Everhour turns tracked client work into invoices, while the hour split shows what earned revenue and what stayed internal.
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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Tracked hours flow straight into a polished invoice — no copy-paste, no manual math.
The calculation separates client-chargeable work from time that supports the business but does not belong on a client invoice. It answers three practical questions: how many hours are billable, how many are non-billable, and what dollar amount comes from the billable portion. That split matters for freelancers, agencies, consultants, and law firms because total hours alone do not show revenue capacity.
The output usually includes billable hours, non-billable hours, total tracked hours, billable percentage, and billable amount in USD. For U.S. work, there is no federal VAT/GST or national sales-tax rate for billed professional time. If a service is taxable, use the state and local jurisdiction-specific tax input after the pre-tax billable amount is calculated.
Start by labeling each time entry by purpose. Client delivery, approved project work, consultations, drafting, implementation, review, and direct support are usually billable when the client agreement allows them. Internal meetings, sales calls, training, admin cleanup, proposal work, and correction of preventable errors are usually non-billable. The contract, statement of work, engagement letter, or firm policy controls the final classification.
Do not treat non-billable time as a discount. A discount reduces the price of work that was otherwise billable; non-billable time never enters the client charge in the first place. 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 rule's limited low-cost exception.
The core formula is simple: billable amount = billable hours × billing rate. When several rates apply, calculate each rate group separately, then add the results. Billable percentage = billable hours ÷ total tracked hours × 100. Total tracked hours include both billable and non-billable work, so the percentage shows how much of the recorded time can become client revenue.
For example, a client implementation includes 18 approved strategy hours at $180 per hour and 24 approved production hours at $125 per hour. The billable amount is $3,240 plus $3,000, or $6,240. If the same project also includes 14 non-billable internal hours, total tracked time is 56 hours. The billable percentage is 42 ÷ 56 × 100, or 75%.
A one-off calculation is enough when you have a short time log, one client, clear billable labels, and no approval or invoicing handoff. It also works for checking whether a fixed-fee project stayed close to the expected mix of client work and internal support. Keep the source entries, rates, and exclusions attached to the calculation so the invoice total can be explained later.
A managed workflow is better when several people log time, rates differ by person or task, entries need approval, or billed work must flow into accounting. Everhour Billing & Invoicing converts tracked billable time and expenses into invoices, calculates invoice amounts from rates while excluding non-billable tasks, and exports invoices to QuickBooks Online, Xero, or FreshBooks with status sync back to Everhour.
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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Review each time entry against the client agreement, project policy, or engagement terms. Mark client-authorized delivery work as billable and internal support work as non-billable. Then total each group separately. Do not classify time by who performed it alone; the task purpose and billing terms determine whether the entry belongs in the client charge.
Use billable hours ÷ total tracked hours × 100. Total tracked hours include billable and non-billable entries. If a project has 42 billable hours and 14 non-billable hours, total tracked time is 56 hours and the billable percentage is 75%. This percentage is a utilization-style measure, not the same as collected revenue.
Write-downs apply after billable time is identified. If 10 hours are billable at $150 per hour, the pre-write-down value is $1,500. If the invoice is reduced to $1,200, the billable time is still 10 hours, but the billed amount and realization rate change. Keep classification, pricing, and reductions separate.
Bill internal project management time only when the client agreement, statement of work, or engagement terms allow it. Coordination work can be billable on some professional-service projects and non-billable on others. Label it consistently, because moving internal coordination into billable totals without support inflates the invoice and distorts utilization.
There is no federal VAT/GST or single national sales-tax rate in the United States. Sales tax treatment is state and local, and some services are taxable in some jurisdictions. Calculate the pre-tax billable amount first, then apply the jurisdiction-specific tax input only when the billed service is taxable.
Everhour Billing & Invoicing converts tracked billable time and expenses into invoices, calculates invoice amounts from rates while excluding non-billable tasks, and supports client settings and invoice customization. Invoices can be exported to QuickBooks Online, Xero, or FreshBooks, with status details syncing back to Everhour.
Everhour tracks billable and non-billable time in reports, with columns for Billable Time, Non-Billable Time, Billable Amount, and Cost. Admins can review the split by member or task, so non-billable work stays available for management analysis without being added to the client invoice.
Track approved hours, exclude non-billable tasks, and create invoices from the same source data. Everhour keeps the billable split connected to client billing.
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