Unbillables

Unbillables are time, activities, or costs incurred by employees of a professional services firm that cannot be billed to a client. They are distinguished from billable work, which is invoiced to clients, and from unbilled revenue, which has been earned but not yet invoiced.

Common examples include administrative tasks such as timesheet administration and internal reporting, internal meetings, training, business development and marketing, human resources duties, information technology support, travel time not directly tied to a client, and pro bono or charitable work that is not charged.

Firms track unbillables through timekeeping systems and category codes. The ratio of billable to non-billable hours, or overall utilization, is used to assess efficiency. Elevated unbillables can depress utilization and profitability, while excessive emphasis on billables may compromise service quality or staff morale.

To manage unbillables, firms pursue process improvements, automation, and clearer scoping and budgeting for projects. Scheduling discipline, standardized templates, and outsourcing of routine tasks can reduce non-billable time. Some firms also reclassify certain routine activities as billable when they are directly linked to a client project.

The precise definition and emphasis of unbillables vary by industry and firm. In some contexts, particular internal activities may be treated as billable if they are directly allocated to a client or project.