Why is time tracking tough for accounting firms?
The work comes in lots of small pieces for lots of clients. A VAT question on the phone, an email about the annual accounts, a fix to a file you thought was finished. Each takes just a few minutes—and those are the minutes most likely to get missed.
The workload isn’t steady either. Around tax deadlines, year-end accounts, and month or quarter close, your calendar is packed but your timesheet is empty. If you only fill it in on Friday, you’re guessing—and guesses are almost always less than what really happened.
The real question isn’t whether you track time, but whether you include the quick advice in between. That’s often what makes the difference between a profitable engagement and one that isn’t.
What should each entry include?
Keep each entry simple so it works even during busy weeks. A good entry answers four questions: for whom, for what, how long, and what exactly.
- Client. Always include, even for a five-minute question.
- Engagement (project). Annual accounts 2025, VAT returns, payroll, advisory questions. Later, you can see where the time went for each engagement.
- Activity. A short, fixed list: processing, compiling, reviewing, advice, meetings, internal.
- Duration. The actual time, not rounded up to an hour.
- Description. One line the client could read, like ‘answered question on company car benefit’.
How do you organize clients, engagements, and activities?
Set up a project for each recurring engagement or for each year per client. A project per year (‘Annual accounts 2025’) makes it easy to compare years. Group ad-hoc questions in one ‘Advice’ project per client so they don’t get lost.
Use activities for the type of work, not for the client. Five to eight activities is enough. Too many choices slow down logging and make reports harder to read.
| Level | Example | Used for |
|---|---|---|
| Client | De Vries Bakery Ltd | Invoicing and overview by client |
| Project | Annual accounts 2025, VAT 2026, Advice | Budget and hours per engagement |
| Activity | Compiling, Review, Advice, Internal | Rate and billable or not |
Fixed fee or hourly: what does it mean for your hours?
Many firms charge a fixed fee for annual accounts or bookkeeping, and an hourly rate for advice and extra work. For fixed-fee work, you still track the hours, but they don’t show up on invoices. You use them to check if the fee still makes sense.
With hourly billing, the hours go straight to the invoice. The tricky part is the line between them: when is a question covered by the fixed fee, and when is it extra? Agree on that with the client up front in the engagement letter, and log extra work as its own billable activity. More on that in Billable hours.
| Work | Model | Record hours as |
|---|---|---|
| Annual accounts, bookkeeping | Fixed fee | Non-billable activity, for review |
| Advisory questions, extra work | Hourly | Billable activity |
| Internal meetings, training | None | Own firm as client, non-billable |
Approving and invoicing at month-end
Have a partner or team lead review hours before they go on an invoice. That way, you catch missing descriptions or hours logged to the wrong client before your client does.
A set routine helps, even in busy months. How to set up approval is covered in Approving hours.
- Staff finish their week, including quick advice.
- The approver reviews each week and approves or declines with a reason.
- You run a report of approved hours that haven’t been invoiced yet.
- You turn those into draft invoices, which you check and send from your accounting software.
What should you watch out for?
Most issues start when time is recorded, not at invoicing. Watch for these:
- Waiting until Friday. In busy weeks, that means Friday night—and then you’re guessing. Log daily. A timeline picks up work on your computer and meetings in your calendar; phone calls you log yourself, right after they end.
- A catch-all client ‘Misc’. Anything that ends up here can’t be invoiced or analyzed.
- Descriptions only you understand. ‘Misc. work’ tells the client nothing and leads to questions about the invoice.
- Fee details. Follow your professional association’s rules and your engagement letter on what an invoice must show.
How Half5 does it
In Half5, you create clients with a project for each engagement, each with its own hourly rate and optional budget in hours. Activities are set as ‘Billable’ or ‘Non-billable’ and can have their own hourly rate. So hours on fixed-fee work go on a non-billable activity: they show up in reports but never as an invoice line.
Half5 tracks your day on your own device (programs and windows via the desktop app, meetings from your connected Google or Outlook calendar) and prepares ‘Suggestions’ under ‘Still to register’. Programs and windows stay end-to-end encrypted on your own devices, only you see your calendar meetings, and you log phone calls yourself. The firm only sees the hours you register.
With ‘Approve hours before invoicing’ turned on, an admin or department manager approves hours first. Then you use ‘Create draft invoices from report’. Moneybird, WeFact, and Exact Online receive a draft invoice. With e-Boekhouden, you check the draft in Half5, and ‘Finalize’ creates the numbered invoice in e-Boekhouden.
Frequently asked questions
Should I track hours for fixed-fee clients too?
Yes. They don’t go on the invoice, but without them you can’t tell if the fee still works. Log them as a non-billable activity.
How do I log a five-minute phone call?
As a regular entry on the client and its ‘Advice’ project, with a short description. Do it right away or at the end of the day; a week later you’ll forget.
How many activities does a firm need?
Usually five to eight. Enough to separate rates and billable work, but few enough to pick quickly.
Who approves hours at a small firm?
Often the owner or a partner. If there’s only one approver, agree who checks their hours, or accept that they review their own.
Should we track internal hours too?
Yes, it’s worth it. Add your own firm as a client and log internal work as a non-billable activity, so you can see how much time doesn’t go to clients.
