Everhour supports project budgeting for billable work, but the invoice amount still starts with approved hours and rates.
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A billable amount calculation answers one practical question: how much approved client work should be charged before the invoice goes out. The core inputs are approved billable hours, the rate attached to those hours, and any agreed write-downs or exclusions. Non-billable admin time, internal review, sales work, or warranty work should stay visible in records but outside the amount charged to the client.
For U.S. work, totals are normally stated in USD. The United States has no federal VAT/GST or national sales-tax rate for billed professional time. Sales tax treatment is state and local, so the billable amount should stay separate from any jurisdiction-specific tax input unless the service is taxable where the client or transaction is handled.
Start with time that has cleared review for billing. Raw worked time and approved billable time are not the same figure: a team can spend 44 hours on a project while only 36 hours are approved for the client invoice. That difference matters because utilization, realization, collection, and effective billing rate each answer a different question.
Utilization compares billable work with total available work time. Realization compares billed value with standard value after write-downs. Collection compares collected cash with invoiced amounts. Effective billing rate divides actual billable revenue by total work time or approved billable time, depending on the management question. Mixing those measures into the invoice calculation causes overstated client charges or misleading profitability reports.
The basic formula is: approved billable hours multiplied by the applicable hourly rate, summed across every role, task, or rate category. Then subtract approved write-downs and add billable expenses or taxable amounts only when they belong on the invoice. Keep each rate line separate when a project uses multiple people, phases, or service categories.
For example, a systems review includes 24 approved consulting hours at $160 per hour and 16 approved documentation hours at $110 per hour. The consulting line is $3,840, and the documentation line is $1,760, producing a $5,600 gross amount. If the manager approves a $300 write-down before invoicing, the pre-tax billable amount is $5,300.
Do not add a generic U.S. tax percentage to every billable amount. Some services are not taxed, and taxable service rules vary by state and locality. Texas taxes taxable services at a 6.25% state sales and use tax rate, with local jurisdictions able to bring the combined rate up to 8.25%. New Mexico gross receipts tax for services varies by business location from 5.125% to 8.6875%.
Payment timing is also separate from the amount calculation. For federal-agency vendor invoices, Prompt Payment rules generally use the contract date, accepted discount terms, an accelerated-payment rule, or 30 calendar days after receipt of a proper invoice. For U.S. lawyers, ABA Model Rule 1.5 requires the scope of representation and the basis or rate of fees and expenses to be communicated in writing for new client-lawyer relationships, subject to the limited low-cost exception.
A one-off calculation is enough when the project has a few approved entries, one or two rates, and no recurring budget constraint. It gives you the amount to review before invoicing: rate lines, write-downs, billable expenses, and jurisdiction-specific tax if the service is taxable. That works for a simple monthly invoice or a quick pre-bill check.
A managed workflow is better when the amount changes throughout the month. Everhour Project Budgeting tracks time and money budgets, recurring budget periods, threshold email alerts, expense inclusion controls, and multiple billing methods. That gives managers a running view of billable exposure before the invoice stage, especially when client-level budgets or time-and-materials rates need ongoing control.
This content is for general information only, may not be fully up to date, and is provided without any warranty or liability.
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The final billable amount comes from approved billable hours, the rate assigned to each hour, billable expenses, discounts, write-downs, and any jurisdiction-specific tax input when the service is taxable. Keep tax separate from the pre-tax service amount so you can review the labor charge before applying state or local rules.
No. Non-billable hours should not increase the client charge. They belong in internal reporting because they affect utilization, project cost, and effective billing rate, but they should stay outside the invoice amount unless the client agreement specifically makes that work billable.
Add sales tax only when the billed service is taxable under the relevant state and local rules. The United States has no federal VAT/GST or single national sales-tax rate. A U.S. calculation needs a jurisdiction-specific tax input when the professional service, location, and transaction terms make the charge taxable.
A write-down reduces the gross billable value before the client is charged. If approved hours at standard rates total $5,600 and a $300 write-down is approved, the pre-tax billable amount becomes $5,300. Keep the write-down visible so realization reporting shows the gap between standard value and billed value.
For federal-agency vendor invoices, Prompt Payment rules generally set payment due on the contract date, accepted discount terms, an accelerated-payment rule, or 30 calendar days after receipt of a proper invoice. For January 1 through June 30, 2026, the federal Prompt Payment interest rate for late payments is 4.125%.
Everhour Project Budgeting tracks hour-based and money-based budgets as people log time and expenses. Teams can use recurring budget periods, threshold email alerts, budget protection, expense inclusion controls, and client-level budgets to monitor billable exposure before the invoice total is finalized.
Use Everhour Project Budgeting to track time and money budgets while work is happening, then review budget status before invoicing for clearer billable amount control.
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