Freelance and Billable Hours
Tracking for money has a different standard from tracking for insight, and the gap between hours worked and hours billable is the number that decides whether the work pays.
General orientation, not tax or legal advice. For teams applying “Freelance and Billable Hours” to client or project work, project time tracking provides an operational record to compare with estimates; the useful conversation is about scope and delivery, not activity as a substitute for results.
When time becomes an invoice, the record stops being a personal tool and becomes a document somebody else may question.
The different standard
Contemporaneous. A record made at the time carries weight; a reconstruction made at month end does not, and in a dispute the difference is decisive.
Specific. "Client work, 3h" is not a defensible line. "Drafting section 4 of the report, 3h" is.
Consistent. A record with three days missing invites doubt about the rest.
And retained. Longer than you think, because disputes arrive late.
These requirements rule out sampling, estimation and most automatic capture for this purpose.
The number that matters
Billable hours as a proportion of hours worked.
For most independent workers this lands somewhere between half and two thirds, and almost everybody overestimates it before measuring.
Which means an hourly rate calculated on a forty-hour week is wrong by a third or more, and that single error accounts for a great deal of underpricing.
Measure it for a month before setting any rate.
What the unbillable time contains
Finding work: proposals, enquiries, conversations that go nowhere.
Administration: invoicing, chasing, accounts, tax.
Tool and skill maintenance.
Scoping and quoting, which frequently takes hours and is only sometimes recoverable.
And rework arising from unclear briefs, which is the category worth tracking separately because it is negotiable.
Tracking to the right granularity
Per project, not per task, unless the client requires otherwise.
Start and stop honestly: the five minutes reading an email about the project is project time.
Round consistently — to five or six minutes — and state the rounding if the client asks.
And separate the categories of unbillable work, because that split is what tells you which part of your business is expensive.
Fixed-price work
The record becomes an internal instrument rather than an invoice.
Its use is to find the effective hourly rate after the fact, which for fixed-price work is the only way to know whether it was worth doing.
And to build the reference class for the next quote, which is covered in the estimating note and is where the money actually is.
What clients may ask for
A breakdown, which your record should be able to produce without editing.
Which is an argument for recording in a form you would be willing to show, rather than one you would have to sanitise.
If you would not show it, the problem is usually the record rather than the work.
Two records
One for billing, one for yourself.
They answer different questions and the personal one should be freer — it is where the honest note about the afternoon that went nowhere belongs.
Keeping them separate prevents the billing record from being shaped by self-image, which is the performance problem in its most consequential form.
What to check
Do you know your billable proportion, measured rather than assumed?
Is your record contemporaneous, or reconstructed at month end?
Could you produce a breakdown tomorrow without editing it?
And was your rate calculated on hours worked or hours billed?
Two records, deliberately
One for billing, one for yourself.
They answer different questions, and keeping them separate prevents the billing record from being shaped by self-image, which is the performance problem in its most consequential form.
Worth keeping in mind
Measure your billable proportion for a month before setting any rate. Almost everybody overestimates it, and a rate calculated on a forty-hour week is wrong by a third or more.
In short
Contemporaneous, specific, consistent and retained.
Those four requirements rule out sampling, estimation and most automatic capture for billing, and the difference matters a great deal in a dispute.
The point
Two records: one for billing, one for yourself.
The first must be defensible and the second must be honest, and those requirements conflict often enough to need separating. For a complementary perspective on work, measurement or planning, consult Microsoft 365.