Everhour connects tracked time to budgets and billing, while the math starts with approved billable hours and rates.
Track billable vs. non-billable time and see your real utilization rate and revenue potential in seconds.
Working hours in the period
Admin, meetings, internal work
Industry average is 75–80%
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A billable-hours calculation answers three practical questions: how much client work is chargeable, what that time is worth at the agreed rate, and what amount should move toward an invoice. The core input is approved billable time, not every hour worked. Internal meetings, rework, training, sales calls, and admin time stay outside the billable total unless the client agreement says otherwise.
For U.S. work, the total is normally denominated in U.S. dollars. The United States has no federal VAT/GST or national sales-tax rate for billed professional time, so tax treatment is state and local when a service is taxable. Keep tax as a separate jurisdiction-specific input instead of baking it into the hourly calculation.
The basic formula is billable hours × billing rate. When more than one rate applies, calculate each group separately, then add the subtotals. If a contract uses billing increments, round each time entry according to that policy before totaling hours. A 6-minute increment equals 0.1 hour; a 15-minute increment equals 0.25 hour.
For example, a client implementation record has 26 approved technical-review hours at $160 per hour and 12 approved coordination hours at $95 per hour. The technical subtotal is $4,160, and the coordination subtotal is $1,140. The pre-tax billable amount is $5,300 before any write-down, discount, reimbursable expense, or state and local tax input.
Billable hours show chargeable work, but they do not prove the final revenue collected. Utilization compares billable time with total working time. Realization compares billed value with standard billable value after write-downs. Collection compares cash received with invoiced amount. Effective billing rate divides earned or billed value by the broader time base you choose.
Using the same example, add 12 non-billable internal hours to the 38 approved billable hours. Total work time becomes 50 hours, and the effective billing rate across all work is $106 per hour. That number is lower than both client-facing rates because non-billable work consumed capacity without adding invoice value.
A one-off calculation is enough when you have a short time log, one client, one rate, no write-down, and no approval step. It is also enough for checking a quote, explaining a subtotal, or confirming whether a small invoice matches the agreed rate. Keep the source entries because the final number is only as reliable as the approved time behind it.
A managed workflow becomes necessary when several people track time, rates change by project or member, client budgets matter, or invoices need review before sending. Everhour Project Budgeting supports hour-based and money-based budgets, recurring budget periods, budget alerts, and budget protection, so tracked time can stay tied to project limits instead of being rebuilt manually at invoice time.
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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Billable hours are approved work entries that the client agreement allows you to charge. They usually exclude internal administration, sales work, general training, and non-client meetings unless the contract or engagement letter makes them chargeable. Mark non-billable work separately so utilization and effective rate calculations show the full cost of serving the client.
Billing increments change the total when time entries are rounded before multiplication. With a 0.1-hour increment, 7 minutes rounds according to the billing policy to the nearest, next, or other agreed increment. With a 0.25-hour increment, the same raw time may become 0.25 hour. Apply the increment consistently before multiplying by the billing rate.
Write-downs show the difference between work value and the amount you choose to bill. If you erase the original billable time, realization becomes impossible to read. Keep the approved hours, standard value, write-down amount, and final billed amount as separate figures so you can see whether pricing, scope, or efficiency caused the gap.
Do not assume a single U.S. sales-tax answer. The United States has no federal VAT/GST, and sales tax is state and local. Some professional services are taxable in specific jurisdictions, while others are not. Use a jurisdiction-specific tax input when the billed service is taxable, and keep the pre-tax billable amount visible.
Payment timing does not change billable hours, but it affects cash planning. 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. Private-client payment timing comes from the contract, invoice terms, or applicable state law.
Everhour Project Budgeting tracks hour-based and money-based budgets as people log time, with recurring budget periods and threshold alerts. Teams can monitor billable work against a project or client-level budget before the invoice is prepared, which keeps overruns visible while work is still active.
Everhour Billing & Invoicing converts tracked billable time and expenses into invoices, excluding non-billable tasks from the invoice amount. Invoice data can be grouped by project, task, person, date, or another available breakdown, then exported to QuickBooks Online, Xero, or FreshBooks.
Track approved hours against project budgets before invoice day. Everhour gives teams budget alerts, budget protection, and billable-work visibility tied to real logged time.
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