Unbillable

Unbillable refers to work time or costs that cannot be billed to a client. In professional services environments such as law, consulting, accounting, and engineering, staff typically track time as billable or non-billable. Billable hours are those charged to a client, while unbillable hours are not charged directly and are usually absorbed by the firm or funded through overhead.

Common unbillable activities include administrative tasks (invoicing, time-entry), internal meetings, training and development, research and knowledge management, compliance, business development, marketing, onboarding, paid time off, sick leave, and internal research or projects not tied to a specific client engagement. Some organizations also categorize certain client-related activities as non-billable if they cannot be traced to a specific billable engagement or if they are part of long-term internal initiatives.

Measurement and impact: Firms often monitor utilization, defined as billable hours divided by total available hours. Unbillable time lowers utilization and can affect profitability unless compensated by higher billable productivity, larger or more efficient projects, or appropriate overhead allocation. Some firms exclude certain internal activities from overhead or apply blended rates to account for unbillable work.

Management considerations: Unbillable work is typically deemed necessary for long-term capability, compliance, and business health. Firms seek to minimize unnecessary unbillables through process improvements, enhanced time-tracking accuracy, automation, and clearer project scoping, while preserving essential internal activities that support future revenue.