Home » Blog » How to Calculate Billable Hours with Resource Planning Software?

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.

What will you get thanks to this article:

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, by 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?

Track billable hours with time tracking apps or timesheet software

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 resource management software

Teamdeck is a Saas resource management software that helps companies plan and measure their teams’ work. Dozens of agencies, software houses, and product teams use Teamdeck for as resource scheduling software, leave management system, or just the best employee time tracking software.

To calculate billable and non-billable hours with Teamdeck, you’ll use the data collected from your employees’ timesheets.

Time tracking and calculating billable hours 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 to get a 30-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 and calculating billable hours and and non-billable in reports

When you sign up for Teamdeck, you get access to a robust reporting suite, where you can create project status reports, project budget report templates, and employee payroll reports templates, and more. It is also where you can keep track of your team’s billable hours.

Before we dive into details about your billable hour 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.:

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.

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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.

Calculated billable hours with time tracking app
Billable hours report overview

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:

Tracking non billable hours and billable in the time tracking tool
How many billable hours have been charged and how to calculate them?

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”.

Timesheet report based on time tracked or time you spend

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 billable hours for client's project with resource planning software
Teamdeck.io as billable hours tracker for client invoicing

Calculate your invoices based on the billable hour’s chart

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. 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.

Work hours overview in a time management software
Hourly rate overview. Non-billable and billable hours tracker help with optimization of business processes.

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:

Create invoices with accurate records presented on billable hours chart
Invoice your clients based on billable hours tracker
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