How to Calculate and Improve Billable Utilization for Creative Agencies

It is difficult to fit creative work into billable hours. Brainstorming sessions, cross-team collaboration, and sometimes client revisions are often unaccounted for.

So, without a clear strategy, it is easy to feel stuck between managing workloads, attending client meetings, and spending time on activities that make you money. 

In this guide, I will show you how to track and improve billable utilization. I will also explain how you can use ManyRequests and other tools to simplify the process for your day-to-day agency operations. 

What is Billable Utilization?

Billable utilization measures the time your team spends on revenue-generating tasks. And for creative agencies, this means more than tracking the hours. It helps you understand how to balance client work with behind-the-scenes efforts without spending too much time on those non-billable activities. 

For instance, the hours your web designers spend building a website landing page are billable. 

But it wouldn’t have been perfect without the brainstorming sessions, internal revisions, and meetings, which are important but non-billable. 

What Counts as Billable vs. Non-billable Time for Creative Agencies?

Here’s an elaborate breakdown of billable vs. non-billable activities for creatives: 

Billable tasks include:

…what your clients directly pay for. It's the kind of work that moves the needle financially. These are:

• Your actual work— the assets you designed, websites you updated, or the long-form SEO articles you wrote. They're the actual deliverables that clients choose your agency for.  

• Client revision requests. 
• Ideation. 
• Attending client meetings and presentations - if any, especially if the client consents to paying for them. 

Non-billable tasks:

These tasks do not exactly have price tags, but without them, your team will likely struggle to deliver high-quality work that meets the client's expectations. These are: 

• Team meetings for internal feedback and reviews. 
• Admin duties like invoicing or designing roadmap and scheduling deadlines. 
• Reporting to management. 
• Writing invoices or tracking late payments. 

Why you need a balance

These two categories work hand-in-hand, but the right balance makes your workflow more efficient. 

So, what do you do? 

Schedule specific times for each task (billable and non-billable) and limit non-billable tasks to when they’re necessary. These can be client calls, writing regular reports, or meetings with your internal teams. 

Now, how do you track time spent on client calls, writing reports, or other non-billable activities? 

How to Track Non-Billable Hours or Activities 

Some people use a pen, paper, a clock, and Google Calendar to track time spent on ideation. While this works, it’s too manual and inefficient. You can’t log the time automatically on your project management software and may not get the exact results you want. 

Instead, use ManyRequests to sync all your active projects. If you need to chat with your team members to bounce ideas off, open the timesheet in the task chat box in the Requests dashboard:

If you want to log the time spent sharing ideas, you can start and end the timer when you’re done. You can also log time by adding it manually: 

You can use the Loom video integration to record your screen, just in case you want to share some ideas with others without writing texts: 

The embed will look like this: 

If you don’t want to use an existing task box to monitor the time spent brainstorming ideas for a project, create specific “Requests” for them and tag them as non-billable. That way, you can log in the times manually and see how long it takes you. 

Once you know this, here’s how to know if you’re spending too much time on non-billable activities: 

How to Calculate Billable Utilization 

Billable utilization rate = (billable hours / total hours worked) x 100 

Here's how the formula applies to a design team:

Say your team spends 30 hours on design mockups, 5 hours in internal meetings, and 10 hours on revisions and client edits. 

• Billable hours: 30 hours on mockups.
• Non-billable hours: 5 hours in internal meetings and 10 hours on revisions = 15 hours.
• Total hours worked: 30 + 15 = 45 hours.

The billable utilization rate is 30 / 45 x 100 = 66.67%. 

Your designers on this project spent 66.67% of their time on billable tasks and 33.33% on non-billable tasks. That's not exactly a loss, but it's a lot of time spent on non-billable activities— which you'll still pay for if you're billed per hour. 

So, what does this mean for you? 

Knowing your billable and non-billable hours helps you decide how to reduce non-billable tasks to save money or systemize some of your processes. 

