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How to Track Billable vs Non Billable Hours

Harvest addresses the challenge of tracking both billable and non-billable hours, helping businesses optimize resource allocation and boost profitability.

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What should you charge per hour?

Most freelancers and consultants dramatically undercharge. This calculator accounts for what most people miss: non-billable time, taxes, and overhead.

$
Accounting for vacation, holidays, sick days
60%
Most freelancers can bill 50-70% of their time. The rest goes to admin, marketing, proposals, and learning.
$
Software, insurance, equipment, accounting, taxes beyond income tax, etc.
Your break-even rate $0
Recommended rate (+20% buffer) $0
Billable hours per week 0h
Equivalent daily rate $0

Start tracking your billable hours

Walk through the entire flow below. Start a timer, check your reports, and create a real invoice — all in three clicks.

Go ahead — start tracking!

One click and you're timing. Try it right here: start a timer, add an entry, edit the details. This is exactly how it feels in Harvest.

  • One-click timer from browser, desktop & mobile
  • Works inside Jira, Asana, Trello, GitHub & 50+ tools
  • Duration or start/end — your call
  • Day, week & calendar views to stay on top of it all
  • Friendly reminders so no hour gets left behind
Acme Corp
Website Redesign
Homepage layout revisions
1:24:09
Content Strategy
Blog calendar planning
1:30:00
SEO Audit
Technical audit report
0:45:00
Brand Guidelines
Color system documentation
2:15:00
Logo Concepts
Initial sketches round 1
1:00:00
Today's total 6:54:09

Understanding Billable vs Non-Billable Hours

When it comes to managing productivity and profitability, understanding the difference between billable and non-billable hours is crucial. Billable hours are those you can directly invoice to clients, encompassing activities like client meetings, project work, and consultations. These hours directly contribute to your revenue. On the other hand, non-billable hours include necessary tasks such as administrative work, internal meetings, and business development, which are not directly charged to clients but are essential for business operations.

Effectively tracking both types of hours can significantly impact your financial outcomes. Industry benchmarks suggest that maintaining a 60-80% utilization rate for billable hours is ideal, with top firms achieving upwards of 75%. Misclassifying even a few hours weekly can cost firms over $200,000 annually in lost revenue. Understanding these metrics is the first step towards optimizing your time management strategy.

Strategies to Track and Optimize Your Time

Effective time tracking is vital for distinguishing between billable and non-billable hours and enhancing profitability. Here are some key strategies:

  1. Clearly define billable versus non-billable activities for your team to prevent confusion and ensure accurate reporting.
  2. Utilize easy-to-use time tracking tools like Harvest that offer one-click timers and integrations with popular platforms, reducing manual errors and improving accuracy.
  3. Encourage real-time logging of hours to prevent the loss of billable hours. Studies show that waiting until the end of the week can lead to a loss of up to 25% of billable hours.

These strategies not only improve time tracking accuracy but also help identify inefficiencies, allowing for better resource allocation and enhanced productivity.

Leveraging Harvest for Efficient Time Management

Harvest provides comprehensive solutions for tracking both billable and non-billable hours, making it an ideal choice for businesses looking to optimize productivity. With features like one-click start/stop timers and detailed reporting, Harvest allows you to streamline your time management processes.

Additionally, Harvest integrates with tools like Asana, Trello, and Slack, enabling seamless workflow management. Regular reviews of Harvest's detailed reports help businesses understand time allocation and make data-driven decisions to improve productivity. By reducing non-billable hours through streamlined processes, Harvest empowers teams to focus on revenue-generating activities efficiently.

Reducing Non-Billable Hours for Greater Profitability

Reducing non-billable hours is essential for increasing profitability. High non-billable time can lower profit margins by 10-20%. Harvest helps reduce these hours through automation and streamlined processes. By setting clear goals and budgets for non-billable activities, businesses can minimize their impact.

Automating repetitive tasks such as invoicing and timesheet entries with Harvest can significantly cut down non-billable time. Delegating or outsourcing low-priority tasks also ensures that your team focuses more on billable work. Regularly reviewing time usage reports enables businesses to continuously optimize their processes and enhance utilization rates.

Track Billable vs Non-Billable Hours with Harvest

See how Harvest helps track billable and non-billable hours effectively, providing insights for productivity and profitability.

Screenshot of Harvest tracking billable and non-billable hours.

How to Track Billable vs Non Billable Hours FAQs

  • Billable hours are those that can be directly invoiced to a client, such as project work and client meetings. Non-billable hours include tasks like internal meetings and administrative work, which are essential but not directly charged to clients.

  • Tracking both types of hours allows businesses to accurately manage financials, improve resource allocation, and enhance profitability. It helps identify inefficiencies and optimize processes for better operational management.

  • Harvest provides tools like one-click timers and detailed reports to track both billable and non-billable hours efficiently. This helps businesses optimize their time management and focus on revenue-generating tasks.

  • A good billable utilization rate typically ranges from 60% to 80%, with top firms achieving 75% or higher. This balance ensures profitability while allowing for necessary non-billable activities.

  • Businesses can reduce non-billable hours by automating administrative tasks, delegating or outsourcing low-priority work, and setting clear goals for non-billable activities. Harvest helps streamline these processes to minimize their impact.

  • Yes, Harvest integrates with various tools such as Asana, Trello, Jira, Slack, and QuickBooks, allowing seamless workflow management and time tracking across platforms.

  • Poor time tracking can lead to significant revenue losses, misclassified billable hours, underbilling or overcharging clients, and incorrect project profitability reports. Harvest's accurate tracking helps mitigate these risks.

  • Businesses should review time tracking reports regularly, such as weekly or monthly, to identify trends, spot inefficiencies, and make informed decisions about resource allocation and project pricing.