Accountants Billable Hours Monthly Formula
Learn how monthly accounting billable hours, fee revenue and target utilization are calculated.
This calculation estimates how much of an accountant's monthly working capacity can be charged to clients and the fee revenue it could produce. It also shows the utilization required to reach a chosen monthly revenue target.
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Estimated Monthly Fee Revenue
Where:
First calculate total available working hours, apply the percentage expected to be billable, then multiply those billable hours by the average realised hourly rate.
Variables Explained
| Variable | What It Means | Unit |
|---|---|---|
| workingDaysPerMonth - Working days per month | The number of days available for work during the month. | days |
| hoursPerDay - Working hours per day | Average daily hours available for client work and internal activities. | hours |
| billableUtilization - Expected billable utilization | The percentage of total working time expected to be chargeable to clients. | percent |
| hourlyRate - Average billable hourly rate | The average realised fee earned for each billable hour. | currency |
| targetMonthlyRevenue - Monthly revenue target | The monthly billable fee revenue target used to calculate required hours and utilization. | currency |
Step-by-Step Calculation
Calculate monthly working capacity
Multiply expected working days by average daily hours to find total available hours before non-billable time.
monthlyCapacityHours = workingDaysPerMonth * hoursPerDay
Estimate billable hours
Apply the expected billable percentage to monthly working capacity.
monthlyBillableHours = monthlyCapacityHours * (billableUtilization / 100)
Estimate non-billable hours
The remaining hours represent administration, training, business development and other non-chargeable work.
monthlyNonBillableHours = monthlyCapacityHours - monthlyBillableHours
Calculate expected fee revenue
Multiply estimated billable hours by the average realised hourly rate.
estimatedMonthlyRevenue = monthlyBillableHours * hourlyRate
Calculate hours needed for the target
Divide the revenue target by the average hourly rate to find the billable hours required.
targetBillableHours = targetMonthlyRevenue / hourlyRate
Calculate required utilization
Compare billable hours needed with total available capacity to find the necessary billable percentage.
requiredUtilization = (targetBillableHours / monthlyCapacityHours) * 100
Calculate the revenue difference
A positive result is above target, while a negative result is below target.
revenueDifference = estimatedMonthlyRevenue - targetMonthlyRevenue
Example: sole practitioner monthly billable capacity
Monthly working capacity
20 × 7.5
150 hours
Estimated billable hours
150 × (70 / 100)
105 hours
Estimated non-billable hours
150 - 105
45 hours
Estimated monthly fee revenue
105 × 150
$15,750
Hours needed for target
15000 / 150
100 hours
Utilization needed for target
(100 / 150) × 100
66.7%
Revenue difference
15750 - 15000
$750 above target
Final Result
The plan estimates 105 billable hours and $15,750 in monthly fee revenue, which is $750 above the $15,000 target.
Assumptions
- ✓Billable utilization is the share of all working hours that can be charged to clients.
- ✓The hourly rate is an average realised rate across the month rather than a list or headline rate.
- ✓Working days and daily hours are assumed to be broadly consistent during the month.
- ✓The target is compared with gross fee revenue before deductions, taxes and collection issues.
Limitations
- !Actual demand, deadline pressure and client approvals can change billable time.
- !Fixed-fee work may have a realised hourly rate that differs from the planned average.
- !The calculation does not adjust for write-offs, discounts, bad debts or unrecorded time.
- !A result above 100% required utilization indicates the stated target cannot be met within the entered capacity and rate alone.
Common Mistakes to Avoid
Entering a standard hourly rate instead of the lower average rate actually realised after discounts or fixed-fee work.
Treating all working hours as available for client work and overlooking administration, review and business development.
Using a utilization percentage as a decimal, such as entering 0.70 instead of 70%.
Counting leave, public holidays or internal meetings as normal working days without adjusting capacity.
Interpreting estimated fee revenue as cash collected during the same month.
Related Formulas
Frequently Asked Questions
How are monthly billable hours calculated for an accountant?
Multiply working days by hours per day, then multiply the result by expected billable utilization as a percentage.
How do I calculate accounting fee revenue from billable hours?
Multiply estimated billable hours by the average realised hourly rate.
What utilization is needed to reach a monthly revenue target?
Divide target revenue by the hourly rate to find required billable hours, then divide those hours by monthly working capacity and multiply by 100.
What does a required utilization above 100% mean?
It means the target requires more billable hours than the entered working capacity provides at that hourly rate.
Should fixed-fee work be included in the hourly rate?
It can be included by using an effective hourly rate based on expected fixed fees divided by the time expected to deliver the work.
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