And while there are hundreds of tools that can help you with timekeeping and productivity management, one of the best tools available today is Time Doctor. When your billing cycle ends, you should add all the number of work hours for your clients. Paid vacation days and other benefits of in-house employees, etc.

• An excellent time tracking software can help you overcome these challenges, ensuring that you bill clients accurately.
• Using the export button inside the reporting dashboard, you can easily export your total hours (billable and non-billable).
• Hence, providing value to clients’ needs makes communication time a part of billable service to be included within estimated hours for jobs and tasks.
• Totaling billable hours takes into account how many paid holidays and vacation or sick days each tech gets in a calendar year, so grab your PTO calendar and start counting.
• Or remove the date entirely if your organization does not have that as a paid holiday.

It’s a great way to avoid letting work hours go uncompensated. Value-based billing is also important in regard to establishing HR company policies for compensations and promotions. Like with the numerator, many top-performing firms will also take a more nuanced view of the utilization calculation’s denominator, depending on what they are trying to measure. 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.

What percentage of hours should be billable?

Businesses tend to increase their profit margins while employees get a chase to improve their productivity and efficiency. Doing effective billable hours accounting will help you figure out how much time, funding, and other resources were required for a specific project or collaboration. Instead of struggling with ballpark numbers, you get specific data that will help you make fast and effective decisions when planning future projects and selecting clients to work with. As you probably already know, project planning is crucial for project success as it helps you see the big picture when outlining the upcoming steps from A to Z. It is the very stage where you get to define all the timelines, set milestones, name and describe tasks that will get you closer to the project finish line. Depending on the size of the project, this stage can take from a few hours to a few days, which is why it deserves a place on every billable hours chart. While the ideas of what is billable and what isn’t vary from business to business, and project to project, the idea behind them is basically the same.

Salary$60,000Benefits$16,900Total Cost$76,900Capacity2080Cost-Per-Hour$36.54That’s billable hours it! You now have an accurate calculation for Employee Cost-Per-Hour.

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At a 50 percent billable hour efficiency rate, a technician does four hours of billable work, spending half a workday inside a customer’s home or on a commercial job site performing services. The trouble is, things are rarely that simple if you really want to use something like professional services billable utilization to drive beneficial behaviors. Here’s what you need to think about when measuring billable utilization for your professional services firm. Time is money—especially when it comes to how many billable hours in a year an attorney can accumulate. For example, attorneys in legal firms must work a certain number of billable hours each year. Many in-house employees also need to calculate their billable hours.

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Professional Services Utilization Benchmarks

You will get paid for what is worth without underselling your services. You can track and record all the hours spent on the project and then separate billable and non-billable hours or you can simply record billable hours and leave out non-billable hours. Non-billable hours also include activities that employees do for their own benefit, for example, taking a 5-minute break to freshen up, or eating. These activities are not directly related to work tasks but contribute to the employee’s total hours. Non-billable hours (sometimes called “overheads”) refer to any work done that doesn’t get invoiced to clients. Businesses have to have non-billable hours to ensure their internal processes run smoothly, and they can have a positive effect on company culture if they are managed correctly.

We’ll also highlight the best tool you can use to calculate your billable hours accurately. More importantly, you have to ensure that you accurately track the time spent on projects and bill clients accordingly. Any negligence here might negatively impact your net profit and income goals. Once you’ve got your projects and rates set up, the next thing to do is get down to business. Have each of your employees track their time using our desktop, web, or mobile apps. Make sure, depending on the project they’re currently working on, that your team is tracking their time towards the correct task.