How to Increase Billable Hours Ethically and Efficiently
If you’re here, you’re not merely content with how many billable hours you capture, and you’re under the impression that some of these are slipping through the cracks.
As a freelance writer managing a team, I’m always paying attention to how to increase billable hours, so I can invoice as much as possible.
Key takeaways:
- Track billable hours deliberately: Build crystal-clear time-tracking policies to eliminate ambiguity in the billable hours tracking process.
- Simplify the process: The easier you make time tracking, the more compliant your team will be. So, implement one-click solutions like EARLY to capture every billable minute.
- Minimize non-billable work: Every minute spent on non-billable tasks is potential lost revenue. Prevent that by delegating, automating, and streamlining admin work.
- Schedule strategically: Front-load billable work when energy is highest and batch admin tasks to create uninterrupted billable time blocks.
What are billable hours?
Billable hours represent the time you can charge for, as during this time, you’re directly working on client projects or deliverables. For agencies and any type of companies that invoice their time, billable hours are the backbone of revenue generation.
Unlike admin tasks or internal meetings, billable hours contribute directly to your bottom line. A report on digital agencies states that the average employee is expected to bill 25 hours per week. The same employee is expected to work other 13 hours on non-billable hours or tasks for a total expected weekly commitment of 38 hours.
According to the Yale Law School Career Development Office, a law firm averages a yearly range between 1700 and 2300 billable hours. As the bar is raised, knowing how to increase your billable hours without sacrificing your work-life balance is essential.
But here’s the challenge most service firms face: the average professional only bills 4 hours in an 8-hour workday. The rest? Lost to admin tasks, interruptions, and inefficiencies.
That’s a lot of potential revenue slipping through the cracks.
How to increase billable hours
Let’s get practical. I’ll introduce you to proven strategies to help your team maximize billable hours without having to work overtime or choosing dodgy and unethical ways in the client billing process.
On the contrary, I suggest you think of ways to reduce overtime, and you’ll see your billable hours chart plummeting, too, as overtime is counterproductive and, in fact, decreases business efficiency;
1. Make the rules of tracking billable hours crystal clear
Ambiguity around what counts as billable and non-billable hours leads to inconsistent tracking and lost revenue. I’ve seen firms lose thousands in billable hours simply because team members weren’t sure if certain activities “counted.” Here’s what to clarify:
Define billable activities with precision
Rather than making vague guidelines, create specific examples for your industry. For instance, “Client emails over 10 minutes” or “Research directly related to client deliverables.”
Also, different industries have different standards for what constitutes billable work. It’s worth noting these and making your team aware of them:
- Legal professionals: Client consultations, legal research, document preparation, court appearances
- Consultants: Client meetings, project work, analysis, report creation
- Creatives: Design work, client revisions, project-related communications
- Accountants: Tax preparation, audits, financial statement work, client advisory sessions
Learn how to maximize billable hours, and keep track of budget with EARLY!
Create a reference guide and address the gray areas
Create a simple one-pager where you outline what is and isn’t billable. One law firm I worked with created a decision tree that made it clear for each employee which activities were billable and which were not.
Also, create clear policies for tasks that are ambiguous (like travel time or brief client calls), so your team knows how to track billable hours accurately. Should they track time on travel, and at what rate? Should they track time as long as five minutes, or should this be ignored? Other possible questions for your guide could be the following:
- Should the time spent driving to a client meeting be considered billable?
- What action should be taken if a client cancels a meeting? Should they still be charged for the time that could have been allocated to another task?
Note that the decision of what types of time and not is yours, you won’t find standard guides on this topic. Ultimately, you should guide your choices on principles of ethics and authenticity, considering what your clients are likely to accept.
Set minimum increments
One important note that you should account for is that most professional service firms bill in 6, 10, or 15-minute increments. If it’s your case, too, be explicit about it in your policy. If you bill in 15-minute increments, a 5-minute client call might still be billed as 15 minutes.
Remember, without clarity, team members often default to not billing time when they’re uncertain. This under-tracking directly impacts your bottom line.
2. Explain the mutual benefits of accurate tracking
Your team needs to understand why accurate billable hour tracking matters, both for the company and for them personally.
