Days & Hours: What Should I Use for Billing? - Barrington Research Group, Inc.
Days & Hours: What Should I Use for Billing?
Accounting for your time in days or hours is more complicated than you think. While an hour has 60 minutes in it, when you start assigning project time to a client's contract, you need to make some decisions. How many minutes equals an hour—20? 35? 59? Typically professionals think about hours in quarter-hour increments. For example, I count work on a project that takes from 8-15 minutes as a quarter hour (i.e., 0.25 hours). If it is less time, I forget about it because it will likely even out next time.
Days are more complicated. How many hours should be in a work day? The standard for most government employees are either 8 hours a day (40 hours a week) or 7.5 hours (37.5 hours a week). These are usually codified in a collective agreement, providing a useful benchmark for you to share with your client if the topic of your billing practices comes up. And what about coffee breaks and lunch? Are they counted? Where I live, two 15 minute paid coffee breaks are included in the "day" but lunch is not. Search local government human resources websites for more information.
Like many professionals who bill for their time, consultants don't work the same number of hours each day and they probably work on several projects over the course of any single day. This is why keeping track of your time is so important. Time tracking software is easy to find these days. Many programs are cloud-based so you can even access them through your phone. At the end of each day, before you forget, track your billable time in hours or partial hours.
When it comes time to bill your client at the end of the month, how do you account for your complex work patterns? Divide the total number of hours you have worked on each project by the 7.5 or 8 standard you have selected, turning them into day-equivalents. Then multiply the total days by your per diem. Now you are ready to send out your bill with the evidence you need to back it up!
Originally published in the Independent Consulting TIG Newsletter, Volume 6, Issue 3. September 2015.