For a law firm, the requirement says a great deal not only about standards but also about law firm culture. Automation offers an ideal solution to the error and inefficiency of manual time tracking. Automatic hours trackers like Timely track all your hours for you, so you don’t spend any more time on essential admin.

• Calculate totals for each service category separately, and enter the category and grand totals on the appropriate lines on the voucher form.
• Exactly how you bill for these hours will depend on how you track your hours and the agreement you have with the client.
• Billable hours are the total amount of time you spend working on a particular project.
• And associating billable data to a customer via an account makes lots of sense.
• By making an effort for billable hours tracking, you can get the real picture of just how much time your team invests into projects.

Many of those services will be project-based and include kick-off meetings, project scoping, industry research, writing pitches, and other project activities. An attorney’s approach to billable hours will differ from a PR agency.

Step 3: Track your team’s time

Doing this also helps in measuring KPIs in your organization. If you use QuickBooks Online for accounting, it’s easy to track time and enter https://www.bookstime.com/. Track hours in Timesheets or use the built-in time-tracking functionality.

For essential, non-billable tasks like drafting proposals, search for ways to make the process more efficient. Automate the processes that can be automated, and figure out ways you can do other tasks faster without compromising the quality of work. First impressions are everything in life, and onboarding your new clients is no exception. Get the complete Client Intake Checklist here to learn more. It’s time to literally think about time as money for your firm. Breaking for a 90-minute lunch may be fine in your firm, but that’s a $350 expense that would probably need partner approval if you treated that time as money. The answer is for your firm to establish a documented time policy.

Don’t Be Lazy: The Billable Hour Has Survived For A Reason

Billable hours are hours worked by an employee for an employer that are billed to the employer’s client. However, the practice of using billable hours has also been criticized for a number of reasons. Various forms of technology have been developed to track the billable hours generated by employees. Lawyers, like freelancers, typically have a large number of clients that they’re juggling at once.

Both of these options allow for the more mundane tasks of lawyering to be handled by someone other than you, the attorney. There are many software options out there, designed to aid resource and practice management. This software not only helps offices keep track of billable hours, but also makes other useful tasks easier, like productivity analysis, costing, reports, invoicing, and accounting.

SmallLaw Billing Maxims (i.e., Get Paid!)

First, it’s important to identify what constitutes billable hours vs. non-billable hours. Billable hours include all the time an attorney spends actually working on a matter or even thinking about a matter.

The number one thing for a service provider is to ensure the focus on long term relationships and customer value is emphasised, despite the short term pressures. A good detailed example of this is the use of liquidated damages clauses in fixed price contracts. Basically these are penalties that the supplier will have to pay to the client in the event of project overruns.

Calculate Billable Hours

When trying to figure that out, look at how much non-billable time you currently use and see if that is providing a benefit to your company or not. Billable hours, for those who are unfamiliar, are pretty self-explanatory. They’re the hours that are tracked by an individual on a team as they’ve worked normal or overtime hours that can be billed to a client. The number one thing for a client firm engaging a service provider is to ensure a focus on value delivery and outcomes rather than activity – however you can achieve that. Remember that unless you promised free customer service after the job closes , those hours ARE billable. You might stop halfway through a task as you need to go to the restroom. You pause your tracker for this perfectly legitimate reason and get back to your desk.

Expert advice and resources for today’s accounting professionals. Attending meetings with the client or related to the client’s project. Billable hours seem like they should be black and white, but they aren’t always. Generally, if you can tie your work back to the client, your time is billable. As a business, you’re responsible for your staff, and that means covering days off and their salary, regardless if their time was marked as billable or not. Along those same lines, some expenses can be fairly recouped from a client while others have to be eaten by the law firm. The goal is not to have profits nibbled away by non-recovered expenses that were never billed to the client.

Step 2: Set your billable rates

Billable Hours refer to the hours worked by an individual that they can charge to a client. The work conducted during those hours must be on behalf of the client. They cannot include any hours spent doing non-project-related tasks. Typically, they reach an agreed hourly rate with the client before starting the project. There have been a few numbers bandied about concerning non-billable hours and the poor comparison to billable hours (if you’re counting non-billable hours) as a bad thing.

• Billable hours present the most secure way to tie your work back to the client.
• These agreements can prevent any disagreements on the time spent.
• The most effective way to keep highly organized client files is tomaintain completely electronic client and matter files.
• What can we do to change the dynamics of billable hours firms to get better outcomes?
• Here’s an example of billable hours from the accounting industry.

If you’re completing multiple tasks at the same time, then you also need to track them separately. Most clients will have an expectation of the amount of time a project will take and if your billable hours fall within this, they most likely won’t question it. There are other tasks related to your client’s project that are also non-billable hours. These include the initial proposal to get the job and sending the invoice after it. The client would not expect you to exclude these when calculating billable hours. You may agree beforehand on some parameters with your client, which can be useful before you get started.

Billable and non-billable hours: how to find the perfect balance

It can also depend on the billable hours tracker that you’re using. Non-billable hours are the hours you spend for which you cannot charge a client.

In such cases, your organization has invested time as well as resources. However, it’s difficult to have them itemized and billed on an invoice.

A few examples include freelancers, law firms & legal professionals, accounting firms, and advertising agencies. TSheets time tracking, you can track time against clients but also against jobs or projects for those clients. Customize your billing with the option to set billable rates, depending on the client or job. Upgrade your account to get job costing features that let you track time against a project’s expected number of hours. Use retrospective reports to inform your decisions and craft more accurate estimates. Saviom, a resource management and workforce planning software.

In general, when lawyers have less than 100 percent of their billable hours, this could be an indicator of a problem. These issues could happen due errors in pricing systems, or due to duplicate work, and etc. If you track all your time, not just your billable hours, you’ll be able to look back at your work day and see where you can become more efficient.

It is standard practice to send invoices monthly but for projects that need more resources, you can work out a bi-weekly schedule with your client. Historical timesheet data from previous projects can make it much easier to provide accurate estimates when you bid for new business, or when you have ongoing projects with changing scopes. Billable hours also help to avoid any possible misunderstanding with clients as the matter of who is doing what. Billing in such way helps to show what activities are being done under the scope of the project and, therefore, need to be paid for with the client’s money. Clockify is a time tracker and timesheet app that lets you track work hours across projects. So, if a lawyer has 2,340 billable hours per year and a total yearly available number of 3,120 hours, we’ll divide 2,340 by 3,120.

When tracking billable hours manually with a billable hours chart, most lawyers adhere to 1/10th of an hour (aka six-minute) increments. It might seem silly in the moment to track a five-minute phone meeting or the two minutes it takes to send a work email. But all those small increments of billable time can add up over the span of an entire project. Track every minute you spend working on a client’s project to increase your billable hours. Record your billable hours by project, so you know what client you’ll invoice for the work you’re completing.