Non-Billable Hours

Track business hours that shouldn't be billed to clients while maintaining visibility into all work performed.

🎥 Video Tutorial

Learn how to track and manage non-billable business hours.

What are Non-Billable Hours?

Hidma categorizes time into three main types: Business, Internal, and Personal. Business hours represent client work, Internal covers company activities like meetings and training, and Personal tracks time off or breaks. The Non-Billable Hours feature adds an important distinction within Business hours, letting you split client-related work into two categories: billable business hours that you'll invoice to clients, and non-billable business hours for client-related work that won't appear on any bill. This subdivision gives you granular tracking while keeping all work visible in your reports and timesheets.

Why Track Non-Billable Business Hours?

In professional services, not every hour you spend on client matters ends up on an invoice. You might have a courtesy call with a long-standing client to discuss their business challenges, spending thirty minutes offering advice without billing for it. Or perhaps a project ran over budget and you're absorbing the extra hours as a goodwill gesture to preserve the relationship. Maybe you're doing pro bono work for a nonprofit, or you're in a training session with a client where you don't charge for the onboarding time. These situations are common, and they represent real work that deserves to be tracked even though it won't generate revenue.

The challenge without non-billable tracking is that you have limited options: either log the time as Internal hours (which misrepresents it as company work rather than client work), or don't log it at all (which gives you incomplete data about where your time actually goes). The Non-Billable Hours feature solves this by letting you record that yes, you spent three hours on Client A's matters, but no, only two of those hours are billable. The third hour was a relationship-building call, or work beyond scope that you're not charging for, or rework to fix an error.

This visibility provides several valuable benefits. You can see the true picture of time spent versus time billed, which helps identify scope creep on projects. Your utilization metrics become more accurate because all client work is captured, even the non-billable portions. When it's time for rate negotiations, you have data showing "we actually spent 120 hours on your projects this year but only billed you for 95 hours." This transparency often strengthens client relationships rather than weakening them. And from a business analysis perspective, you can assess project profitability more accurately by comparing all time invested against revenue generated.

Enabling Non-Billable Hours

Step 1: Enable the Feature

1. Go to Settings > Configuration
2. Click on Timesheet Settings
3. Find the Non-Billable Hours setting
4. Toggle it ON
5. Click Save Changes

Only for Business Hours

Non-Billable Hours only applies to Business hours. Internal and Personal hours are already non-billable by nature, so this feature doesn't affect them.

Step 2: Communicate with Your Team

Once enabled, all users will see the new billable/non-billable options appearing in their timesheet interface. This change affects everyone's daily workflow, so clear communication is essential. Take time to explain when hours should be logged as non-billable - perhaps it's scope overruns beyond agreed budgets, or maybe it's courtesy calls that don't fit within project scopes. Make sure your team understands your company's specific policy on non-billable work, since different firms handle this differently. Some are generous with absorbing hours, others are strict about billing everything possible.

Also explain how this affects utilization metrics. If your company tracks billable utilization percentages for performance reviews or bonuses, team members need to know that non-billable hours count as client work but don't contribute to billable percentages. This transparency prevents surprises when someone wonders why their utilization is lower despite working many client hours - the non-billable tracking provides that explanation.

Using Non-Billable Hours

Adding Non-Billable Time in Timesheets

When you add time to your timesheet:

1. Click on a day to add time

2. In the Business Hours section, you'll now see two input areas:

   • Billable - Time that will be available for billing
   • Non-Billable - Time that won't be billed

3. Select the job/project

4. Enter hours in the appropriate field:

   • If it's billable work → Enter hours in Billable field
   • If it's non-billable work → Enter hours in Non-Billable field

5. Add a description (optional but recommended)

6. Save the entry

Example:

• Billable: 2 hours - "Prepared financial statements for Q3"
• Non-Billable: 0.5 hours - "Courtesy call with client to discuss results"

Visual Indicators

When a time entry includes non-billable hours, you'll see:

• A special icon on the entry indicating it contains non-billable time
• This helps you quickly identify mixed entries in your timesheet

Editing Existing Entries

To change whether hours are billable or non-billable:

1. Click on an existing business time entry
2. You'll see the Billable/Non-Billable toggle button
3. Click the button to switch between modes
4. Adjust the hours as needed
5. The total updates automatically

Example:

• Entry shows: 3 hours total (2 billable, 1 non-billable)
• Click "Non-Billable" button to view/edit the 1 non-billable hour
• Click "Billable" button to view/edit the 2 billable hours
• Both portions are stored in the same entry but tracked separately

Marking Hours as Non-Billable During Billing

A powerful feature: you can designate hours as non-billable at the point of billing, without modifying timesheets.

