Why is time tracking hard at an accounting firm?
The work comes in many small pieces for many clients. A VAT question on the phone, an email about the annual accounts, a correction to a file that was already ‘done’. Each piece takes a few minutes, and those minutes are exactly what gets written down least.
The workload is also uneven. Around tax deadlines, year-end accounts and the close of a month or quarter, the calendar is full and the timesheet empty. If you only look back on Friday, you estimate, and estimates almost always come out lower than what really happened.
The question is rarely whether you track time, but whether the short advice in between is in there too. That's often the difference between an engagement that pays and one that doesn't.
What should each entry contain?
Keep each line simple so it still works in a busy week. A good entry answers four questions: for whom, for what, how long and what exactly.
- Client. Always, even for a five-minute question.
- Engagement (project). Annual accounts 2025, VAT returns, payroll, advisory questions. Later you can see per engagement where the time went.
- Activity. A short fixed list: processing, compiling, reviewing, advice, meetings, internal.
- Duration. The real time, not rounded up to an hour.
- Description. One line the client may read, such as ‘answered question on company car benefit’.
How do you structure clients, engagements and activities?
Create a project per recurring engagement or per year for each client. A project per year (‘Annual accounts 2025’) makes years easy to compare. Bundle ad-hoc questions in one ‘Advice’ project per client, so they don't get lost among the rest.
Use activities for the type of work, not for the client. Five to eight activities is enough. Too much choice makes logging slow and reports hard to read.
| Level | Example | Used for |
|---|---|---|
| Client | De Vries Bakery Ltd | Invoicing and overview per 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. On fixed-fee work you still record the hours, but they don't become invoice lines. You use them to check whether the fee still fits.
With hourly billing the hours feed the invoice directly. The tricky part is the boundary: when is a question covered by the fixed fee and when is it extra work? Agree that with the client up front in the engagement letter, and log extra work on its own billable activity. More on that distinction in Billable hours.
| Work | Model | Record hours as |
|---|---|---|
| Annual accounts, bookkeeping | Fixed fee | Non-billable activity, for post-calculation |
| 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 the hours before they reach an invoice. That way you catch missing descriptions and hours on the wrong client before the client does.
A fixed routine helps, even in busy months. How to set up the approval itself is in Approving hours.
- Staff complete their week, including the short 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 that into draft invoices, which you check and send from your accounting software.
What should you watch out for?
Most problems don't start at invoicing but earlier, when time gets recorded. Watch for these:
- Leaving it until Friday. In busy weeks that becomes Friday night, and then you estimate. Log daily, or use a tool that keeps track of your day for you.
- A catch-all client ‘Misc’. Anything that ends up there can never be invoiced or analysed.
- Descriptions only you understand. ‘Misc. work’ tells the client nothing and leads to questions about the invoice.
- Fee specifications. Follow your professional body's rules and the terms in your engagement letter on what an invoice must show.
How Half5 does it
In Half5 you create clients with a project per engagement, each with its own hourly rate and optional budget in hours. Activities are set to ‘Billable’ or ‘Non-billable’ and can carry their own hourly rate. So hours on fixed-fee work go on a non-billable activity: they count in reports but never become an invoice line.
Half5 keeps track of 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’. That timeline is end-to-end encrypted and not shared with your organisation; the firm only sees the hours you register.
With ‘Approve hours before invoicing’ switched 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 finish the invoice there yourself.
Frequently asked questions
Should I record hours for fixed-fee clients too?
Yes. They don't go on the invoice, but without them you can't tell whether the fee still fits. Record them on a non-billable activity.
How do I record a five-minute phone call?
As a normal 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 won't remember.
How many activities does a firm need?
Usually five to eight. Enough to separate rates and billable work, few enough to choose quickly.
Who approves hours at a small firm?
Often the owner or a partner. If there's only one approver, agree who reviews their hours, or accept that they check their own.
Should we track internal hours as well?
Yes, it's worth it. Add your own firm as a client and log internal work on a non-billable activity, so you can see how much time doesn't go to clients.
