Accountants Billable Hours Formula
Learn how hourly rate, working capacity and billable utilization are used to estimate accounting practice billings.
This calculation estimates the client fees an accounting practice could bill from hourly work. It turns available working time into chargeable hours, then applies the average realized hourly rate to produce monthly and annual gross-billings estimates.
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Estimated Annual Billings
Where:
First estimate how many hours per day are billable. Multiply those hours by monthly working days and the hourly rate, then multiply the monthly result by the number of working months.
Variables Explained
| Variable | What It Means | Unit |
|---|---|---|
| hourlyRate - Hourly billing rate | Average realized amount charged for one billable hour. | currency |
| workHoursPerDay - Available work hours per day | Hours available on a typical working day before allowing for non-billable time. | hours |
| billableUtilization - Billable utilization | Percentage of available work time expected to be charged to clients. | percent |
| workingDaysPerMonth - Working days per month | Average number of days worked in a month. | days |
| workingMonthsPerYear - Working months per year | Number of months included in the annual estimate. | months |
Step-by-Step Calculation
Convert utilization to a decimal
A utilization percentage must be divided by 100 before it can be applied to hours.
utilizationDecimal = billableUtilization / 100
Calculate daily billable hours
This estimates the chargeable part of a normal workday.
dailyBillableHours = workHoursPerDay * utilizationDecimal
Calculate monthly billable hours
Daily chargeable hours are multiplied by the typical number of working days.
monthlyBillableHours = dailyBillableHours * workingDaysPerMonth
Calculate monthly billings
Each estimated billable hour is valued at the average hourly billing rate.
monthlyBillings = monthlyBillableHours * hourlyRate
Calculate annual billings
Monthly gross billings are annualized using the selected working months.
annualBillings = monthlyBillings * workingMonthsPerYear
Example: sole accountant billing $150 per hour
Daily billable hours
8 × (65 / 100)
5.2 hours
Monthly billable hours
5.2 × 20
104 hours
Monthly billings
104 × $150
$15,600
Annual billable hours
104 × 12
1,248 hours
Annual billings
$15,600 × 12
$187,200
Final Result
Estimated billings are $15,600 per month and $187,200 per year before expenses and taxes.
Assumptions
- ✓The hourly rate represents the average rate actually realized across billed work.
- ✓Utilization is the share of available hours that can be charged to clients.
- ✓Working hours, utilization and working days are assumed to be consistent across the selected months.
- ✓The result is gross billings, not profit, cash collected or take-home income.
Limitations
- !Client demand, seasonal deadlines, leave and workflow disruptions can change billable capacity.
- !Discounts, fixed-fee engagements, write-offs and unpaid invoices can make actual revenue lower than billed fees.
- !Different service lines may have different rates and utilization levels.
- !The calculation does not deduct wages, software, rent, insurance, taxes or other operating costs.
Common Mistakes to Avoid
Entering an advertised rate instead of the average rate realized after discounts or write-offs.
Treating all available work hours as billable and overlooking administration, training and business development.
Using calendar days rather than actual working days.
Interpreting gross billings as profit or cash received.
Annualizing 12 months without allowing for planned leave, seasonal closure or a partial year.
Related Formulas
Frequently Asked Questions
How are billable hours calculated for an accountant?
Multiply available work hours per day by billable utilization, then multiply by working days. For example, 8 hours at 65% utilization gives 5.2 billable hours per day.
What is the formula for hourly accounting billings?
Monthly billings equal hourly rate × work hours per day × utilization as a decimal × working days per month.
What does billable utilization mean?
It is the percentage of available working time spent on client work that can be charged under an hourly engagement.
Does the formula calculate accounting practice profit?
No. It estimates gross fees billed. Profit requires a separate calculation for operating costs, compensation, taxes and other expenses.
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