Everhour supports billable-hour tracking and project budgeting, but the calculation starts with a clean split between client and internal time.
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
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Tracking billable vs non-billable hours answers three practical questions: what should be charged to the client, what time supported the work but should stay off the invoice, and how much team capacity went into earning that revenue. Billable time usually connects directly to client-approved work. Non-billable time includes internal meetings, admin, training, sales activity, rework outside scope, or project tasks excluded by contract.
The output is not only an invoice total. You also get utilization, billed value before write-downs, and an effective billing rate across all worked time. In the United States, totals are normally denominated in U.S. dollars. There is no federal VAT/GST or single national sales-tax rate, so any taxable-service calculation needs the correct state or local tax input.
Start by labeling each time entry before multiplying by a rate. Use billable for client-approved work that should appear on the invoice. Use non-billable for work that should remain visible in reporting but not charged. Do not delete non-billable time; removing it hides the true cost of delivering the project and makes utilization look better than reality.
The common mistake is mixing billing status with productivity. A required internal project meeting can be productive and still non-billable. A client call can be billable only when the contract, engagement letter, or statement of work allows it. For U.S. legal work, the basis or rate of fees and expenses must be communicated in writing for new client-lawyer relationships, subject to the ABA Model Rule 1.5 limited low-cost exception.
The core formula is billable hours × hourly rate, calculated separately for each rate category. If a project includes 28 approved strategy hours at $155 per hour and 19 approved implementation hours at $125 per hour, the billable value is $4,340 plus $2,375, or $6,715 before taxes, discounts, expenses, write-downs, or collections.
Now compare that with all worked time. If the team also logged 10 non-billable internal hours, total worked time is 57 hours and billable time is 47 hours. Utilization for this project is 47 divided by 57, or 82.46%. The effective billing rate across all worked hours is $6,715 divided by 57, or $117.81 per hour.
A one-off calculation is enough when you are checking a single invoice, estimating a small job, or reconciling a short timesheet. A spreadsheet works when the rate structure is simple, all entries are already approved, and there is no recurring budget, invoice handoff, or client-level spending limit to monitor.
A managed workflow is better when billable status affects budgets, approvals, invoicing, and future staffing decisions. Everhour Project Budgeting supports hour-based and money-based budgets, recurring budget periods, budget alerts, budget protection, expense inclusion controls, multiple billing methods, and client-level budgets, so tracked billable and non-billable time can feed the same operating record.
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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Create a separate billable status for each time entry before calculating totals. Do this at the task or project level, depending on how the client agreement defines chargeable work. Then group entries by rate, person, task, or project so the invoice total and internal utilization numbers come from the same underlying time record.
Yes. Non-billable hours should stay in the timesheet because they show the full cost of serving the client or running the project. Removing them makes utilization, margin, and workload reports inaccurate. The correct approach is to exclude non-billable time from invoice totals while keeping it available for internal reporting.
Multiply each approved billable-hour group by its own rate, then add the subtotals. Do not average rates before the calculation unless the contract uses a blended rate. If a project uses person-specific, task-specific, or project-specific rates, the rate attached to each entry controls the billable value.
Billable hours are approved hours eligible to be charged. Billed hours are the hours that actually appear on the invoice after write-downs, discounts, capped fees, or client-specific exclusions. A project can have 47 billable hours but fewer billed hours if you reduce the invoice before sending it.
Calculate billable labor first, then apply the jurisdiction-specific tax rule only when the service is taxable. The United States has no federal VAT/GST or national sales-tax rate for billed professional time. State and local rules control whether a service is taxable and which rate applies.
Everhour Project Budgeting lets teams track hour-based or money-based budgets while billable and non-billable time accumulates against project limits. Admins can use recurring budget periods, budget alerts, budget protection, expense inclusion controls, multiple billing methods, and client-level budgets to keep delivery and billing visible.
Everhour Billing & Invoicing converts tracked billable time and expenses into client invoices. It calculates invoice amounts from rates, time, and billable expenses while excluding non-billable work, then can export invoices to QuickBooks Online, Xero, or FreshBooks.
Set budgets around approved client work, keep non-billable time visible, and use Everhour Project Budgeting to connect tracked hours with spending limits, alerts, and better billing control.
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