Time Tracking for Billing: Best Practices & Tools to Make It Effortless

Time tracking for fun and giggles is one thing (just kidding, no one does that). But time tracking for billing? That’s where things get really “exciting”. And by exciting, I mean dangerously close to losing money by undercharging clients and questioning your entire invoicing system.

Billing is a slippery slope that starts with one untracked meeting and ends with you wondering if you’re running a business or just donating your time to the clients.

No matter if you’re a lawyer, a consultant, a CPA, a freelancer, or an agency team leader, you already know the stakes are high. Time is money, and it’s also revenue and accountability.

Knowing all this, we wanted to dig a bit deeper into the real challenges of billing based on time (there are so many!), and show you the right tools and automation so you can turn time logs into accurate billing.

Basically, this article is here to encourage you not to be afraid of relying on time tracking for accurate billing. You just need the right system and the right tools. Fear not; we got you.

Why does time tracking matter for billing?

The answer is simple: because if you are a service provider, your revenue is tied directly to hours worked.

For you, time is literally money. And tracking that time with accuracy, consistency, and accountability is what can ensure your revenue predictions become a reality.

Don’t believe me?

Here’s why effective time tracking is so essential for billing:

1. You can ensure revenue accuracy. If you’re not tracking every billable hour (and minute), you’re leaving money on the table. Just think of this example: losing 15 minutes a day per team member can add up to thousands in lost revenue over the course of a year. Multiply that by a whole team, and the numbers start to sting. Ouch.
2. You start building relationships with clients based on trust. More often than not, clients want to know what they’re being billed for. You can use a well-documented time log as the foundation for that trust; show them you aren’t pulling numbers out of thin air but invested real time into their project.
3. You’ll be able to spot inefficiencies. Tracking time reveals where your team’s time is going and what your “toxic” business patterns are (like overservicing clients). When you analyze time data, you are more likely to make smarter resourcing decisions, optimize workflows, and improve future estimates and pricing models.
4. You’ll get better at scope management. You can’t be 100% sure if your projects tend to go beyond the original scope if you don’t track time. Plus, effective time tracking gives you the courage to renegotiate or upsell additional work rather than absorbing the cost.

What happens if you don’t bill properly?

You fall into the common time billing traps.

Here are the most common traps and why they cost you more than you think.

#1 Overdelivering

Repeat after me: it’s not noble to go above and beyond for a client. If you’re consistently putting in extra hours that aren’t billed, you’re losing revenue.

Overdelivering occasionally is fine. But when it becomes a pattern, it sets unrealistic expectations and undervalues your team’s time, skills, and expertise.

#2 Missing billable hours

The more you multitask or context switch, the easier it is to forget to log those quick client calls, small design tweaks, or client emails that technically count as billable work. Individually, they seem like nothing, but collectively, they’re making a huge indent in your revenue.

#3 Forgetting to log time

Relying on memory to track your day is like trying to build a house of cards during a tornado; it’s frustrating and guaranteed to collapse even though you desperately need it to hold up.

Not to mention, logging time later can’t be accurate. Manual time entries are usually rounded numbers full of guesses, like “2 hours” for a task that definitely took somewhere between 17 minutes and an entire afternoon.

#4 Misjudging task duration

You’re bad at estimating how long things take. I am bad at it. We all are.

Especially when we are juggling multiple responsibilities. And that misjudgment can lead to underbilling or inaccurate scopes that undermine profitability.

#5 Confusion around what’s billable and what’s not

Some teams struggle to draw the line between what can be billed and what should be considered part of overhead. Internal meetings, admin work, or onboarding tasks often go unnoticed or misclassified.

#6 Manual time logging

Spreadsheets and sticky notes are not a time tracking system. They are just convenient, widely used methods that lead to inconsistencies and delayed invoices. Not to mention, they can be the cause of your billing issues and those awkward “Can you explain this charge?” conversations with clients.

They lack audit trails, real-time tracking, and any kind of automation, as your team spends more time figuring out what they did than actually doing the work. And when it comes time to invoice, post-its can’t help you stitch together a timeline. It’s all very inefficient, error-prone, and unscalable.

#7 Delayed invoicing

When time logs aren’t up to date, neither are the invoices. Your invoices and your cash flow suffer.

Plus, the longer you wait to send an invoice, the more likely it is to be questioned or dismissed.

So, how can you avoid falling into these billing traps?

Time tracking for billing is brilliant when it works. When it doesn’t, it brings a slow, painful death to your revenue.

