Setting Up Time Tracking Features in QuickBooks Online
Time tracking in QuickBooks Online serves as an indispensable tool for efficient business operations, especially for service-based businesses and companies with billable hours. The platform offers comprehensive time tracking capabilities that integrate seamlessly with billing, payroll, and project management features to create a unified system for managing your business operations.
Enabling Core Time Tracking Functions
QuickBooks Online's time tracking feature requires proper activation and configuration through the account settings. Navigate to the Gear icon and select "Account and Settings," then locate the "Time Tracking" section. Within this section, click the "Edit" button to access the configuration options. Enable both the "Use time tracking" and "Make time billable" options to unlock the full potential of the time tracking system. These settings create the foundation for accurate time recording and efficient billing processes across your organization.
Configuring Service Items for Time Tracking
Service item configuration plays a vital role in organizing and categorizing billable time entries. Access the "Sales" menu and select "Products and Services" to begin creating detailed service categories. Each service item should reflect specific types of work performed, such as "Strategic Consulting," "Technical Support," or "Project Management." When creating services, establish appropriate billing rates and link them to the correct income accounts. This detailed categorization enables precise tracking of different service types and supports accurate financial reporting.
Establishing Employee and Contractor Profiles
Proper setup of worker profiles ensures accurate time tracking and billing across your organization. Access the "Workers" section to create detailed profiles for both employees and contractors who will be tracking time. Include comprehensive information such as contact details, pay rates, and billing rates for different service types. Consider implementing tiered rate structures based on experience levels or service complexity to maximize profitability and maintain fair billing practices.
Customizing Time Tracking Settings
Fine-tune your time tracking system by customizing additional settings that align with your business practices. Configure approval workflows, set up automatic reminders for time entry, and establish billing rules that match your service agreements. These customizations help maintain consistency in time tracking and ensure compliance with your established business processes.
Implementing Time Entry Procedures
Establish clear procedures for time entry to ensure consistent and accurate tracking across your organization. Create guidelines for real-time versus batch time entry, set expectations for entry frequency, and define requirements for activity descriptions. These procedures help maintain data quality and support efficient billing processes.
Tracking Billable Time
With your setup complete, it's time to dive into the actual process of tracking billable time. QuickBooks Online offers two primary methods for time entry, giving you the flexibility to choose the approach that works best for you and your team.
Single Time Activity
The Single Time Activity method is perfect for one-off time entries or quick logs. It's ideal for those moments when you need to quickly jot down the time you've spent on a task before moving on to the next thing. Here's how to use it:
Start by clicking the "+" icon and selecting "Single time activity." Choose the employee or contractor who performed the work, then select the customer and service this time entry is for. Enter the date of the work, how long it took, and provide a detailed description of what was done. Make sure to check the "Billable" box and enter the correct billable rate. Once you've double-checked all the information, click "Save."
Weekly Timesheet
For those who prefer a more traditional approach or need to enter time in bulk, the Weekly Timesheet feature is your friend. This method is particularly useful for team members who work on multiple projects throughout the week. Here's how to use it:
Navigate to the "Time" section and click on "Weekly Timesheet." Select the employee or contractor and the week you're entering time for. You'll see a grid where you can enter hours worked each day, selecting the appropriate customer and service for each entry. Don't forget to check the "Billable" box for any time that should be billed to the client. Add detailed descriptions for each time entry to provide clarity on the work performed. Once you've entered all the time for the week, click "Save."
Remember, the key to effective time tracking is consistency and detail. Encourage your team to log their time daily if possible. It's much easier to remember what you worked on at the end of each day than trying to recall a week's worth of work on Friday afternoon. The more detailed and timely your time entries are, the smoother your billing process will be.
Adding Billable Time to QuickBooks Online Invoices
QuickBooks Online provides multiple methods for converting tracked time into billable invoices, streamlining the process of charging clients for services rendered. The platform's integrated time tracking and invoicing features ensure accurate billing while maintaining detailed records of all billable hours.
Creating New Invoices with Billable Time
Start by clicking the "+ New" button and selecting "Invoice" from the dropdown menu. Choose your customer, and QuickBooks will automatically display any unbilled time associated with that client. Select the relevant time entries from the side panel, and click "Add" to include them on the invoice. The system automatically populates the invoice with detailed descriptions, rates, and total amounts for each time entry.
