Should You Track Non-Billable Hours?

If your company is in an industry that charges clients per billable hours then you must be using a software to track your time. However, if you’re only tracking billable hours, you’re not really doing much to improve the efficiency of your business. Why?

It’s simple: for your business to function better, you must improve all processes, not only those you’re being paid to do.

What Are Non-Billable Hours and Why Should You Care?

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Non-billable hours include the time you put in to finish work that can’t be paid by the client. They are a business expense, and if not optimized, they could cost you a fortune.

Non-billable hours usually include: (some other might be applicable as well, depending on your industry)

• Networking
• Client research
• Employee development
• Company meetings
• Admin processes like invoicing, bookkeeping, etc.
• Proposal writing

Non-billable hours are the backbone of your company. No matter how many actual projects you have, you wouldn’t be able to run them without the tasks that constitute as non-billable.

So, What Can You Do About It?

The first step towards resolving a problem is identifying the problem.

Once you start using electronic timekeeping software to track non-billable hours, you’ll be able to optimize the processes that take up most of the time. Maybe you’ll see that redundant meetings take a lot of time for no reason, and you’ll be able to cut them down.

Do you have any idea how much time you and your employees spend researching, pitching, writing proposals and seeking for new clients? An hour, two, three per day? Is it more? How can you be sure? You could be if you were using a business time tracking software. If you figure out that one of your employees spends too much time on research each time they get a new project, you should talk to them and shift them in another direction. Additionally, it’s possible you’ll see a way to rework the processes, in order to make more time for billable hours.

You’re the one who’s going to end up paying for those unbilable hours. You know that, right? It’s quite possible that some clients are costing you more than they’re worth due to a huge number of lengthy, usually pointless, meetings, emails and conference calls. When you start using a team time tracking software, you’ll see clearly if your team is spending more time on non-billable activities with clients. Once you identify the clients, you can either drop them, or update the terms of your arrangement.

The thing about time tracking is that it’ll give you, and your teams, an accurate picture of how you’re spending your time. This makes everyone more accountable for how they spend their work time. Generally, seeing how you’re using time makes you think how you can spend it more efficiently.

What is more, tracking both billable and non-billable hours will help you make much more accurate project estimates in the future.

In the end, you need to remember that each hour you spend on non-billable activities, is an hour less you can bill to the client. So, make sure you’re tracking time every single day.

How Can You Track Non-Billable Hours?

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It’s actually pretty easy, and pretty much the same as for billable hours. You just keep your 

employee time tracking and management software running while you’re working. You just go ahead and label meetings as ‘Offline time’ and add a memo “Meeting with client X”.

Best time tracking programs will give you an option to classify time spent as productive or unproductive. With a bit of customization, you can have that time actually classified as non-billable and billable time.

Final Thoughts

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It might not seem that way - but non-billable hours are just as important as billable ones. They are paving your way towards profit, and helping you achieve excellent results. The fact that you’re not getting paid for them doesn’t mean you shouldn’t be tracking, or trying to improve what you’re doing during those hours.

Are you tracking your non-billable hours? How? Did you try doing it with Insightful? Let us know!

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