If you truly think about it, billing your time should be flexible and scalable, allowing you to align payment with effort. When it’s not, you fall into the traps of underbilling, missed hours, and confused clients.

So, what “constitutes” a profitable time billing system?

If you ask me, I’d say a time tracking process that’s smooth, reliable, and actually fits the way you and your team work. Here’s what that looks like in practice.

#1 Frictionless time tracking

Think: automatic, silent, and in the background.

If tracking time feels like yet another task, your team won’t do it consistently. Or accurately. 

That’s why you need real-time tools that integrate into your team's workflow: browsers, calendars, project management tools, email, Slack, etc.

Passive time trackers that automatically capture your activity are the GOAT. The less mental energy you require to track time, the more reliable the data will be. And reliable data equals accurate billing.

#2 Daily time logging

Daily time logging is a must. Not just for the big projects or major tasks.

You need to remember the “small stuff”, like quick calls, meeting prep work, and internal meetings. Not logging time for these quick, little tasks daily leads to serious revenue leakage. The more you put off logging time, the more you rely on guesswork, and guesswork always underestimates.

That 10-minute email draft? Who can remember that?!

That 5-minute Slack consult? Gone with the wind.

Multiply these minutes by days, then by team members, and you’re looking at potentially thousands in lost billables each month.

That’s why you need to implement a “log as you go” culture; if a task takes time, it gets logged. And don’t just track client work; track internal work, as well, so you can find ways to get better at planning and what drains your productivity.

#3 A time tracking system that integrates with your invoicing flow

This is just common sense: a time tracking app should fit into your billing system. If your team tracks hours in one tool, has to copy time data to a spreadsheet, and then manually build invoices in another app… that’s too much work, and you can expect missed hours, inconsistent rates, and delayed payments.

The goal is to choose a setup that connects time tracking, project data, and invoicing because such a setup reduces admin work (by automating routine tasks and approvals) and eliminates the need for double entry.

What kind of a time tracking tool should you choose?

The sad reality is that many apps that offer time tracking and invoicing miss the mark. They all promise to be an all-in-one solution for time tracking and invoicing.

In theory, that sounds great. In practice, not so much.

Most of these tools rely heavily on manual input, and that’s where they fall short.

Think about it. If your “smart” tool requires your team to remember what they did, scroll through their calendars, type in task names, assign projects, add billable rates, and then double-check everything before invoicing… you’ve replaced one admin task with another.

Moreover, instead of reducing overhead cost, these tools often increase it. You’re tracking time, yes, but manually. Then, you’re manually reviewing time logs, manually generating invoices, and manually chasing down corrections. It's all work you didn’t include in your timesheets and work that adds no value to your clients.

Time tracking is supposed to save time.

When it becomes yet another task on a to-do list, it creates the same problems you were trying to solve, including inaccurate time entries, missed billable hours, invoices full of errors and decreased revenue. You get more admin, not less.

So, what should you look for instead?

I’d say time tracking software for billing that allows you to effortlessly and accurately track time.

Something like:

• A passive time tracker that automatically captures activities in the background
• A tool that has calendar and app integrations so you can assign time to corresponding projects and tasks.
• A tool that automatizes your invoicing, allowing you to create invoices in just a couple of clicks.

Top 7 time tracking and billing software

Now that you know why time tracking matters for billing, the common traps to avoid, and what features to look for in a time tracking tool, let’s make your life even easier.

Here are 7 top time tracking and billing software options so you can capture every billable minute and invoice with confidence.

#1 Memtime

Surprised to see Memtime taking the throne? Don’t be.

When it comes to billing based on time, Memtime is the king of accuracy. 👑
With our tool, you can say “goodbye” to lost billable hours, forgetfulness, and guesswork.

Unlike traditional tools that rely on timers, manual input, and your memory, Memtime doesn’t do any of that. It tracks your work passively, in the background, capturing your actual activity minute by minute across all tools and apps.

You don’t have to start or stop anything. Just do your work, and let Memtime, our desktop app, build a precise timeline of your day.

Here are the features that make Memtime stand out:

1. Automatic and passive time tracking. Memtime records every app, document, meeting, and website you use and creates a visual timeline so you can easily reconstruct your day.
2. Daily time logging that actually works. Memtime shows you exactly what you did, when, and for how long (even those “invisible” tasks that don’t get billed).

