What are Billable Hours and How to Track them to get paid?

Feb 2, 2021 7:12 AM ET

iCrowdNewswire   Feb 2, 2021  2:12 AM ET

When you’re working on an hourly basis with clients, you need to define a system. It must monitor your time spent on the project, track billable hours, and issue invoices to clients.

Additionally, you need to keep an account of non-billable tasks like answering calls and emails.

If you don’t know how to frame this system, this article elaborates on the step-by-step process to track and get paid.

What are Billable hours?

The time spent working on the tasks for the client’s projects is considered a billable hour.

What are the tasks involving client projects?

  1. Researching
  2. Planning the project
  3. Framing the project timelines
  4. Performing the planned work to complete the project
  5. Editing and revising the work
  6. Attending meetings
  7. Reading and replying to client emails.

These are some main areas every freelancer or small business bill for.

What are non-billable tasks?

  1. Proposal development for new projects
  2. Consultations and meetings before signing the contract
  3. Administrative tasks like invoicing and payment processing
  4. Work beyond the scope of the project as mentioned in the contract

This may also vary depending on the work and industry. For example, if you’re a marketing consultant, then you should charge for consultation calls. However, ensure that you inform the client about it.

Ways for tracking billable hours

Here is a step-by-step quick guide for tracking billable hours.

  • Determine your hourly rate

Before you pitch to the clients, you need to determine your hourly rate for the services you provide.

How to set your hourly rate?

  1. Do market research on the cost people charge for services you provide
  2. Set an annual income target, you like to earn
  3. Determine the rough estimate of how much time you prefer for accomplishing the project

Once you have done all these steps, divide the salary you want to earn by the number of working hours in a year.

For example, you want to earn $500000 per year, and you like to work for 6 days a week, and 6 hours a day, then your hourly rate would be $1600.

  • Track your time

For tracking a time, you have several options-timesheets, time trackers (app or websites). However, using manual methods like logging in the timesheet can be a tedious and inaccurate method.

Use automatic time tracking software. They are available in free and paid versions that fit your budget.

The data is also stored in the cloud, which you send to the clients via email seamlessly. Tracking billable hours solves the confusion between you and the client, thus making the payment processing smoother.

  • Add your working hours

When you record the working hours based on the project, the client knows exactly what tasks they are paying you for.

This helps you track the time spent on the client’s work per billing cycle.

Once a billing cycle is complete, review your tracker reports and calculate the project’s billable hours.

  • Schedule an invoice

After you’ve calculated the billable hours, create an invoice.

The invoice must contain

  1. Client’s contact information-name, address, phone number, and email address
  2. The list of services you provided with a number of items
  3. Billable hours for the services
  4. Payment mode
  5. Payment deadline
  6. Discounts (if any)
  7. Total amount plus taxes

It is best to inform the client regarding the payment terms while signing the contract as it dissolves the ambiguity before it arises.

The Final Takeaway

Tracking billable hours has major benefits when you’re working on an hourly basis. It leaves no room for confusion for both you and clients. Following these steps help you create a practical system for working on any project.


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