This article is an extract from the book 'Everything you need to know about Xero Practice Manager'
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It is important to understand the difference between ‘billable’ and ‘invoiceable’. All client time is billable. If it is a service you have offered on your website, and you’re performing that for a client; it’s a billable activity. Whether it is invoiced or not, that is a matter for the job manager or the person doing the invoicing. It is based on the nature of the engagement and the expectations set with the client. Your staff shouldn’t ever need to think about whether a client activity is billable or not. The answer is always yes.
A common misconception is that billable time is only appropriate where we are invoicing on an actual time and cost basis. This is not true. Just because a job is a fixed-price agreement does not mean the time put to the job is not billable. It is a billable task, even though we have invoiced it using a different method.
Another common misconception is, where we may be doing rework, fixing mistakes or we’ve gone over budget on a job or task, that this time is ‘non-billable’. This is not true. This is still billable time and the fact that it may or may not be invoiced is a different matter for the job manager, partner or person preparing the invoicing to decide, based on the terms of the engagement and the expectations set with the customer.
One permission setting every staff member should have turned off is the ‘Flag time sheet entries as billable or non-billable at time of entry’ setting. It is not for our staff to worry about or decide whether a service we are providing to a client is billable or not. That is determined by the job manager, partner or other person preparing the invoice based on the nature of the engagement.
By marking our client services time sheets as non-billable, we are improving our write-offs but reducing our productivity. We are better off seeing accurate productivity than managing the reasons for write-offs as they occur.
The only client-facing tasks that are marked as non-billable are sales-based activities.
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