Adding Time to Existing Invoices
For existing invoices that need billable time added, navigate to the Sales menu and select Invoices. Locate the desired invoice and click "Edit". When the invoice opens, access the side panel to view available billable time entries. Select the appropriate entries and click "Add" to incorporate them into the existing invoice.
Customizing Time Entry Details
Review each time entry on the invoice to ensure accuracy and completeness. Modify descriptions, adjust rates if necessary, and verify that all billable hours are properly categorized. QuickBooks allows for detailed customization of how time appears on invoices, including options to group entries by service type or date.
Managing Unbilled Time
Regular monitoring of unbilled time helps maintain efficient billing practices. Use the "Unbilled Activities" filter in the Customers section to quickly identify clients with pending billable time. This proactive approach ensures no billable hours are overlooked during the invoicing process.
Best Practices for Billable Time
To make the most of QuickBooks Online's time tracking and billing features, it's important to establish some best practices. These guidelines will help ensure accuracy, efficiency, and transparency in your billing process.
- Enter Time Promptly: Encourage your team to log their hours daily, or at the very least, weekly. When time entries are made while the work is still fresh in mind, they tend to be more accurate and detailed.
- Use Detailed Descriptions: Instead of a vague entry like "Worked on project," aim for something more specific such as "Developed custom CSS for client's homepage redesign" or "Conducted market research for Q3 marketing strategy."
- Review Time Before Invoicing: Before adding billable time to an invoice, take the time to review all entries for accuracy. Check that all time is accounted for, the rates are correct, and the descriptions are clear and professional.
- Communicate with Clients: If you're billing for a large amount of time or have reached a significant project milestone, consider giving the client a heads up before sending the invoice.
- Set Up Time Tracking Policies: To ensure consistency across your team, it's beneficial to establish clear policies for time tracking. These policies might include guidelines on what is considered billable versus non-billable time, minimum time increments for billing (e.g., billing in 15-minute increments), and how to handle different types of work such as meetings, research, or revisions.
Advanced Time Tracking Features
QuickBooks Online offers several advanced features that can take your time tracking and billing to the next level. These tools can help you manage complex projects, gain deeper insights into your business, and streamline your billing process even further.
Projects
For businesses that handle complex client engagements, the Projects feature in QuickBooks Online can be a game-changer. This feature allows you to organize all billable time and expenses related to a specific project in one place. Here's how to use it:
Navigate to the "Projects" section and click "New project." Enter a name for the project and select the associated customer. You can then add team members to the project and set their project-specific billing rates. As work progresses, you can track time and expenses specifically for this project. One of the most valuable aspects of the Projects feature is the ability to generate project-specific reports, giving you deeper insights into the profitability and progress of each engagement.
Classes and Locations
For businesses that need to categorize their billable time beyond just customers and services, QuickBooks Online offers the Classes and Locations features. These tools allow you to add another layer of organization to your time entries, which can be incredibly useful for detailed reporting and analysis.
To use these features, you'll first need to enable them in your account settings. Once enabled, you can assign a class or location when entering time. For example, you might use classes to distinguish between different departments or types of work, while locations could be used for different office branches or client sites. This additional categorization allows for more detailed reporting, helping you understand which areas of your business are most profitable or where you're spending the most time.
Automated Invoicing
For businesses with recurring billable time, such as retainer agreements or ongoing projects, QuickBooks Online's automated invoicing feature can be a real time-saver. Here's how to set it up:
Go to the "Sales" section and click on "Recurring Transactions." Click "New" and select "Invoice" from the options. Set up the recurring schedule (e.g., monthly, weekly) and enter the invoice details. You can choose to automatically add unbilled time to these recurring invoices, ensuring all your billable hours are captured. Once you've set up the template, save it, and QuickBooks will automatically generate and send these invoices according to your specified schedule.
Time Tracking Apps
While QuickBooks Online's built-in time tracking features are robust, some businesses may need more advanced capabilities. Fortunately, QuickBooks integrates with various time tracking apps, with TSheets (now QuickBooks Time) being a popular choice. These integrations can offer features like GPS tracking for on-site work, enhanced job costing capabilities, mobile time entry for team members on the go, and automated reminders to ensure everyone logs their time.
