Billable hours are the hours of work you can charge a client for, as opposed to internal time spent on admin, sales or training. They are the raw material of every services invoice: each one is priced by a rate and then grouped into the lines a client actually sees.
Billable vs non-billable
The line between the two is set by your client agreement, but the split is usually clear.
| Billable | Non-billable |
|---|---|
| Client project delivery | Internal admin |
| Client meetings | Business development |
| Research for the engagement | Training and learning |
The ratio between billable and total hours is your utilization rate, which is why accurate billable tracking underpins almost every other metric.
How billable hours become invoice lines
A recorded hour does not become revenue on its own. It has to be priced and presented. The pricing follows a clear cascade: the project rate first, then the team member's rate, then your organisation default.
Billable value = billable hours x effective rate
Hour Cap then turns those priced entries into invoice lines and pushes them to Xero as a draft for review. You choose how the lines are grouped, by entry, by project, by date or by team member, and the descriptions your team wrote are preserved so the invoice still reads like a record of the work.
A worked example
An employee works 8 hours in a day: 6 on a client project and 2 on internal admin. Only the 6 billable hours reach an invoice. At a 150 rate, that is 900 of billable value for the day, while the 2 admin hours stay non-billable.
Related terms
Billable hours feed directly into your realisation rate and any write-downs you apply before invoicing. To work out what each billable hour really earns once non-billable time is counted, run the effective hourly rate calculator.