Billable vs. Non-Billable Hours

In most reports and time tracking, we encounter the terms billable and non-billable hours.

In this article, we'll explain what these terms mean, which hours are billable or non-billable, and how we can influence them.

The distinction between billable and non-billable hours always pertains to the perspective of our company and our clients. Individuals in our account are always paid for all hours; that is, both billable and non-billable hours are counted as costs for us.

Billable Hours

Billable hours are those for which we, as a company, get paid by the client—that is, they have a positive client rate.

Non-Billable Hours

Non-billable hours are those that we do not get paid for.

Which Hours Are Non-Billable?

Non-billable hours are:

• All hours in projects with the budget type Without Budget

• All hours in Time Estimates budgets that have a zero hourly rate

• All hours that exceed the estimate in the Time Estimates budget type

• Hours that we manually mark as non-billable in the Timesheet budget type

Hours that we manually mark as non-billable in the Time Estimates budget type

In such cases, these hours are not counted towards the limit, and subsequent time tracking can be marked as billable even if it exceeds the time estimate.

Each non-billable hour then has zero revenue.

If we have a Time Estimates budget with an estimate per activity, one person may use all the billable hours (because they tracked time earlier than their colleagues), and then all the hours of the colleagues will have zero revenue.

This can significantly affect the profitability of individuals in all reports.

For this reason, we recomend using Time Estimates per person, not per activity.