Track billable hours by defining what is billable for each client, recording time against clients and projects as the work happens, reviewing entries every week and invoicing from that record. The biggest source of lost revenue is time that was worked but never recorded. Automatic tracking with project tagging closes most of that gap.
Key takeaways
- Decide what is billable in writing, client by client.
- Capture time while the work happens. Memory loses the small tasks.
- State your billing increment in the contract.
- Review weekly, before the details fade.
What are billable hours?
Billable hours are the hours of work you can charge to a client under your agreement. Everything else is non-billable.
| Usually billable | Usually non-billable |
|---|---|
| Client work and deliverables | Internal meetings |
| Client meetings and calls | Sales and proposals |
| Research for a client matter | Training |
| Revisions within scope | Administration |
| Project management for the client | Fixing your own mistakes |
"Usually" matters. Travel, onboarding and communication time are billable for some clients and not for others. The agreement decides.
How do you track billable hours step by step?
- Define billable work for each client. Put it in the statement of work.
- Set up clients, projects and tasks in your time tracker. Keep the list short.
- Capture time as you work. Use a timer or, better, automatic tracking.
- Tag time to a project at the moment of work.
- Review weekly. Assign untagged time and fix mistakes while people remember.
- Invoice from the record.
- Compare hours with the budget and raise overruns early.
Which billing increment should you use?
| Increment | Common in | A 7-minute call is billed as |
|---|---|---|
| 6 minutes (0.1 hour) | Legal and accounting | 12 minutes |
| 15 minutes (0.25 hour) | Agencies and consulting | 15 minutes |
| Actual minutes | Retainers and technical support | 7 minutes |
Smaller increments are more precise and easier to defend. Whichever you use, state it in the contract and apply it the same way every time.
Where do billable hours leak?
Reconstruction
Timesheets written from memory at the end of the week leave time out.
Small tasks
A five-minute email and a ten-minute call are rarely written down.
Context switching
Time spent moving between clients gets lost between entries.
Untagged time
Work recorded with no client attached cannot be invoiced.
Scope creep
Extra requests are done as favors and never logged.
Write-downs
Hours are trimmed at invoice time because nobody can substantiate them.
Automatic tracking deals with the first four. The last two need a conversation with the client, and a record makes that conversation easier.
How should you record non-billable time?
Track it as carefully as billable time. Give it a few named buckets, such as internal meetings, sales, training and administration, and have people tag it the same way they tag client work.
There are three reasons. Utilization cannot be calculated without it. Your rates have to cover it, so you need to know how much there is. And when non-billable time has no home of its own, it ends up on whichever client project is open, which makes that client's numbers wrong.
How do billable hours relate to utilization?
Billable utilization is billable hours divided by available hours. It is the standard health measure for a services firm. SPI Research's 2026 benchmark put average billable utilization at 66.4% in 2025, the lowest in the survey's history. The formula and worked examples are in Employee utilization rate.
How does BirdsEye track billable hours?
BirdsEye records time automatically and attributes it to projects.
- Projects and tasks. Named, color-coded projects with tasks under them, and a list of who may book time to each.
- Tagging in the agent. People pick their current project and task as they work.
- Hour budgets. Set a budget for a period and watch consumption against it.
- Manual entries. Add client meetings and calls that happened away from the computer.
- Clean-up tools. Move a block of time to another project, or attach a project to untagged time in bulk.
- Project report. Totals against budget, by day, person and task.
- CSV export. Send time entries to your invoicing system.
BirdsEye does not issue invoices. It gives your billing system the record. Projects and budgets are part of the Team plan. See pricing.
- Website redesign14h 20m
- Mobile app11h 05m
- Support queue6h 30m
- Untagged1h 50m
Frequently asked questions
What is the difference between billable and non-billable hours?
Billable hours can be charged to a client under your agreement. Non-billable hours are work the business needs but cannot charge for, such as sales, training and administration.
How many billable hours are in a year?
A full-time year has 2,080 paid hours, which is 40 hours for 52 weeks. After 10 holidays and 15 days of leave, 1,880 remain. At 75% utilization that is 1,410 billable hours.
What is the best way to track billable hours?
Record time automatically as the work happens and tag it to a client or project at that moment. Review weekly and invoice from the record.
Should I bill in 6-minute or 15-minute increments?
Six-minute increments are more precise and common in legal work. Fifteen-minute increments are simpler and common in agencies. Either works if the contract says so.