Billable hours are a cornerstone of the consulting industry, but the reality of managing and maximizing them can be quite different from what many consultants expect when they start their careers.

Many consultants find themselves grappling with the nuances of billable hours, including how to track them effectively, how they impact their work-life balance, and how they influence client relationships. Based on the experiences of seasoned consultants, here’s a comprehensive guide to managing billable hours.

Always record ALL your billable time

One of the most important lessons in managing billable hours is to never cut your time preemptively. New consultants often reduce their billed time out of fear that it might seem unreasonable to clients or supervisors. However, it’s essential to bill for every minute spent on client work, no matter how small.

Short tasks, like brief emails or quick consultations, should be billed accurately. It’s easier for a supervisor or billing partner to adjust hours than for you to recover time you didn’t record.

Log time as you work

To ensure accurate billing, log your time continuously as you work. Record your time immediately upon completing a task to prevent forgetting entries and to capture every minute of client work.

This method not only maintains precise and detailed records but also proves invaluable during audits or when generating detailed billing reports for clients.

Set yourself clear goals

Setting clear and specific billable hour goals is crucial for enhancing both performance and job satisfaction. Start by breaking down your annual targets into monthly, weekly, and daily objectives.

Account for holidays, personal commitments, and any time away from work to ensure you consistently meet your goals. Being purposeful and strategic in your planning each week will help you stay on track and achieve your targets throughout the year. Aim to hit your daily billable goals by integrating them into your overall work plan and adjusting for any potential interruptions.

Manage non-billable time

Consultants frequently invest significant time in non-billable activities like administrative tasks, internal meetings, and professional development. Efficient management of this non-billable time is essential for maximizing your billable hours.

Consider advocating for the implementation PSA software at your firm to streamline these non-billable tasks. The right PSA tool can significantly reduce the time spent on administrative work, allowing you to focus more on billable activities. It will make your day more enjoyable (less admin) and will be beneficial for your workplace as they will get more productivity out of their people.

Understand the value of your time

Billing is not just about recording time; it’s also about understanding the value of your work.

If a task takes longer than initially anticipated, it’s important to bill for the actual time spent rather than the estimated time. For instance, if a brief email involves significant research, bill for the full amount of time spent on the task rather than the time it took to send the email itself.

Avoid arbitrary billing limits

Don’t overly stress about meeting arbitrary billing limits. Focus on delivering high-quality work and providing value to the client. If a task requires more time to complete properly, communicate this to your supervisor and adjust the billing accordingly. Quality work often outweighs rigid adherence to time limits, and clients appreciate thorough and well-executed deliverables.

Communicate clearly with your clients

Transparency with clients regarding billing practices is essential.

Clearly communicate how you track and bill your hours, and provide detailed invoices that break down the time spent on various tasks. This transparency helps build trust and prevents misunderstandings, ensuring that clients feel confident in the value they are receiving.

Avoid the “speed chess clock mentality”

Billing shouldn’t be treated like a stopwatch where you pause for every minor interruption. If you're engaged in focused work, continue billing even during meetings or when brainstorming.

For example, if you’re talking about a project while grabbing coffee with a coworker or conducting related research, this time is still valuable and should be billed. However, avoid billing for non-work activities, like casual conversations or personal time, to maintain professionalism and accuracy in your records.

Be prepared for challenges

Managing billable hours can be challenging for new consultants, especially when dealing with complex projects or tight deadlines. Be prepared for these challenges by developing effective time management strategies and maintaining open communication with clients and supervisors. Adaptability and proactive problem-solving can help you navigate these challenges. Using timesheet reminders can also increase your likelyhood of recording time accuately.

Billable hours and consulting go hand in hand

Understanding and managing billable hours effectively is a key component of a successful consulting career. By following these tips—accurately billing your time, setting clear goals, using billing software effectively, and maintaining transparency with clients—you can enhance your productivity and job satisfaction. Embracing these practices will help you achieve a balanced and rewarding consulting career.