By exploring these advanced features and integrations, you can create a time tracking and billing system that's perfectly tailored to your business needs, helping you work more efficiently and bill more accurately.
Essential Time Tracking Reports in QuickBooks Online
QuickBooks Online offers robust reporting capabilities that transform time tracking data into actionable business insights. The platform's reporting features help businesses make informed decisions about resource allocation, pricing strategies, and project management while ensuring all billable hours are properly captured and invoiced.
The Time Activities by Customer Detail report provides a comprehensive view of time spent on each client, helping identify time-intensive projects and inform pricing decisions. This pairs effectively with the Unbilled Time report, which highlights all non-invoiced time activities, ensuring no billable hours are overlooked during the billing cycle. Regular review of these reports helps maintain consistent cash flow and accurate client billing.
For businesses utilizing the Projects feature, QuickBooks offers specialized reports like Time Cost by Employee/Vendor and Project Profitability reports. These tools break down costs and revenue by worker and project, providing clear insights into team productivity and project profitability. The Project Profitability Summary report is particularly valuable for analyzing the financial performance of individual projects, helping businesses identify their most profitable work and optimize resource allocation.
Troubleshooting Common Issues
Even with the best systems in place, you might encounter some hiccups along the way. Here are solutions to some common issues you might face when dealing with billable time in QuickBooks Online:
- Time Not Showing as Billable: First, make sure the "Billable" box is checked for the time entry. Next, verify that the service item associated with the time entry is set up as a billable item. Finally, double-check that the employee or contractor is set up correctly in your QuickBooks account.
- Billable Time Not Appearing on Invoice: Start by making sure you're creating the invoice for the correct customer. Then, check the date range of the billable time against the invoice date – time entries outside of the invoice date range won't appear. Lastly, verify that the time hasn't already been billed on a previous invoice.
- Incorrect Billable Rates: If you notice incorrect rates on your billable time, review the rate set on the service item associated with the time entry. Then, check if a custom rate was entered directly on the time activity. For projects, verify the team member's project-specific rate if you're using that feature.
- Unable to Edit Billed Time: Once time has been added to an invoice, you can't edit it directly in the time entry. Instead, you'll need to remove the time from the invoice, edit the original time entry, and then add the updated time back to the invoice.
By understanding these common issues and how to resolve them, you'll be better equipped to handle any bumps in the road as you manage your billable time in QuickBooks Online.
Transform Your Billing Process Today
QuickBooks Online's time tracking features provide powerful tools for converting billable hours into accurate invoices efficiently. By implementing proper time tracking procedures and utilizing the platform's integrated billing features, you can ensure every billable hour is captured and properly billed to your clients.
Take control of your service billing by leveraging QuickBooks' comprehensive time tracking capabilities, from setting up billable rates to generating detailed invoices. Whether you're managing multiple projects or tracking individual client work, QuickBooks' streamlined process helps maintain accurate records while ensuring timely payment for your services. Start maximizing your revenue potential by implementing effective time tracking and billing procedures in QuickBooks today.
Sources: [1] https://www.dummies.com/article/technology/software/money-management-software/quickbooks/how-to-bill-for-time-in-quickbooks-2021-277688/ [2] https://quickbooks.intuit.com/learn-support/en-ca/sales-customers/how-do-i-add-time-activity-billable-time-sheet-to-existing/00/832496 [3] https://quickbooks.intuit.com/learn-support/en-us/help-article/invoicing/enter-billable-time-job-quickbooks-online/L7Rliz6dh_US_en_US [4] https://quickbooks.intuit.com/learn-support/en-us/help-article/manage-customers/create-invoice-billable-time-expenses/L7RYKgXJU_US_en_US [5] https://quickbooks.intuit.com/learn-support/en-us/employees-and-payroll/how-to-put-billable-time-on-an-invoice-if-using-quickbooks-time/00/1187303 [6] https://quickbooks.intuit.com/learn-support/en-us/other-questions/new-invoice-experience-summary-bills-and-linking-time/00/1359733
