Accounting technology / Glossary / Time and billing

What is time and billing?

Definition

Time and billing is the part of an accounting firm's systems that records time spent on client work and turns it, or agreed fixed fees, into invoices. It tracks work in progress, rates and budgets, and reports on how much recorded time is billed and collected, which shows the profitability of each client and engagement.

Also calledtime and fees

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Key measures: Utilisation, realisation
Shift: Hourly to fixed fees
Category: Practice management

How time and billing works

In the traditional model staff record time to client jobs at hourly rates, the time builds up as work in progress, and partners bill it, writing some off. Firms measure utilisation (chargeable time against available time) and realisation (fees billed against the value of time recorded). Many firms have moved to fixed and recurring fees agreed in advance, which changes the tooling: Ignition and Anchor bill from the signed proposal or engagement letter, while Karbon, TaxDome and Canopy combine time tracking and invoicing with workflow. Time is still recorded on fixed-fee work to show whether each fee covers the effort.

Common questions

What is work in progress in an accounting firm?+

Time recorded on client work that has not been billed yet, valued at charge-out rates. It is reviewed before billing, and the difference between its value and the amount billed is a write-off.

Do accounting firms still need time tracking with fixed fees?+

Most still track time, because it shows whether each fixed fee covers the work and supports pricing the next engagement. Some firms track only by exception.

What is realisation in time and billing?+

The share of the value of recorded time that the firm actually bills, or collects. A realisation rate well below 100 per cent means fees are being written down.