Billable vs. Non-Billable Hours: How to Track Them for Profits in 2025

You're working 50+ hours a week, but your profits don't match your effort. We get it. The real problem lies in the "tracking." This means that you are not properly tracking billable vs non-billable hours. 

Most freelancers and agencies only bill 65% of their actual time, and the best ones hit 85-90%. That 20% difference can mean thousands in lost revenue. 

Therefore, ClientManager has to enter the market to reduce the risk of losing the revenue that businesses deserve.  

This guide shows you how to track both types of hours correctly, hit higher utilization rates, turn every working hour into either direct revenue or smart business investment, and how Client Manager can be your handy help doing all the above with ease. 

Get to Basics: Billable, Non-Billable, and Actual Hours?

What are Billable hours?

Billable hours are the total hours you spend directly working on the out-of-house (client's) project. The primary purpose of tracking billable hours is building strong client relationships and, obviously, generating revenue for the work done. Furthermore,  billable hours are generally an hourly rate or a fixed rate. 

Billable hours have something more. It's when you track these hours that your clients can see exactly what you're doing and how you're spending their money. 

What are Non-Billable hours? 

Next hand, we've non-billable hours. These hours refer to the extra time you, as the worker, spent on administrative tasks, such as team training, brainstorming, and more. These are essential aspects for any project, but cannot be billed directly to clients.

But these hours represent the invisible engine that keeps your business running smoothly, even though they don't generate immediate revenue.

Actual Hours

The complete amount of time spent on billable and non-billable tasks is included in actual hours.  For instance, your actual hours are 10, if you work on business development for 2 hours and have eight total billable hours as a lawyer.

Decisions on workload, assignments, and workflow concerns about billable and non-billable work can all be influenced by a review of the total.

Best Practices for Tracking Billable and Non-Billable Hours

Now, you know the basics. The next question immediately pops up: how can you utilise them for profits? There are a few smart tracking strategies that can prove to be profitable practices for your business.

1. Set Clear Guidelines and Definitions: The first step to establishing is "clarity." Every team should be clear about billable and non-billable hours. In short, set clear definitions for your team. For example, the time spent designing a client's campaign is billable, but internal research work is not. This clarity helps save time for everyone. In the end, documenting the rules for billable or non-billable hours is essential to avoid future confusion.

   
   

2. Monitor Time in Real Time: It’s challenging to recall what you worked on at the end of the week. This time ends up being lost. Hence, real-time tracking is far more accurate and prevents lost revenue. Modern platforms like ClientManager have shown how automation makes this process a lot more handy. Your team can capture time as it happens in real time because real-time tracking provides immediate insights into project progress and resource allocation.

3. Stay Consistent With Your Categories: Time categories should be standardized across all projects and team members. For instance, one can set up 4-5 different categories for billable work and about 3-4 categories for non-billable work because this type of consistency makes reporting meaningful and helps you spot profit-draining patterns immediately. 

4. Set Weekly Tracking Goals: Set target percentages for your team. Every profitable service business aims for at least 60-70% billable hours. You should track this weekly and adjust workloads when non-billable tasks start consuming too much time. Moreover, create simple dashboards that show each team member's billable percentage. This visibility encourages better time management and identifies training opportunities.

5. Review and Adjust Monthly: This practice has done wonders for many businesses. You can also schedule monthly reviews to analyze your billable vs non-billable hours data. Look for trends that impact profitability. Are these projects requiring way too many non-billable tasks? Is administrative work cutting into billable time? Which team members maintain the healthiest billable ratios? Use these insights to adjust pricing, processes, and team productivity optimization.

6. Automate Where Possible: Reduce manual tracking overhead with automation tools. ClientManager makes it handy by offering automated rate calculations, centralized dashboards, and seamless billing integration. You can set different rates per project, automatically calculate fees, and manage team entries from one place. The easier you make tracking billable hours, the more accurate your data becomes. When automation handles the details, your team focuses on profitable client work.

   
   

7. Use purpose-built tools or platforms: We get it. Manual spreadsheets quickly become a burden. However, purpose-built software, such as ClientManager, helps bring everything together in one place.  What's more? Hour tracking, invoice generation, and performance analysis without having to jump from one system to another help save time and also create a professional experience for clients.

   
   

Track Time and Generate Huge Profits With the Right Tool: ClientManager Software

Look, we can all agree that smart tracking is the only way to make excellent earnings. Moreover, maintaining a balance between billable and non-billable hours guarantees that every hour adds to the success of the business. It simply doesn't matter if you're working on the project or training your team for that project. Every hour is counted as an asset. 

Hence, the takeaway:  Time is the most valuable resource one has, but only when one manages or even tracks it correctly.

Good time-tracking practices and advanced tools, like ClientManager, can optimize profits by tracking the work in the best way. They eliminate inefficiencies and improve profitability.  It is an all-in-one tracking software that tracks your employees' hours and ensures you get paid properly. 

We have a great idea. Why not book a free demo with our time-tracking and management software to save time? You can smooth the track flow, and after setting it up, it just takes a few clicks to make everything trackable and manageable. 

Question People Ask Frequently

What is the best way to track billable hours? 

The best and easiest way to track billable hours is by smartly switching to the advanced time-tracking software, such as ClientManager. This tool automates logins, categorizes work by project, and even produces reports and billing invoices for you. 

Which is better, billable or non-billable?

Honestly, both are important from a project perspective. So, balancing them is a smarter move for leading your business from struggling to a successful one. 

What are examples of non-billable hours?

Non-billable hours are hours you spent on activities such as internal team discussions on projects, administrative tasks, professional training of the team, and more. For these activities, you cannot charge a client directly. Hence, it is named as non-billable hours.