Also, when people understand the “why,” compliance dramatically improves, share these benefits:
- Revenue impact: Show them the direct relationship between billable hours and company health. “Each additional billable hour per team member per week translates to $X increased annual revenue.”
- Client relationship benefits: Accurate time tracking leads to a transparent client billing process and reduces disputes while building trust.
- Reource allocation insights: Proper tracking helps you identify which clients and projects are profitable versus those that drain resources and the entire team to have better workload management.
With EARLY, you can access accurate reports with just one click
3. Make tracking billable hours effortless
The easier you make it for your team to track time, the more compliant they will be. Complicated systems or burdensome processes create resistance and lead to inaccurate data. The best practices you can implement include:
- Use a user-friendly billable tracker: Choose a time-tracking app like EARLY that makes tracking billable time simple and intuitive. Such a tool will automate non-billable hours as well as billable tracking, as your team can click a toggle, and then billable hours are captured.
- Enable one-click tracking: Save time with a time-tracking system that allows you to track§ in one click, without any hassle.
- Use automatic rounding features: Most firms don’t bill clients for exactly 13 minutes of work, but they round to the nearest billable increment. A good billable hours software handles this automatically and saves mental effort.
- Create logical activity categories: Structure your tracking options to match your team’s actual workflow rather than forcing them to hunt through irrelevant categories. In EARLY, for example, you can add hourly rates to calculate how much money you make for the billable hours created by your team. Hence, your team can go straight to choosing the billable activity, and then you will have access instantly to insights into your earned income.
One consulting firm I worked with increased their tracked billable hours by 22% simply by switching from their clunky legacy system to a modern, user-friendly time-tracking software. The time was always being worked, but it just wasn’t being captured before.
4. Minimize non-billable activities
Every minute spent on non-billable work is a minute you can’t charge clients for. The key is identifying which non-billable activities are necessary and which can be reduced or eliminated.
For example, I worked with a marketing agency that realized their creative directors were spending 7+ hours weekly on routine reporting tasks. What did they do? They delegated all reporting to junior staff and started using automated time reporting systems.
Try these approaches:
- Audit current non-billable activities: Use your time tracking data to identify where non-billable time is going. Are administrative tasks consuming too many hours, and do you need to automate non-billable tasks? Are certain internal meetings inefficient?
- Delegate non-billable tasks: Route admin tasks to team members whose time isn’t billed at premium rates. A lawyer billing $300/hour shouldn’t be doing work a $25/hour assistant could handle.
- Streamline internal processes: Examine workflows for inefficiencies. Could your weekly team meeting be shortened? Could some approval processes be simplified?
- Create templates and resources: Develop standardized templates for common deliverables to reduce time spent “reinventing the wheel” and focus on business development and other primary business needs.
5. Improve workflow efficiency
Beyond minimizing non-billable tasks, you can increase billable hours by completing client work more efficiently without sacrificing quality. This involves streamlining processes, eliminating bottlenecks and building overall better workflow processes.
Consider these tactics:
- Batch similar tasks: Group similar activities (client calls, document reviews, etc.) to reduce context-switching costs. Context switching can waste up to 40% of your productive time and wasted valuable time that could be turned into billable hours.
- Implement standard processes: Create clear workflows for common client deliverables and the billing process if needed so your team members don’t waste time figuring out the next steps.
- Identify and resolve bottlenecks: Set clear project management goals and KPIs, based on which to locate workflow chokepoints and address them. Often, small process tweaks can dramatically improve the output.
6. Optimize time management
Time management strategies can significantly impact billable hours. The good news? Time management can be taught and improved.
Effective strategies include:
- Time blocking: Encourage team members to schedule deep work of focused work for billable hours, protecting these times from interruptions.
- Set daily billable targets: Break down monthly or weekly goals into daily billable hour targets. This makes the goal more immediate and trackable.
- Prioritize by value: Teach team members to tackle high-value billable work during their peak energy hours, saving administrative tasks for lower-energy periods.
- Create distraction-free environments: Establish “quiet hours” or dedicated focus spaces where interruptions are minimized.
