Billable Expenses: A 2025 Guide from Your QuickBooks Trainer

No one wants errors, delays, or frustration creeping into their workflow. Unless you’re keeping track of your billable and non-billable hours properly, you won’t have a cat in hell’s chance of accurately remembering what went down. So, that’s why you need a clear plan, with solutions to the following problems baked in. Billable hours are the hours your team spends delivering client-specific project tasks. Many companies, as well as independent consultants and contractors, operate at an hourly rate.

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• Here are the main reasons why keeping track of your non-billable hours is significant for your company and your clients.
• Explore different tracking modes, categorize your time according to client and project, and then create and send a professional invoice for your billable hours with FreshBooks invoicing software.
• Speaking of lawyers and legal professionals, their ideal utilization rate is 100 percent.
• These tools help ensure data accuracy and handle administrative tasks.
• By automating tasks, you can eliminate the need for manual data entry, reducing the risk of mistakes caused by human error.

Digital payment platforms charge a fee to process payments—those fees qualify as billable expenses. Many small business owners make the mistake of only counting the portion they receive after the processing fee is deducted. Accounting departments know this because invoices and accounts receivable won’t match without including the fee. Once the contract is signed, research and planning may be required to fulfill your business obligations, which can include time and labor. A best practice in this case is to itemize research and planning as a billable expense on your invoices. Other billable expenses include research and planning, online payment processing fees, tools for client engagement, office supplies, subscriptions, and travel expenses.

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Billable hours are the time spent working on client projects that you can charge directly to your client. Understanding billable hours helps you structure your time management and ensure you’re compensated fairly for your work when billing clients. Billable hours are petty cash the time spent working on client projects which can be billed directly to the client.

What are billable and non-billable hours?

However, in reality, organizations often struggle to come up with an effective system of time tracking to optimize their earnings. It’s important to understand billable vs non-billable work, because time that’s not what are billables billed is time for which the company does not receive revenue. Michelle Payne has 15 years of experience as a Certified Public Accountant with a strong background in audit, tax, and consulting services.

How To Increase Billable Hours

Billables AI and MyCase share a mission to empower law firms with smart, accessible tools that improve the business of law. This partnership marks another step forward in delivering on that mission—helping firms spend less time on timekeeping and more time practicing law. Casey Means does not have an active medical license, and appears to lack a background in public health, which won’t necessarily preclude the Senate from confirming her as Surgeon General. Assuming her nomination sails through, it’s uncertain how much will be left of American public-health infrastructure once her term is under way. Over all, the full-time staff at H.H.S. has shrunk by more than twenty per cent since January. Finally, but no less importantly, managing your utilization rates isn’t only relevant to your finances.

Subscriptions and fees for service providers

If your firm decides to use these codes, it’s important to match corresponding narratives to these codes. While the codes may have some meaning on their own, the narratives give them more context and provide a bigger picture for clients. For more information on the best billing code practices, check out this blog post we made. Narrative consistency is also important for maintaining professionalism. If one employee writes narratives in a manner that is way different than another employee, confusion is bound to occur. A good way to establish consistency is to train employees in the proper etiquette of writing narratives and what https://www.bookstime.com/blog/what-is-cash-flow the firm’s standards for documenting are.

• These issues could happen due errors in pricing systems, or due to duplicate work, and etc.
• The answer to these challenges is found in time-tracking software that diligently and promptly records workers’ hours with ease and convenience for multiple benefits.
• Especially when expenses can easily be mixed up, such as in the case of travel, vehicle expenses, meals, and entertainment, or supplies.
• That percentage can go even higher in certain high-performance fields.
• Without clear guidelines, you might underreport your billable hours or misclassify tasks, leading to lost revenue.

The commonly-held estimate of billable time lies somewhere between 60-80 percent…

Define how billable utilization is crucial and always good for client’s project management. But, besides the utilization rate, there is another metric in the law industry. It’s called the realization rate – how many hours an attorney tracks compared to the fees that are collected.

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This way, you need to mark all your billable and non-billable activities. Clockify is a time tracker and timesheet app that lets you track work hours across projects. One of these reports is The 2017 Legal Trends Report, a survey done by Clio, which included around 3,000 legal professionals. According to this research, out of the 8-hour workday, only 2.3 hours of the day were marked as billable.

The law firm example: How many billable hours in a year?

Learning how to balance billable vs non-billable hours is the key to unlocking your agency’s growth. Join us as we explore the best strategies to utilize your resources and manage your billable hours successfully. Administrative duties are never going to be billable tasks, so why not minimize their impact through automation? By adopting a scalable solution that is easy to use and deploy, you will soon see how efficient and sustainable an automated software solution can be.