Glossary
The words of billing by the hour, defined plainly.
Short, factual definitions you can quote — with the practical detail underneath. Tool-neutral, and honest about where Hoursmith does or does not help.
Free for solo freelancers · No credit card required
- Billable expenses
- Billable expenses are costs a provider pays on a client's behalf — stock photos, software licences, travel, print — and recharges on the invoice, either at cost or with an agreed markup. They are listed separately from fees, supported by receipts, and must never be billed twice.
- Read the full definition
- Billable hours
- Billable hours are the hours of work that can be charged to a client under the terms of your engagement, usually at an agreed hourly rate. Hours spent on your own business — sales, admin, learning — are non-billable even though they are real work.
- Read the full definition
- Blended rate
- A blended rate is a single hourly rate charged for work performed by several people with different individual rates. It is calculated as the total expected cost of the hours divided by the total hours, and it simplifies quoting and invoicing for teams.
- Read the full definition
- Client portal
- A client portal is a secure, client-facing area of a provider's software where a client can view their invoices, see what has been paid and what is outstanding, download documents, and pay online — without needing an account in the provider's internal tool.
- Read the full definition
- Fixed-fee billing
- Fixed-fee billing is charging a client an agreed total price for a defined deliverable or scope, regardless of the hours it takes. The provider carries the efficiency risk, so the fee is normally invoiced in stages — deposit, milestones, completion — and hours are tracked internally to measure the effective rate.
- Read the full definition
- Hourly rate
- An hourly rate is the price charged for one billable hour of work. A sustainable rate is derived from the income you need, divided by the billable hours you will realistically sell, with overhead costs, taxes, and unpaid time off added on top.
- Read the full definition
- Invoice
- An invoice is a commercial document a seller sends to a buyer that itemizes goods or services delivered, states the amount owed, and sets the payment terms and due date. It creates the receivable in the seller's books and is the record both sides reconcile against.
- Read the full definition
- Invoice snapshot
- An invoice snapshot is the frozen copy of everything on an invoice — bill-to details, line descriptions, quantities, rates, taxes, and totals — captured when the invoice is issued, so later changes to the client record, project rate, or time entries cannot alter a document the client already received.
- Read the full definition
- Milestone billing
- Milestone billing is invoicing a project fee in instalments tied to defined events — signing, design approval, launch — rather than in one invoice at the end. Each milestone invoice bills a stated portion of the total and is usually due before the next phase starts.
- Read the full definition
- Non-billable hours
- Non-billable hours are working hours that cannot be charged to a client: proposals, invoicing, bookkeeping, marketing, internal meetings, training, and unpaid rework. They are overhead, and your billable rate has to cover them.
- Read the full definition
- Payment terms
- Payment terms are the conditions on an invoice that state when payment is due and how it can be made. 'Net 30' means the full amount is due 30 days after the invoice date; 'due on receipt' means immediately; '2/10 Net 30' offers a 2% discount for payment within 10 days, otherwise full payment in 30.
- Read the full definition
- Recurring invoice
- A recurring invoice is an invoice generated automatically on a fixed schedule — weekly, monthly, quarterly — for ongoing services such as retainers, maintenance plans, or subscriptions. Each occurrence can be a fixed amount, the period's unbilled usage, or a mix, and can be sent automatically or held as a draft for review.
- Read the full definition
- Retainer
- A retainer is a recurring fee a client pays in advance to secure a provider's availability or a set amount of work each period, usually monthly. Retainers are billed on a schedule rather than per project and may or may not include a fixed number of hours.
- Read the full definition
- Stripe Connect
- Stripe Connect is Stripe's product for platforms and marketplaces that lets a third-party application take payments on behalf of a business into that business's own Stripe account. With 'direct charges', the payment is created on the business's account, so the funds, the payout schedule, and the Stripe relationship belong to the business, not the software vendor.
- Read the full definition
- Time entry
- A time entry is a single recorded block of work — a start and end time or a duration — attached to a client, project, and often a task, with a note describing the work and a flag for whether it is billable. Timesheets and invoices are built from time entries.
- Read the full definition
- Time rounding
- Time rounding is the practice of converting tracked work time to a fixed billing increment — commonly 6, 10, or 15 minutes — before pricing it. A rule of 'round up to the next 15 minutes' turns a 32-minute task into 45 billable minutes; 'round to nearest' turns it into 30.
- Read the full definition
- Timesheet
- A timesheet is a structured record of the hours a person worked over a period, typically broken down by day and by client, project, or task. It is used to calculate pay, bill clients, and show evidence for an invoice.
- Read the full definition
- Utilization rate
- Utilization rate is the share of available working hours that are billable to clients, calculated as billable hours divided by total hours and expressed as a percentage. A 32-billable-hour week out of 40 available hours is 80% utilization.
- Read the full definition
- Work in progress (WIP)
- In professional services, work in progress (WIP) is the value of time and expenses that have been recorded but not yet invoiced. Rising WIP means work is being done faster than it is being billed; old WIP is revenue at risk of being written off.
- Read the full definition
Put the vocabulary to work.
Hoursmith keeps billable time, expenses, and invoices on one line — free for up to 3 members, no card.
Free for solo freelancers · No credit card · Cancel any time