Every service business has non-billable hours: internal meetings, sales calls, admin, fixing your own mistakes, and the “quick favours” clients never pay for. Some are necessary; many are not. The problem is that most companies have no idea how many there are — because nobody tracks them. Here’s how to measure non-billable time and bring it down without making people feel watched.
Why non-billable hours matter
If a person works 160 hours a month and 60 of them are non-billable, your billable rate has to carry the cost of all 160. A shift of just ten hours a month from non-billable to billable work can change a project’s margin dramatically. And on fixed-price projects, every unplanned hour comes straight out of profit.
Step 1: Track everything, mark what’s billable
You can’t measure what isn’t recorded. Ask the team to track all their working time, and simply flag each entry as billable or not. In Clocknico, every time entry has a billable flag, and projects can be marked billable so client work is billable by default. Create internal projects — “Sales”, “Admin”, “Internal meetings”, “Training” — so non-billable time has a home too.
Step 2: Look at the ratio
Use reports to compare billable and non-billable hours:
- Per person — is someone stuck in meetings or support all week?
- Per client — which clients generate lots of unpaid work?
- Per project — where does scope creep happen?
Clocknico’s reports can be filtered by billable status, date range, client, project, department and person, and exported to CSV.
Step 3: Separate “good” from “bad” non-billable time
Not all non-billable time is waste:
- Investment — sales, training, internal tools. Keep it, but budget it.
- Overhead — admin, internal meetings. Reduce and streamline.
- Leakage — out-of-scope requests, rework, unbilled extras. Fix the cause or start charging.
Step 4: Fix the biggest leak first
- Scope creep on a project? Agree a change request process, or move the client to hourly or a retainer.
- Too many status meetings? Replace some with a shared task board — see our guide to kanban task management.
- Admin eating hours? Generate invoices from tracked time instead of building them by hand.
- Support work for free? Track it on a dedicated project and include it in a retainer.
Step 5: Watch the cost, not just the hours
An hour of a senior engineer’s non-billable time costs more than an hour of a junior’s. With cost rates per employee, Clocknico’s Profitability page shows the real labour cost of each project — billable and non-billable hours together — next to its revenue.
Don’t turn it into surveillance
The goal is to find process problems, not to blame people. Share the numbers openly, talk about causes, and celebrate when a team wins back hours. Read more on introducing time tracking without micromanaging.
Clocknico tracks billable and non-billable time, rates, invoices and profitability in one app — free for teams of up to 5 users.