Project Management 101: Increasing Your Billable Hours

Scoro |  April 30, 2015 |  Last updated: September 6, 2016

Increasing Your Billable Hours

In many service-oriented firms, clients are billed according to an hourly rate. This is true in many industries: law firms, web development, marketing, software development, and more.

Yet, as many project managers are aware, hours worked and billable hours are two very different things. Exactly how much time is being billed to your customers versus how much time your employees work?

While the exact numbers vary by industry, a good benchmark is often around 60% utilization. Meaning that up to 40% of money spent on wages is going down the drain. When you calculate the total wages your company pays to its employees, this figure can result in a remarkable difference between your current revenue and how much higher it could be.
Not all non-billable hours are a waste of time. In some cases, those hours are being invested in projects that will grow the company and allow it to take on more work in the future. Even if you understand that, there is still money being left on the table. Here are a few techniques you can employ to bring the hours billed and hours worked closer together.

Analyze the current situation

Track and analyze all of your non-billable hours. Which of these internal projects are really necessary, and which aren’t yielding returns in terms of productivity or quality of work? Look at the schedule of various meetings, team building exercises, and other non-billable activities, and ask yourself which of these is helpful. If nobody on your team considers the activity useful, it’s time to stop doing it and focus that time on working with customers.
For essential, non-billable tasks like drafting proposals, search for ways to make the process more efficient. Automate the processes that can be automated, and figure out ways you can do other tasks faster without compromising the quality of work.
To get a quick overview of how your business is performing and how much time is spent on specific tasks, create a project tracking dashboard.
If you’d like to learn more about project dashboards, see the complete guide to KPI tracking dashboards.


Planning the time

The perfect employee often takes the world on their shoulders without any complaints, even as they collapse under the weight. On the flip side, a poorly performing employee may complain about being over-worked even when they spend five hours of their daily time on Facebook while being ahead on assigned projects.
Examine how each employee is spending their time and reward them appropriately. Take some of the workload off of your excellent employees and assign them to less productive employees.
Successfully assigning tasks to your team members requires understanding each person, knowing their strengths and weaknesses, and being aware of how much work is assigned to them. As such, a good project manager cannot focus entirely on getting the job done: you have to know your team inside and out and utilize their abilities to the fullest extent.
Master the art of motivating your employees by reading this article on managing staff morale.

Redefine “Billable hours”

What tasks do you deem to be billable and which do you consider non-billable? It seems like there should be a fairly obvious definition: work done for a client is billable, work not related with a customer is not. What may be happening, however, is that you are falling into a trap of thinking a routine task is simple or that it does not seem like something you should charge for. Analyze how much time you are spending on “minor” tasks, after you add them up you may be surprised how much time you waste on these seemingly inconsequential tasks, and how many hours go unbilled.

A general rule is to ask yourself if you’d be working on a given task if client X did not exist. If the answer is no, then it is billable for the client. The only hours that are non-billable are those tasks you’d need to do whether the client is there or not.
To get paid on time, track your time and send automated invoices to your customers. Read how to find the best time billing software.

try project management software

Completed job does not mean the work is done

You’ve done the work, you billed your client for the time spent, they provided payment and the job is closed. Then something happens that every creative service provider is familiar with: they receive a call, and the client has questions. You answer those questions, hang up the phone, and you think you are done. The former client calls again. This repeats until you’ve spent 5 or 6 hours that month answering questions from a former client.

Remember that unless you promised free customer service after the job closes (and you should not), those hours ARE billable.
Consultation and customer service can be charged if it is eating into your productivity. Add up the time spent talking with the client and if it closes in on the one-hour mark, be upfront with the client and tell them that if this keeps up they’ll have to pay a consultation fee. Remember: if you do not value your time, nobody else will.

Time billing is also an incredibly important part of project management software. When looking for a PM tool, ensure it has an automated invoicing feature included.
Read on: How to Improve Your Project Management With Scoro in Six Steps?

Keep Accurate Records

Last, but certainly not least, comes your record keeping. It may be tempting to fudge the records and estimate how much time you spent on a project. The problem with doing this is that if you overestimate, your client loses trust, and if you underestimate you are giving away time. Keep accurate accounting of every hour of time spent every day so that you know exactly how much time has been spent on which client.

Accurate record-keeping has two benefits. The first, and most obvious, benefit is that it allows you to bill your clients accurately. The second advantage comes into play if a customer disputes the charges: you can send records quickly and easily tracking where every penny the client spent is going. This will help reassure your client that their money was well spent.

To keep track on your project performance, monitor the right metrics that give you the best overview. Start by looking into these 16 essential project KPIs

Remember: your company’s time is valuable. Every minute wasted is a minute that could have gone towards your bottom line.
Doing your research, tracking your employee workload and making use of time tracking and reporting tools such as Scoro will help boost business efficiency to well above the standard, translating into additional revenue for you.


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