For instance, rather than spend too much time on client revisions, collect detailed briefs on every major need before you start working on a project. You can also set a realistic benchmark for billable tasks, as explained below: 

Setting Benchmarks for Billable Utilization

Once you calculate your billable utilization and know where your agency stands, set a percentage for the hours you want to spend on non-billable activities. Use this template:

Contractors or employees doing actual work

Managers

Admin or sales teams

Target between 75-80% of all work hours on billable tasks. 

Strike a balance between client interactions and oversight, with targets estimated at 35-50%

Keep this around 10% to focus on essential but non-billable tasks. 

If you work hourly with your clients, use the service catalog feature on ManyRequests to create your time-based services. This is what the process looks like: 

Here, you can specify the hours a project will take you and get the client to pay for the service directly. 

You can also offer a trial period if you want clients to get a feel of your work before committing to your agency. 

Why Billable Utilization is Necessary for Creative Agencies

Juggling client projects and internal activities is not easy. 

Add that to marketing your agency and converting leads to active clients- that’s a lot more work. So, you need to know your workloads, profit margins, and billable and non-billable hours in one dashboard. 

You can do this with ManyRequests. 

If you navigate to the Request dashboard, you will see all active tasks (Requests), the assignees for each task, unassigned projects, deadlines, and project statuses. 

You can also use the kanban view to see all these details: 

The dashboard in the image above clearly shows an overview of all active tasks, including their current status (in progress or pending feedback), priority levels, and other information. 

You can also navigate to Report for more nuanced financial data. This helps you filter your revenue per project type or client to see the ones that make you the most money. See example here: 

You can also use the service filter to see which of your services clients choose the most and how much revenue you have from them. 

How Agencies Lose Money Through Poor Billable Utilization

Many creative agencies struggle to balance billable tasks with non-billable ones, which can quickly add up. This can affect how much money you make and how much quality work is actually done. Here are some of the things I found: 

1. Untracked time adds up

When teams don’t accurately track their time, small and often insignificant tasks begin to add up quickly, contributing to revenue loss. 

It's easy to overlook those five-minute email replies or quick check-ins, but they can cost your business thousands yearly. According to a Time is Money study by Accelo, about $50,000 is lost by employees who are answering emails and phone calls alone. 

The bottom line is that only when non-billable time is tracked in detail can these hidden or lost figures be identified and billed. 

2. Missing out on opportunities to optimize resources

Earlier in this article, I explained how using pen and paper to track brainstorming hours is too manual and inefficient. 

But that’s not all. 

When too much time is spent on tasks that can easily be automated or using a system like ManyRequests, you lose money and expose employees to burnout. 

More than 77% of employees experience burnout at their current jobs yearly due to poorly managed workloads. 

To avoid losing money due to poor billable utilization, automate administrative duties like writing invoices and plan capacity as often as you can. 

Pro Tip: You can learn more about the key differences between billable and non-billable hours to better organize your time. 

How to Improve Billable Utilization without Sacrificing Creativity 

As a creative agency, you need all the help you can get to balance billable and non-billable work. Here are some tips to help you find the sweet spot: 

1. Keep Billable and Non-billable Work Separate 

This point cannot be overstated. You should first clearly define what counts as billable work–tasks like your client projects, strategy sessions, etc.- versus non-billable tasks like team training, workshops, and internal meetings. 

2. Use Simple Tools to Help You Stay on Track 

I understand the urge to use the newest tools on the market. However, you should be careful not to get too complex with them. Use a more straightforward tool like ManyRequests to keep everything organized. 

Don’t take our word for it. Here’s what Benjamin Williams, CEO of 55Knots, says: 

“We have been using ManyRequests for 3+ years, they are the backbone of our business. We manage clients, team, payments, timelines, (and) projects. The best thing about ManyRequests is that we have everything in one place and that they continuously keep improving the product. 

Sign up for a 14-day free trial now to see how ManyRequests can automate many of your agency operations to keep it simple and easy for you. 

