It’s unlikely every moment at work is directly associated with revenue generating activities.
Administrative and IT work, training, upskilling, networking, strategising and simply thinking may all be recorded as unbillable activities.
It’s necessary to accurately analyse these non revenue generating hours to understand what’s going on in your organisation, and ascertain if resources are spending their time efficiently and effectively.
Methods of tracking unbillable time
Time-tracking apps like Accelo and MinuteDock have made keeping an eye on unbillable time simpler than it used to be. “Accelo tracks it,” says Mat Grant, New Business Director of Waypoint. “Eighty to ninety percent of our billable time is easily tracked as either sales activities or internal projects.”
It’s common for unbillable time to have its own tracking code in many time and billing applications. Zoe Lihou, Account Manager at De Garis Accounting Limited, notes that “post mortem reporting is too late” when it comes to unbillable time. It’s best to record it when it’s worked, so you can use the information to improve your business.
“The impact over a month can be huge, so it should be monitored,” says Michelle Ross, Client Manager at Hughson & Associates.
Useful vs. non-useful unbillable time
“Unbillable isn’t/shouldn’t be a euphemism for non-value adding,” says Lihou. Things, like training staff and staying current on tax laws, are an important part of your practice and shouldn’t be neglected.
A poorly trained staff member will only incur more unbillable time going forward, and not understanding tax laws can get your client and/or your business in trouble.
Unbillable time isn’t useful when it’s taking time away from work that could be spent adding value to client files or improving skills within the firm.
Frustrations like technology issues or aging hardware are common causes of unbillable time, but they can also be catalysts for change.
Using unbillable time to make improvements
If obsolete hardware is constantly causing down time, it’s a clear sign it’s time to upgrade. If, on the other hand, the unbillable work you are doing adds value to your client projects, this might indicate a rate change is necessary.
“It’s important to keep your charge-rates in line with the business value you’re providing. That could mean increasing your hourly rate or using a value-pricing approach instead of presenting the actual time spent on a task to the client,” according to Jared Armstrong, CEO of MinuteDock.
Unbillable time is necessary in any service industry. Keeping an eye on the reasons for the unbillable time and how you can use that information to improve your business processes or client services is the key to not only managing unbillable time, but also learning from it.
On November 12 and 13th Intuit QuickBooks shall be hosting Table Talks at AccounTech.Live in Melbourne.
You are invited to join a facilitated discussions with your peers on a range of topics including amongst other topics: Cracking Down on Unbillable Time.