Glossary
Non-billable hours
Also called: non-chargeable time · overhead time
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.
Last updated October 13, 2026
Common non-billable work
Running a service business creates a steady stream of unpaid work: writing proposals, scoping calls before a contract exists, sending and chasing invoices, bookkeeping and tax prep, maintaining your website and portfolio, learning new tools, and internal team meetings. None of it appears on a client invoice, all of it is necessary.
Some non-billable time is client-specific but still unpaid: onboarding to their systems, reading their documentation, or fixing a bug you introduced. Tracking it against the client tells you the true cost of that relationship.
Why track time you cannot bill
If you only log billable hours, your utilization rate looks like 100% and your hourly rate will be set too low. Every non-billable hour has to be paid for by a billable one. A freelancer who bills 28 hours of a 40-hour week needs the 28 hours to cover all 40, plus taxes, tools, insurance, and time off.
Tracking non-billable time per client also reveals which accounts are quietly unprofitable — the ones that generate hours of unpaid calls, revisions, and admin for every paid hour.
Reducing non-billable hours
The biggest levers are usually invoicing and scoping. Generating invoices directly from tracked time removes the monthly reconstruction job; recurring invoices remove it entirely for retainers. Clear scopes and written change policies turn unpaid revisions into billable work or stop them from happening.
In Hoursmith
Time entries can be marked non-billable and still attached to a client and project, so the tracked record shows the real cost of each relationship; on Studio and Agency the Time report filters by billable state. On Agency, Owners and Admins can also choose to pay team members for selected non-billable or internal work without making it billable to the client.