• Finance

How to track billable hours

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Whether you’re a freelancer or solopreneur who receives hourly pay, tracking billable hours is an essential part of freelancing.

If you aren’t keeping accurate records of how many hours you’re spending on a project, or with a client, then you won’t be able to bill for what you are worth. You’ll most likely end up charging a client for fewer hours than you actually worked, losing money simply because of lackadaisical recordkeeping. There’s also the chance that you may overcharge a client, leading to a potentially awkward situation that could damage your reputation.

Fortunately, there are plenty of options to track how much your time is worth. Let’s go over how you can track your hours and what time you should be tracking.

Who Needs to Track Their Time?

Most freelancers will need some method of tracking their time. Although there are plenty of freelancers who bill by project, retainer or through different means, with some clients you will want to charge an hourly rate. It’s a good idea to be prepared for that. So if a client requests the hours you worked, you can accommodate them super easily without scrambling to find where you inadvertently may have tracked time, by using a time keeping method.

Methods to Track Billable Hours

When you’re figuring out how to track your hours, you want any method you select to be accurate and easy to use.

The simplest and most traditional method would be to write down your hours on pen and paper, along with clock-watching, (when you started and when you ended working), but this isn’t recommended. This method is a hassle, and if you’re switching among projects frequently, do you really want to pull out your hourly work notes each time? Another problem is that you’re in trouble if you happen to lose your notes, whereas, with other methods, you’ll have a digital copy of your records.

A far superior option is choosing a time tracking software which will help automate the process. The great thing about this method is that generally all you need to do is press a button to start and stop the clock. As long as you remember to do that, you’ll have an accurate record of how much time you spent on each project.

If you are always working on your computer, and not online, you could just go with a software program that you install on that machine. However, you’re better off using a software program that also has a mobile app available. This way, if you’re on the go or working for a client while you’re not physically on your computer, you can just open the app and start the clock and it will sync with the online version.

The most important part of choosing a timekeeping method is that you find one that you’re comfortable using and you don’t switch between multiple methods. If you write down your hours sometimes and use an app other times, you’re asking for errors.

Other Benefits of Timekeeping Software

Being able to track your hours at the press of a button is just one benefit of timekeeping software. Considering the fact that there are plenty of SaaS (software as a service) options to track how much your time is worth, features will vary from program to program. But the most comprehensive programs have many useful features that make your entire accounting process easier.

For example, with FreshBooks time tracking software, it’s easy to convert billable hours to invoices to your clients from the software, saving you time and allowing you to quickly take your tracked time from a project and convert it to an invoice. It allows you to accept credit card payments from your clients, and it also has the ability to scan in your receipts and manage your business expenses.

Not only will you be maintaining accurate time records, but you’ll also have accurate expenses records, which can certainly come in handy when tax time rolls around and you need to make your deductions.

What Constitutes Billable Hours?

Once you have your timekeeping method setup and you’ve grown familiar with it, you'll also need to make sure that you bill for what you're worth. Part of this is charging an hourly rate commensurate with your skill level and experience, but just as important is tracking every billable moment.

Far too many freelancers bill for fewer hours than they should. Sometimes, this is because they don’t feel comfortable billing for everything. Perhaps you think the client will be upset if you bill them for a half-hour lunch or consultation. But time is money.

Then there are those times when you don’t bother to track your time because you think it will be so short that it’s pointless to bill for it. But there’s always the chance that 15 minutes turns into an hour or longer. And even if it does end up being only 15 minutes, those little chunks of time add up. Let’s say you skip 30 minutes per week that you could be tracking. By the end of the year, that’s over 25 hours of work you’re doing free of charge.

You’ll need to work your specific billing policies out with each individual client, but as a rule of thumb, if you’re doing something for a client, you should be tracking it and receiving payment for it. You wouldn’t be choosing to do it if you didn’t have this client, which means that they need to pay you for the services you’re providing.

Maximizing Your Freelancing Income

Tracking billable hours to the minute is an important part of maximizing your income when you’re a freelancer. Don’t worry about making a bad impression on a client by tracking for what you're worth. When you keep accurate time records, it presents the impression that you’re a professional who pays attention to the details.

Anyone who sees this kind of timekeeping and billing as a negative isn’t a client you want to have because the people you want to work with understand the importance of getting paid what you’re worth. Tracking everything also makes it easy to demonstrate why the bill costs what it does.

Andrew Harker works at FreshBooks and is a... Digital marketing trailblazer. Problem solver. Communicator. Internet scholar. Subtly charming food nerd.