Do you work in the trades industry as an Aussie tradie – a plumber, electrician, builder, carpenter or landscaper and do you ever find yourself in a state of constant busyness but every now and then the bank account just does not seem to show all that blood, sweat and tears? The solution may go back to one of the basic ideas- that are usually not given enough attention and that is what the term billable meaning in terms of your corporation. It all sounds quite easy does it not? That means billable so you can put it down as something you can bill for. However, when it comes to trades businesses there are gray areas when considering what can be charged and what should be charged on (or least be charged on). By this right, it will unlock the potential of your business profitability. Getting it wrong and you are simply leaving money lying on the floors of the toolshed.
We would like to demystify what is “billable meaning” to your Australian trades operation.
The Easy, Pure Expounding: Billable Hours in The Trades Meaning
At its core, billable time (or billable hours) refers to any work activity or time spent that you can directly charge to a client for a specific job or project. This is the time your skills, expertise, and labour are directly deployed to solve a client’s problem or complete their requested task.
Think of it this way: if a client directly benefits from your time and effort, and you’ve agreed to charge them for that benefit, it’s billable.
Examples of Billable Activities for an Australian Tradie:
- On-site labour: The time you or your team spend at the client’s property actually performing the agreed-upon work (e.g., fixing a leak, wiring a new circuit, laying bricks, installing a new deck).
- Direct client consultation: Time spent on-site or via direct calls/meetings specifically discussing the scope of an existing, paid job, troubleshooting an issue, or explaining progress for which you’ve agreed to charge.
- Material procurement (if explicitly charged): Time spent travelling to and purchasing specific materials for a particular job, especially if this is an agreed-upon charge (e.g., picking up a custom-ordered part for a specific client).
- Travel time (if explicitly agreed): Time spent travelling to and from a specific job site if you have clearly outlined this as a billable item in your quote or terms. This is crucial for remote or distant jobs.
- Supervision: Time spent directly supervising apprentices or team members on a billable job site.
The Other Side of the Coin: Non-Billable Hours
Even though your billable hours are the direct ones that pay your bills, it is also essential that you realise the non-billable hours. These are activities that your business needs to survive but you cannot charge them directly to a given client. They are expenditures, costs of investment or administrative requirements.
Examples of Non-Billable Activities for an Australian Tradie:
- Administration: Invoicing, quoting (other than an itemized quoting fee), keeping your books, responding to general enquiries, responding to emails not to do with a specific billable job, filing paperwork.
- Marketing & Business Development: Revision of your web site, social media posting, networking meetings, development of marketing support materials.
- Tool Maintenance & Organisation: This should be cleaning your ute, sharpening tools, sorting out your workshop, re-stocking the general supplies (not job particular).
- Training & Professional development: Ongoing training through workshops, course attendance, keeping informed about changes in the industry (e.g. new Australian Standards).
- General Travel: Travelling around seeking new employment, a drive out to get general provisions, visiting the bank, being driven to your office/depot.
- Unsuccessful Quoting/Estimating: The time it takes to work up a quote on a job to be awarded, at no charge to the employee (unless the employee charges a quotation fee).
- Unforeseen Delays (unless due to negligence on the part of the client): Waiting on materials to be brought in, surprise equipment malfunctions Using a project with client faults and client fault-free from the fourth edition as an example, do you think the basic-numbered (client fault) project will be more cost effective than the basic-numbered (client fault-free) project? And why?
- Tea breaks and lunch: These are the normal breaks at work.
Why This Distinction is Crucial for Your Australian Trades Business: Your Profit Key!
Understanding the difference between billable and non-billable hours isn’t just about semantics; it’s the bedrock of a profitable and sustainable trades business in Australia. Here’s why:
- Accurate Pricing & Quoting:
- Unless you know what the real non-billable time is you will underprice the jobs. The amount charged per hour should meet all your expenses, not your time on the site.
- You need to make spot on the non-billable overheads to ensure that your price represents your total pricing strategy which makes your price based on hourly rate or fixed price quote is actually making you a profit.
