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The concept of billable hours is definitely familiar for companies that bill their clients by the hour. Software consultancies and agencies often work on the so-called “time and materials” basis. It means that they need to track the time team members spend on client work and issue invoices based on the tracked hours.
Not all hours that employees log are billable hours, though. Working on proposals for potential clients, participating in training sessions, taking part in all-hands meetings—all of these might be considered as non-billable hours. Naturally, as a business owner, you want to keep track of your team’s work, and there are very significant benefits of calculating billable and non-billable hours.
Why should you calculate billable hours and non-billable time?
For starters, knowing the exact breakdown of hours worked, you can invoice your clients accurately. Yet another benefit of tracking time spent on different activities is that you can evaluate your company’s hourly rate and fees. Are you charging too little for your projects to be profitable?
Finally, knowing how much time your employees spend on billable and non-billable tasks will help you find improvement areas within your organization. If people spend a lot of hours sitting in non-billable meetings, perhaps you should focus on teaching effective meeting management. Visibility into your team’s timesheets allows you to optimize company processes and improve your bottom line.
Calculate billable hours in real time with Teamdeck
Teamdeck is a complete resource management solution that helps companies plan and measure their teams’ work. Dozens of agencies, software houses, and product teams use Teamdeck for resource scheduling, leave management, or time tracking.
To calculate billable and non-billable hours with Teamdeck, you’ll use the data collected from your employees’ timesheets.
Time tracking with Teamdeck is easy and convenient. Team members can use a real-time mobile time tracker or enter their time entries manually.
How to get started? Sign up here to get a 7-day free trial and test out the app. The plan for teams larger than two people costs $3.99 per team member per month, all features included. Teamdeck’s crew will help you with onboarding your team seamlessly, and you’ll get your company’s account up and running within one day.
Tracking billable and non-billable time in reports
When you sign up for Teamdeck, you get access to a robust reporting suite, where you can create project status reports, budget reports, payroll reports, and more. It is also where you can keep track of your team’s billable hours.
Before we dive into details about your billable hours’ report, let’s explain how Teamdeck can recognize billable and non-billable hours.
Whenever someone logs in time—manually or via a start-stop time tracker, they can add timesheet tags to their entry. These tags are configurable on the company level and might consist of, e.g.:
- Working from home,
- High priority,
Essentially, you should define a tag for every category of working hours you want to be able to analyze later.
Teamdeck’s reports allow you to break down your team’s tracked time based on these tags, including billable and non-billable time. Let’s see how it works.
Build your billable hours report
Log in to Teamdeck, head to reports, and click on the plus icon in the lower right corner to create a new report. Here, you will be able to select a report template. In this blog post, we’ll show you how to create a billable hours report from scratch so click on “create custom”.
You’ll see an empty report. Give it a name and select the date range you want to analyze.
Now, let’s click on “Add a table” to load some data. You’ll see a default table with all of your company’s projects and some predefined columns. You can remove all of the columns except for “timesheets”. You are also able to filter the information visible in the table to, for instance, only see one particular project. For now, however, let’s leave all of them there:
You’ll notice that there’s a small arrow icon next to each project. If you click on it, you’re able to drill down the timesheet data. By default, you’ll see the names of people working on a given project, and then days. We can change these settings to see billable and non-billable hours.
Click on the “grouping” icon in the upper right corner of your table. Now you should be able to drag and drop different dimensions of data. Say that we want to see billable hours per project and then drill them down by weeks. Drag “Timesheet tags” and “weeks” into the left side of the grouping editor. Ready? Click “apply”.
Now when you click on the arrow icon next to each project, you’ll see a breakdown of your timesheet tags, including non-billable and billable hours.
Calculate your invoices based on the billable hours report
Once you have a report showing your team’s billable hours in Teamdeck, you can easily calculate how much money you should invoice your clients for. All you need to do is add your team’s hourly rate to the report.
Add two new columns to your report. Start by clicking on “Metrics” and then picking “Add custom” and “Add custom values column”. Name the new column (e.g., rate) and pick the currency data type. A new column will appear where you can write down data like you would in spreadsheet cells.
You can input a different hourly rate for each project or even for every team member working within these projects. In the picture, you can see a fixed rate set for the whole “Candy arcade app” project.
Now it’s time to calculate the invoice value based on the number of billable hours and the rate for a single hour of work. Add another column by going to “Metrics” but this time, pick “Add custom” and “Add custom calculation field”. Name the column (e.g., cost), set the currency data type, and type down the following formula:
(Timesheets: Time/60) * Custom values: Rate
Make sure to divide the timesheet by 60 as data is stored within our system as minutes, not hours.
There you have it! Your table should now display the exact price of your services you can put on the invoice:
You can also share your billable hours report with your finance or HR teams and even directly with the client. Simply click on “Share” and then you’ll be able to generate a public link or add collaborators to your report.
If you’re a business owner who needs to track your team’s billable time, we hope that this guide allows you to quickly set up a billable hours calculator using Teamdeck. Perhaps you still have some questions about time tracking or other features of our app? We’ve got you covered—schedule a call with our customer success specialist. We will walk you through Teamdeck and show you how you can set up a perfect billable time report for your team.