3. Make Room for Brainstorming Sessions 

Your team will feel more creative with enough space to think and create freely. Make time for brainstorming sessions and keep them free of deadlines or client expectations. You will see more than a 10% boost in creative output when you do this, according to a study by Harvard Business Review.

4. Avoid Overloading Your Team with Non-billable Tasks 

There's no doubt that non-billable work is needed to deliver an excellent job, but overloading your team with these tasks can be counterintuitive. Let your administrative team handle administrative tasks while your team does the work that generates revenue. 

5 Tools to Track Billable Utilization for Creative Agencies 

Now that you know billable utilization and how to calculate it, you need the right tools to monitor your numbers: 

1. ManyRequests

ManyRequest is an all-in-one client portal with built-in project management tools. You can use its billable utilization feature to monitor billable versus non-billable tasks, analyze team performance, and generate detailed profitability reports. 

You can start by creating hourly custom services for your clients: 

Then, use the time tracking feature to log all the time spent on the task, both billable and non-billable. This is what your team’s logged time would look like: 

ManyRequests also has an all Requests dashboard view that allows users to see active projects, project statuses, assignees, and other relevant details. 

Aside from this, you don’t need to send manual invoices. ManyRequests’ invoicing and billing feature lets you generate automated invoices and notify clients (through the client portal) immediately when a task is completed. They can pay through an invoice that looks like this: 

Finally, you can use the software to charge hourly, per project, 50% or 100% upfront, or create a retainer-based model for your business. 

Sign up within 30 seconds—no credit card required!

2. Toggl Track

Toggl is time-tracking software for billable and non-billable hours. It also has integrations with invoicing software like QuickBooks, so you can bill clients based on the hours of the work done. 

However, it doesn’t have the client portal functionality and flexible client billing models that ManyRequests has. 

3. Harvest

Harvest has time-tracking and invoicing features that allow users to monitor time between multiple projects. It also has a visual report dashboard that shows billable utilization at a glance. 

However, it doesn’t have the multiple payment structures or CRM features that ManyRequests does. 

4. Clockify

Clockify's selling point is that it provides unlimited time tracking for free, which works well for teams on a tight budget. It also has features to track projects and report on billable hours.

However, it doesn’t have features like the white-label client portal, service catalog, native invoicing and billing feature, and other solutions your creative agency needs.  

I wrote a more detailed comparison of Toggl vs Clockify vs ManyRequests here. 

5. ResourceGuru 

ResourceGuru is a resource management software and a scheduling tool for teams that require visibility into their project allocations. The built-in time tracker features let you track the time spent on tasks and help manage capacity planning. 

Compared to a more robust tool like ManyRequest, the downside is that it leans more towards resource management than detailed billable utilization tracking. 

FAQs: 

1. What is the ideal billable utilization rate for creative agencies?

75-85%. However, the ideal rate depends on your team’s roles and project needs. An SPI study suggests that producers or team members whose work impacts delivery should aim for 75-85% utilization. 

However, this can be lower for admin roles because of their responsibilities outside direct billable work. 

2. How do I calculate billable utilization for a hybrid team?

For a hybrid team with full-time and freelance members, use a formula that factors in both work schedules. Track each team member’s available hours and separate billable versus non-billable tasks. Use a tool like ManyRequest or Resource Guru to automate these calculations and get visual insights into where to adjust.

Conclusion

Keeping up with billable utilization can feel overwhelming, especially without the right tools to monitor your billable and non-billable working hours. 

ManyRequest is the best option if you need an all-in-one solution to manage your workflow. This includes: 

• Tracking billable hours. 
• Organizing non-billable tasks. 
• One-click team workload management. 
• Automated client communication, and
• Real-time project tracking. 

These features take the guesswork out of billable utilization and provide everything you need to keep your projects running smoothly, avoid team burnout, and make every working hour count.

Sign up for a 14-day free trial, no credit card required, to explore how ManyRequests helps you better work with clients and teams. 

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