Unpacking the Dichotomy of ‘Billing’ and ‘Non-Billing’ Roles -Myths and Realities
When you are in a staffing company, you ideally do not differentiate between a billing and a non-billing role while recruiting. However, it is common knowledge that most companies look at billing and non-billing roles very differently. The billing roles are those that support the business directly and the non-billing roles are the support roles.
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Billing Vs non-billing
Billing Vs non-billing is a constant debate in companies especially during appraisals or in times of distress. During appraisals for instance, people always are discussing what percentage of hikes should be given to non-billers when compared to the billing employees. Or during a time of distress, this topic again raises its head where it is discussed what percentage of non-billing roles should be hacked? Another constant debate is what should the percentage of non-billing roles be when compared to the billing roles in a company?
To begin with, we need to understand the difference between billable and non-billable roles in an organization. Billing roles are those that directly impact and generate revenue for the company.
Billing roles in an organization normally include:
- Sales and business development teams
- Managers and team leaders
- The leadership team and business heads who make billing decisions
Non-billing roles are typically:
- The HR team
- The marketing team
- Payroll team
- Compliance and legal team
- Tech team
- Finance team
- The administrative team and the executive assistants
Let us examine in detail what is billable and non-billable work?
According to Anil Ethanur, Talent Specialist, CoCreating Xpheno
What is billable work?
All tasks that are directly related to a client’s project are billable work. In other words, billable work are those tasks that can be invoiced and get compensated by the client. Billable work is the main source of income especially for consulting and service-based companies, agencies, law firms and accounting agencies.
Billable work often includes project planning, research, project execution, client communication, and client meetings. There are various categories of billable work, and they are sometimes based on various factors. For instance, some companies use time-based billing (which is they bill for the number of hours that they work on a project), and in this case, time-sheets are maintained for work done on client projects. Some companies have value-based billing, which is essentially a fixed price for something. Some companies work on project-based billing, where the price of the entire project is fixed in advance.
What is non-billable work?
Any work performed by an employee that cannot be billed to the client is called non-billable work. So typically, vacation time, any type of leave sought by an employee is non-billable. Administrative tasks like reviewing and emailing, even attending events or training is considered non-billing. In essence, if you are directly not doing customer work, then it is considered a non-billing activity. There are some essential tasks that have to be done in a company and technically cannot be billed to a client. However, these jobs require employees to perform such tasks and be compensated for them too. Such tasks are:
- Developing proposals and sending them to new clients
- New project pitches
- Team meetings
- Invoicing and finances
- Internal meetings and communications
Myths and realities
It is a myth that non-billable resources can be laid off in times of distress. Think of your HR team. They are the biggest supporters of expanding, replacing, and retaining the billable managers who handle the clients. Similarly, it is not an easy option to outsource a function like marketing. No one can handle the brand’s visibility and related promotions as well as the marketing team. Similarly, the payroll, compliance, and legal teams all are important support functions that no company can do without. The tech teams also take care of the digital experience for customers and operations efficiency. It is impossible to replace them. Last but not least, the finance team cannot be replaced with finance CRMs. They are essential for book-keeping.
While project profitability is important and depends on how many billable hours and resources you have on the job, the non-billable tasks are important for your business. It is impossible to eliminate them. Proper planning and budgeting of time and expenses are the only way to keep a balance between the billing and non-billing roles in an organization.