What Is Resource Non-Billable Hours?
Resource non-billable hours represent the time spent by employees or resources within an organization on activities that aren’t directly billable to clients. In the realm of Professional Service Automation (PSA), tracking non-billable hours is crucial for assessing resource utilization, operational efficiency, and cost management.
In professional firms, employees and contractors spend some time each week on tasks that are not billable to clients. This includes activities like training, business development, administrative work, etc. We know such non-billable activities as non-billable hours.
Importance of Resource Non-Billable Hours
While certain non-billable efforts enrich skills or culture, uncontrolled increases directly reduce project profitability. Businesses must quantify this time to balance investments in staff growth against client budget limits and revenue goals. Non-billables also influence forecasts, utilization rates and salary benchmarking. Gaining visibility informs smarter resource workload alignments. This metric holds significant importance for various reasons:
1. Resource Utilization: Tracking non-billable hours aids in optimizing resource allocation and ensuring efficient utilization.
2. Cost Management: Understanding non-billable hours helps in evaluating operational costs and optimizing workflows.
3. Project Planning: Insights into non-billable hours assist in planning and forecasting resource needs for projects.
Importance of Resource Non-Billable Hours
How to calculate Resource Non-Billable Hours?
Resource Non-Billable Hours are quantified by aggregating the hours spent by employees on administrative tasks, training, meetings, or any activities not directly billable to clients.
If an employee spends 10 hours per week on administrative tasks and 5 hours per week in meetings, the total Resource Non-Billable Hours would be 15 hours per week.
Resource Non-Billable Hours vs Other Resource Metrics
Resource non-billable hours differ from billable hours, which are the hours directly chargeable to clients or projects. Unlike billable hours, which generate revenue, non-billable hours are essential for internal operations and business sustainability but do not directly contribute to revenue generation
1. Billable Utilization Rate: While billable utilization rate measures billable hours, non-billable hours assess the time spent on non-client activities.
2. Resource Productivity: Productivity metrics focus on the output generated by resources, while non-billable hours analyze time spent on non-revenue-generating tasks.
3. Resource Allocation Efficiency: Allocation efficiency evaluates how resources are assigned, while non-billable hours track time spent outside billable tasks.
|Importance / Use
|Resource Non-Billable Hours
|Hours spent on activities not directly chargeable to clients
|Indicates time spent on non-revenue-generating tasks
|Billable Utilization Rate
|Percentage of billable hours against total available hours
|Reflects the efficiency of resources in generating billable work
|Overall Resource Utilization
|Percentage of total utilized hours against total available hours
|Measures the overall efficiency in utilizing available resources
|Measurement of employee output or performance
|Reflects the efficiency and output of employees in completing tasks
How Is Resource Non-Billable Hours Used?
1. Operational Efficiency: Insights into non-billable hours aid in streamlining processes, reducing non-value-added activities.
2. Cost Analysis: Helps in evaluating the cost implications of non-billable activities and optimizing resource allocation.
3. Performance Evaluation: Guides performance assessment by considering the balance between billable and non-billable hours.
Ready to Optimize Your Resource Non-Billable Hours?
KEBS, a comprehensive PSA software, contributes to optimizing Resource Non-Billable Hours through. KEBS offers time-tracking tools that facilitate monitoring and analyzing non-billable hours effectively.
Utilizing KEBS analytics assists in identifying areas for improving operational efficiency and reducing non-billable hours. KEBS provides insights for better resource allocation, aiming to minimize non-billable time without compromising operational needs.
Ready to optimize your Resource Non-Billable Hours? Contact us at KEBS or request a demo to explore how our solutions streamline time tracking and enhance resource utilization within your organization.