- Address procrastination directly: Provide training on overcoming procrastination, such as breaking large tasks into smaller steps or using the “two-minute rule” (if something takes less than two minutes, do it immediately).
7. Leverage technology and tools
The right technology stack dramatically increases billable hours by automating repetitive tasks and streamlining your core work processes. Consider these tech solutions:
- Implement practice-specific software: Industry-specific tools often include built-in templates and automation for common deliverables. Such examples are EARLY for time tracking, Notion for knowledge management, and Zoho Projects as a project management tool.
- Use document automation: Tools that automate document creation and management will save tens of hours of billable time, especially in document-heavy fields like law or accounting.
- Adopt AI assistants: From research summaries to first drafts, AI tools handle time-consuming but straightforward tasks, freeing your team for higher-value billable work.
- Utilize client portals: Self-service client portals reduce time spent on routine client communications while still maintaining service quality.
9. Create effective schedules
Strategic scheduling a well-designed employee schedule, takes into account employee availability, skills, and task dependencies, ensuring that the right individuals are allocated to projects that align with their expertise.
One good example of an effective work schedule is one legal team I consulted with that restructured their weekly schedule, moving all internal meetings to Wednesday afternoons. This created four and a half uninterrupted days for billable client work each week, resulting in a measurable increase in billable hours without extending workdays.
Effective scheduling approaches include:
- Front-load billable work: Schedule the most important billable tasks early in the day before distractions and fatigue set in for your team. You could apply the same technique at the beginning of the week.
- Block dedicated admin time: Rather than letting admin work fragment the day, it’s best to schedule specific blocks for non-billable tasks, so that your most important work is scheduled at the right time and done.
- Balance workloads thoughtfully: Ensure no team member is severely over or under capacity, as both extremes reduce billable hour efficiency. Also, it’s best to use an overtime tracker to stay on top of their work habits.
- Account for energy levels: Schedule demanding billable work during each team member’s peak productivity periods, which will vary from person to person.
- Build in buffer time: Allow realistic transitions between tasks and projects rather than scheduling every minute, which inevitably leads to spillover and stress.
Time tracking apps and their impact on increasing billable hours
The single most effective tool for boosting billable hours isn’t another productivity technique or workplace policy; it’s implementing the right time-tracking app. Why? Because even the most productive professionals can’t bill for the time they don’t capture.
In order to detail why a time-tracking app is a game-changer if you’re looking to maximize your billable hours, I’ll take EARLY and its features as an example.
Unlike clunky legacy systems that create friction and resistance, EARLY makes billable hour tracking effortless. With EARLY’s features, you can:
- Mark tasks as billable with a single click: No more complicated toggling between systems or forgetting to categorize your work.
- Automatically accumulate billable time throughout the day: As you track time for each task, billable hours add up without any extra effort.
- View real-time income calculations – The system tracks hourly rates and calculates earned income as you work, giving immediate visibility into financial performance.
- Choose from multiple tracking methods that fit your workflow, Whether you prefer an innovative physical tracker, keyboard shortcuts, or automated time tracking.
- Eliminate administrative headaches with client-ready reports: Generate professional time reports instantly instead of spending hours compiling billable time data manually.
- Identify your most profitable activities: Gain insights into which projects and clients generate the most revenue versus those that consume time without proportional returns.
The sustainable approach to increasing billable hours
The strategies above have a common thread: they focus on working smarter, not just longer. The goal isn’t to squeeze more hours from an already busy team, but it’s to make sure the hours worked are productive, properly tracked, and appropriately billed.
Remember that sustainable billable hour increases come from:
- Systems that support accuracy: Clear policies and easy tracking
- Efficiency improvements: Better workflows and reduced distractions
- Technology leverage: Automating what can be automated
- Cultural alignment: Teams understanding why tracking matters
By implementing these strategies thoughtfully, you can increase your firm’s billable hours sustainably without demanding nights and weekends from your team.
Sources
https://prometheanresearch.com/2023-digital-agency-industry-report
https://law.yale.edu/sites/default/files/area/department/cdo/document/billable_hour.pdf