- Improved Profitability & Cash Flow:
- Maximise Billable Time: This again can be done by analysing your non-billable work, you liberate more time to work on billable work and directly impact your revenue.
- Identify Bottlenecks: The non-billable time can be tracked to identify inefficiencies. Do you have too much admin time? Perhaps it should be time to buy software or to outsource.
- Improved Resource Planning: Becoming aware of how much of your time you dedicate to various processes can enable you to understand whether you should employ a new assistant or hire another tradie, for instance, or acquire some new equipment.
- Fairer Employee Management (if applicable):
- On the employee side, knowledge on what to bill will provide specific performance standards.
- It allows you to better organise roles more appropriately e.g. allocating some non-billable tasks with an apprentice or office manager, so that your skilled tradies work on what they should directly.
- Tax & Record-Keeping:
- Billable time records are critical to invoicing and this has a direct affect on your Goods and Services Tax (GST) collection and payment and also affects how you report your income tax to the ATO.
- In addition, appreciation of your non-billable expenses can enable you to determine the possible tax deductions and get the true picture of the financial state of your business.
- Professionalism & Client Trust:
- With clear descriptions of what you are charging for, then you will be able to design transparent quotes and invoices. This only gains the trust of your clients, decreasing disputes and making payment a lot easier.
- It enables you to be sure of your prices.
Relatable Examples: Billable vs. Non-Billable in Action
Let’s look at some common scenarios for Australian tradies:
Scenario 1: The Plumber Fixing a Leaky Tap
- Billable:
- Travel time to the client’s house (if agreed in the quote/terms).
- Time spent diagnosing the leak.
- Time spent replacing the tap washer/fixture.
- Time spent testing the repair.
- Non-Billable:
- Time spent updating your Facebook page with a picture of a previous job.
- Driving to the plumbing supply store to pick up general stock for your van.
- Answering a phone call from a potential client asking for a quote (unless you charge for quotes).
- Cleaning and re-stocking your plumbing tools at the end of the day.
Scenario 2: The Electrician Installing New Downlights
- Billable:
- Travel to the client’s home (if specified).
- Time spent measuring and marking out light positions.
- Time spent cutting holes, running cables, and installing light fittings.
- Time spent testing the new lights and circuits.
- Brief time explaining the new setup to the client.
- Non-Billable:
- Time spent calling your supplier to check on the price of a future, unrelated job’s switchboard.
- Answering an email from an apprentice about their weekly timesheet.
- Completing your OHS paperwork for the week.
- Attending an industry seminar on new wiring regulations.
Scenario 3: The Builder Providing a Renovation Quote
- Billable:
- (Only if you charge for quotes/designs): Time spent on detailed design, architectural drawings, or extensive site analysis specifically requested and paid for by the client before the main job is approved.
- Time spent managing sub-contractors on an active, paid renovation project.
- Time spent on-site supervising or directly working on the renovation.
- Non-Billable:
- Initial site visit and measurement for a standard quote (usually absorbed into overheads).
- Time spent drafting the detailed quote and materials list.
- Follow-up phone calls or emails with the client before they’ve accepted the quote.
- Time spent chasing up unpaid invoices from previous jobs.
- Updating your builder’s licence details.
The Bottom Line: Know Your Numbers, Own Your Profit
As far as your Australian trades business is concerned, the concept of billable meaning is not only an accounting concept but a strategic instrument. When strategically and precisely establishing your billable and non-billable hours as well as carefully monitoring that same amount of time, you will learn lessons of immeasurable value on your operations. You can:
- Price with more confidence.
- Find ways to make things more efficient.
- Get wiser when it comes to staffing and technology decisions.
- Finally, make sure that all your efforts are worth the healthy profit margins that you should enjoy.
Start today by consciously categorising your time. You might be surprised at how much non-billable time you’re racking up – and how much opportunity there is to turn that knowledge into a more profitable future for your Australian trades business.