Why This Matters

Sometimes you don't know whether work will be billable until billing time:

• Client negotiates to remove certain items
• Budget exceeded and you're absorbing hours
• Manager decides certain work should be complimentary
• Need quick flexibility without editing timesheets

How to Mark as Non-Billable While Billing

1. Go to Bills > Create Bill
2. Select client and project
3. You'll see unbilled work grouped by job
4. Select the job(s) you want to mark as non-billable
5. Click the "Mark selected as non-billable" icon (appears in toolbar)
6. Choose an option:
   • All hours - Mark all hours for that job as non-billable
   • Custom hours - Specify exactly how many hours to mark

Example: Custom Hours

• Job "Calls or Meetings" shows 3 hours unbilled
• You decide 1 hour shouldn't be billed
• Select the job
• Click "Mark as non-billable"
• Choose "Custom hours"
• Enter: 1 hour
• Click Save

Result: The job now shows only 2 billable hours. The 1 non-billable hour is hidden from the billing view but still tracked.

Viewing Non-Billable Work During Billing

To see hours marked as non-billable:

1. While on the billing page
2. Click "Show non-billable work" button
3. All non-billable hours for this client/project appear in the list
4. They're visually distinguished (different styling or label)
5. You can't directly add them to a bill (they're non-billable)

Reverting Non-Billable Hours Back to Billable

Made a mistake? Changed your mind? You can convert non-billable hours back:

1. While on the billing page
2. Click "Show non-billable work"
3. Select the non-billable hours you want to make billable again
4. Click "Mark as billable" icon
5. Specify how many hours to convert
6. Click Save

Result: Those hours are now available to add to the bill again.

Flexibility Without Timesheet Changes

This approach lets you adjust billing decisions quickly without asking team members to edit their timesheets. The original timesheet entries remain unchanged.

Common Workflows

Workflow 1: Logging Non-Billable Client Call

Scenario: You had a 30-minute courtesy call with a client

1. Open your timesheet
2. Click on today's date
3. Select the client's project
4. In Business Hours section:
   • Billable: 0
   • Non-Billable: 0.5
5. Description: "Courtesy call - discussed upcoming projects"
6. Save

Result: Time tracked but won't appear in billing

Workflow 2: Some Hours Billable, Some Not

Scenario: 3-hour meeting, but only 2 hours should be billed

1. Open timesheet
2. Add entry for the project
3. Billable: 2 hours
4. Non-Billable: 1 hour
5. Description: "Client meeting - strategic planning"
6. Save

Result: 2 hours available for billing, 1 hour tracked but not billable

Workflow 3: Manager Marks Hours Non-Billable at Billing

Scenario: During billing, manager decides to not charge for 1 hour of calls

1. Manager opens billing for client
2. Sees "Calls or Meetings" job with 5 hours
3. Selects the job
4. Clicks "Mark as non-billable"
5. Chooses "Custom hours" → 1 hour
6. Saves

Result: Only 4 hours of calls appear as billable; 1 hour removed without changing timesheets

Workflow 4: Reviewing What Was Made Non-Billable

Scenario: Want to see all non-billable work for a client before finalizing bill

1. In billing view for client
2. Click "Show non-billable work"
3. Review all non-billable entries
4. If anything should be billable, select it and mark as billable
5. Hide non-billable work again
6. Continue with billing

Result: Confidence that billing is accurate

Best Practices

Recommendations

✅ Be consistent - Establish clear guidelines for when to use non-billable ✅ Add descriptions - Always explain why work is non-billable ✅ Review regularly - Monitor non-billable hours to identify patterns ✅ Track scope creep - Use non-billable hours to spot projects going over budget ✅ Don't overuse - Too much non-billable work might indicate pricing problems ✅ Communicate with team - Make sure everyone understands when to use it ✅ Review before billing - Check non-billable work makes sense before finalizing

Reporting and Analytics

Understanding Utilization

Non-billable business hours affect your utilization metrics:

Total Hours = Billable + Non-Billable Business + Internal + Personal

Billable Utilization = Billable Hours / Total Hours

Tracking non-billable business hours separately gives you better insight into where time goes and why utilization might be lower than expected.

Profitability Analysis

Compare:

• Time logged (billable + non-billable)
• Time billed (billable only)
• Gap = non-billable hours

A large gap might indicate:

• Generous client relationships
• Scope creep issues
• Training/relationship building (good!)
• Inefficiency being absorbed (needs attention)

Troubleshooting

Problem: Don't see billable/non-billable options

Cause: Feature not enabled Solution: Go to Settings > Configuration > Timesheet Settings and enable Non-Billable Hours

Problem: Non-billable option showing for internal hours

Cause: This is not a problem - the feature only applies to Business hours Solution: Internal and Personal hours are inherently non-billable, so you won't see these options for them

Problem: Can't add non-billable hours to bill

Cause: This is expected behavior - non-billable hours by definition can't be billed Solution: If you need to bill them, mark them as billable first using the "Show non-billable work" feature

Problem: Team logging too much as non-billable

Cause: Policy issue, not a system issue Solution:

• Review what's being marked non-billable
• Clarify company guidelines
• Discuss with team members individually
• Consider whether pricing/scope needs adjustment

Related Topics

• Creating Time Entries - Logging time in timesheets
• Creating Bills - Converting time to invoices
• Charge-Out Rates - Setting billing rates
• Project Profitability - Analyzing project performance

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Need Help?

Non-Billable Hours is an optional feature that must be enabled by an administrator. Contact your system administrator if you don't see the option in Timesheet Settings.