because it’s all in one place, your billing process becomes faster, clearer, and less prone to error.
How to Increase Billable Hours
Boosting your number of billable hours doesn’t mean working more — it means working smarter. Here’s how:
Set Billable Hour Targets
Create goals for weekly billable time and share them with your team. This keeps everyone focused and accountable.
Track All Your Billable Hours
Don’t forget small tasks like short emails, minor fixes, or quick meetings. These add up over time and generate revenue.
Track in Real Time
The best way to ensure time is accurately recorded is to use a live tracker. Avoid logging hours from memory at the end of the week.
Record Your Non-Billable Hours
Logging non-billable hours gives you a full picture of your workday — and helps you reduce time spent on unproductive tasks.
Stop Procrastinating
Be honest about distractions. Use a task list or app blocker to stay focused so more of your time goes toward client work.
Maximize Your Billable Hours with Invoice Fly
Don’t let admin tasks and manual tracking drag down your efficiency. Invoice Fly helps you:
- Track time seamlessly
- Send invoices based on logged hours
- Get paid faster through integrated payments
- Reduce time spent on repetitive billing tasks
Whether you’re calculating billable hours for solo consulting or managing a larger team, Invoice Fly gives you the tools to streamline and scale.
By calculating billable hours accurately, you’ll improve client communication, increase profit, and keep your business running smoothly.
FAQs about Calculating Billable Hours
Billable hours are tasks you can charge a client for — like consulting, design work, or court appearances. Non-billable hours are essential to business operations but can’t be invoiced, such as admin tasks, internal meetings, or training.
Law firms typically track in 6-minute increments and use time tracking software to ensure every task is accurately recorded. Billing codes and descriptions help categorize services and support detailed invoices.
They often tie this process into accounting systems to streamline how they receive payments.
Yes, but be consistent and transparent. Most professionals round up to the nearest 6, 10, or 15 minutes, depending on the industry. Be sure your invoice shows clear time logs to support your billing method.
Popular tools include Invoice Fly, Toggl, Harvest, Clockify, and project management software with built-in time tracking. These tools make it easy to differentiate between billable and non-billable time while producing professional invoices.
