Billable vs non-billable
| Activity | Billable? | Notes |
|---|---|---|
| Client work (design, code, advice) | Yes | Direct contribution to deliverables |
| Client meetings and calls | Usually yes | Confirm in your engagement letter |
| Project research | Often yes | If it's specific to the client's project |
| Internal team meetings | No | Overhead time |
| Sales calls and proposals | No | Business development |
| Email about the project | Often yes | Tracked in 6 or 15 min units |
How to track billable hours
- 1
Pick a tracking unit
Most service businesses round to 6 minutes (0.1 hours) or 15 minutes (0.25 hours). Be consistent. - 2
Log entries as you work
Real-time tracking is more accurate than reconstructing a week from memory. - 3
Tag each entry
Include project, task, and a short description so the client invoice is easy to read. - 4
Convert to decimal hours
22 minutes → 22 ÷ 60 = 0.37 hours. Many tools do this automatically. - 5
Multiply by your rate
Hours × hourly rate = invoice line. Sum all lines for the invoice total.
Worked example: a freelance week
| Day | Project | Hours | Rate | Line total |
|---|---|---|---|---|
| Mon | Acme - design | 5.50 | $95 | $522.50 |
| Tue | Acme - design | 6.00 | $95 | $570.00 |
| Wed | Brava - consulting | 3.25 | $120 | $390.00 |
| Thu | Acme - revisions | 4.75 | $95 | $451.25 |
| Fri | Brava - workshop | 2.00 | $120 | $240.00 |
| Total | 21.50 | $2,173.75 |
Billable utilization
Utilization = billable hours ÷ total working hours. If you worked 40 hours and billed 22, your utilization is 55%. Many service businesses aim for 60-75% utilization. Knowing your number helps set rates and target income.
Common pitfalls
- Forgetting small chunks. Five-minute calls add up fast, track them.
- Rounding inconsistently. Always round in the same direction at the same interval.
- Bundling unrelated work. Clients dislike vague invoice lines like "various tasks, 12 hours."
- Ignoring scope creep. If a client adds requests, log them as separate entries instead of absorbing them.
Tracking small chunks all day
Solo professionals and consultants often lose 30% to 50% of billable time to untracked small chunks: a five-minute email reply, a quick phone call, a short revision after a meeting. The fix is to log every chunk as it happens, in the smallest billable increment your contract allows. Six-minute increments are standard in legal billing and increasingly common in consulting. Use the Six Minute Rule Calculator to see how chunks add up across a typical day.
Effective rate vs headline rate
Your headline rate is what you tell clients. Your effective rate is what you actually earn per working hour. They are rarely the same. Sales calls, admin, follow-up, and unpaid revisions all eat into the working day. To find your effective rate, divide total monthly billing by total hours spent on the business that month, including non-billable work. If your effective rate is much lower than your headline rate, the gap is usually unpaid scope creep or weak client onboarding.
Practical tracking workflow
- Open a timer when you start work for a client.
- Pause it when you switch contexts. Even a coffee break.
- Log the activity in a single sentence so you can defend the line on an invoice.
- At the end of the day, round to your contract increment.
- Move the day's totals into your invoicing system the same day.
This routine takes about five minutes a day and prevents the end-of-month scramble where you reconstruct hours from memory.
Building an invoice that holds up
Invoices that get paid quickly share the same structure: dated line items, brief descriptions, billable increments, totals per project, and a clear total at the bottom. Avoid vague "various tasks" lines. Use the Invoice Hours Calculator to assemble multiple project lines into one clean invoice total.
Important note
Billing practices vary by industry, contract, and jurisdiction. This is general guidance, confirm rules with your client agreement, accountant, or industry association.