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How do I classify clients using ABCD categories?How do I determine the types of communication traffic?What productivity targets do I set for team members?What is billable time versus non-billable time?What charge rate multiple do I apply to production team members? What is the right resource mix when allocating Finders, Minders & Grinders to jobs?What is the best way to account for one-off fees when capturing fees won or lost?Can inactive employees be permanently deleted from People?What happens during the financial year rollover process?Can we allocate multiple roles to an employee e.g. A Senior Client Manager who is also a Chief Marketing Officer?
Troubleshooting

What is billable time versus non-billable time?

It is important to assess billable time and non-billable time when you determine productivity targets for your team members.

Billable time 

Billable work relates to all tasks connected to client jobs. The aim is that all billable work is invoiced, not unrecoverable which leads to write offs. 

This includes time spent completing the work, workpaper preparation, client follow ups, reviews, client phone calls, advisory and other incidental job related tasks. 

Non-billable time 

These are day-to-day work tasks that are not directly connected to client work. 

Production team members have varying degrees of non-billable tasks during the week and it is often role dependent. The exception is for part time employees and contractors who work for 1-2 days a week for defined client related tasks eg. A contractor works 1 day a week for bookkeeping or compliance work and all work is billable.   

Non-billable time includes team meetings, daily huddles, learning internal processes, general admin, internal emails, workflow management, writing standard operating procedures (SOPs), running technical training, on the job training (excludes client specific training), water-cooler chats and other administration tasks not connected to clients.  

Capacity reducing time

Capacity reducing time relates to time your team members are not available to work eg. holidays, public holidays and sick leave. Productivity targets exclude capacity reducing time.  

Scenario 1: An employee in Australia is entitled to 4 weeks annual leave, 2 weeks sick leave, and 2 weeks of public holidays. This means they will be working 44 weeks a year. Charge rates and productivity will be calculated based on 44 weeks a year rather than 52. 

Scenario 2: Let's consider Mark who has a weekly productivity target of 90%. During the week, he is away on leave for 2 out of 5 days. Weekly productivity is only measured on 3 working days. If it was measured on 5 days without adjusting for the capacity reducing time, Mark's productivity will appear to be 54%, rather than 90% to accurately reflect 3 working days. 

For businesses who use Xero Practice Manager, time entries for employee absences can be recorded against a capacity reducing job. Productivity is automatically adjusted to reflect accurate working hours. 

 

See FAQ - What productivity targets do I set for team members?

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