Two kinds of unbilled hour, and why to keep them apart

Every engineering consultancy has hours that never reach an invoice. Most timesheets record all of them the same way: a tick box marked "non-billable". That box is doing two jobs at once, and it hides the more important one.

Two different facts behind one tick box

Some hours were never meant to be charged to anybody. Others were chargeable, and somebody decided not to charge for them. Both end up off the invoice, but they answer different questions.

Question	Never chargeable	Chargeable, then written off
Examples	Internal admin, bids and proposals, training	Extra review rounds, fixing an error, a goodwill discount
What it is	A property of the work	A decision about the work
Who decides	Known when the time is recorded	Somebody, later, for a reason
What it tells you	Where capacity goes	Where revenue was given away

Never chargeable: a category on the hour

Time spent on a bid, on training or on internal admin was never going to be billed, and that is fine - it is part of running a practice. What matters is knowing which kind it was. "Non-billable" alone cannot tell you whether the month went on proposals or on paperwork, and those call for different conversations.

So the useful record is not a yes or no but a category, chosen when the time is entered by the person who did the work. It is a fact about the hour, and it should stay with it.

Written off: a decision with an author

A write-off is different. The work was done for a client, on their job, and would normally be charged. Then the project lead decides to give some of it away - because the brief changed, because a mistake needed fixing, or to keep a good client happy.

That is a commercial decision, and it deserves to be recorded as one: how much, on which job, by whom, and why. Recording it by quietly flipping the original hours to "non-billable" loses all four.

A write-off recorded as non-billable time makes the job look as if the work was never chargeable - and makes the person who decided invisible.

Why mixing them up costs you

• The margin looks better than it is. If given-away work is reclassified as never chargeable, the job appears to have hit its rate. The revenue you chose not to collect simply disappears from view.
• Patterns stay hidden. Repeated write-offs on one client, or one kind of work, are exactly what should change your next quote. You cannot see them if they look like internal time.
• The record gets edited. Changing the billable flag on hours after the fact alters the time record itself, rather than adding a decision on top of it.

A simple way to keep them apart

1. Record every hour as it was worked: chargeable, or never chargeable with a category.
2. Leave the hours alone afterwards. They are a record of the work, not of the commercial outcome.
3. When you decide not to charge for chargeable work, record a write-off against the job with an amount and a reason.
4. Review both in your work-in-progress report: never-chargeable hours by category, and write-offs by job and client.

How ReliTime handles this

In ReliTime a non-billable hour must name a category from your organisation’s list, such as bid and proposal or training. A phase can fix the category - booking to an internal Training phase has already said what the time was - and on a client-facing phase the person chooses. A write-off is a separate record on the job with its own author and reason, and it never changes the time entries. The work-in-progress report shows the two apart, so margin moves when something is given away and you can see who gave it.

However you track time, the rule is worth adopting: an hour that was never chargeable and an hour you chose not to charge are two different facts. Keep them in two different places.