3. Turning activities into time entries. The app allows you to create time entries based on your logged activity with just a few clicks.
4. Integrations. Memtime provides a 2-way sync with the billing software you already use; you can export time entries directly to tools like Xero, QuickBooks, FreshBooks, and more. (Even if you don’t use accounting software or choose to invoice manually, Memtime still gives you a clear, structured overview of your daily work. You’ll know exactly what to include on your invoices, task by task, minute by minute. No mental gymnastics required.)
5. Local time tracking. All time data is stored locally on your computer; nothing is sent to the cloud.
6. No annoying pop-ups and alerts. There are no interruptions to your workflow, and no reminders.
7. Team-ready. The tool supports hybrid work and remote teams thanks to its local tracking. Plus, you get easy onboarding and no training needed to get started with Memtime.

So, let me say this again. If you’re tired of:

• Reconstructing your week from your calendar.
• Underbilling because you forgot “the small tasks”.
• Wasting time filling in manual timesheets.
• Chasing team members for accurate logs.

Memtime helps you capture everything you’ve done and earned and sends it exactly where it needs to go.

But don’t trust my words; see it for yourself. Start with the 2-week free trial; it’s on us.

Creating a Memtime account takes less than 10 seconds, followed by downloading and installing the app. Easy peasy. Just click the button below to get started.

P.S. If you end up liking Memtime so much, feel free to book a call with us to implement it cross-team. We’ll walk your team through Memtime’s features, show them how to integrate Memtime with their existing billing tools and tailor the setup to fit your and your team’s workflow perfectly ✨

#2 Clockify

Clockify is a well-known time tracking tool for freelancers, teams, and agencies. If you’re looking for a tool that combines manual time entry with integrated invoicing, Clockify is a decent option.

Clockify allows you to track time in real-time or enter time manually. It offers invoicing, but it’s not a full accounting platform. You still want to export data to dedicated financial software like QuickBooks or Xero for bookkeeping and tax purposes.

Here are key Clockify features:

• You can track time in real time with built-in timers or enter time manually.
• You can organize your tracked hours by project, client, or task.
• Clockify lets you create invoices directly from your time logs. You can customize invoice templates, set hourly rates per client or project, and send invoices.
• You can compare billable vs. non-billable work, ensuring your invoices reflect only what you can charge clients.
• You can generate reports that show exactly where your time goes.
• You can connect Clockify with popular accounting and project management tools such as QuickBooks, Xero, Trello, Asana, and more.

If you want a flexible and user-friendly time tracking tool that combines manual time logging with invoicing features, Clockify is one of the top choices.

#3 Harvest

Harvest is one of the most trusted names in the space when it comes to time tracking and billing. Just like Clockify, it combines manual and timer-based tracking with an invoicing system.

Here are the app’s key features:

• You can start and stop timers as you work or enter time manually for when you want to log hours retroactively.
• You can keep all your billable work organized by projects, tasks, and clients and assign different hourly rates per project or team member.
• You can generate invoices from your tracked time and expenses. You can also customize invoice templates, apply discounts, and add taxes before sending invoices from Harvest.
• Harvest lets you log expenses that can be included on client invoices.
• You can track billable and non-billable hours separately.
• Harvest connects with many tools you likely already use, including QuickBooks, Xero, Asana, Trello, and others.

If you need a well-rounded tool that combines accurate time tracking with invoicing, Harvest is definitely an option.

#4 Toggl Track

Toggl Track is one of the most popular choices for freelancers, agencies, and remote teams. It provides time tracking features but doesn’t have native invoicing capabilities, so it integrates with tools that do.

The app comes with a smooth interface, and time tracking is available across web, desktop, mobile, and browser extensions. There’s also background tracking done through its Timeline feature that passively monitors computer activity (any app or website you use for more than 10 seconds). This data is visualized in 15-minute increments.

Here are the app’s core features:

• You start a timer with a single click or log time manually after the fact. Plus, there’s background tracking.
• You can sort your time by project, client, and task.
• You can assign billable rates per project or per user, which is great for accurate invoicing later.
• You can mark entries as billable or not, so you’re only invoicing clients for the work that matters.
• You can generate reports that break down time by day, client, project, or team member.
• Toggl Track doesn’t include its own invoicing module, but it integrates with tools like QuickBooks, Xero, FreshBooks, Harvest, etc.

Toggl Track could be your choice if you want intuitive manual and background time tracking without getting buried in features you won’t use.

#5 Paymo

If you’re looking for a tool that tracks time, helps you manage projects and get paid, Paymo could be it. Paymo is built for small businesses, creative agencies, and freelancers who need to track time and bill, all in one place.

Here’s are some of Paymo’s features:

• You can choose between real-time timers, manual time entry, or timesheets for logging time.
• You can create projects, assign tasks, set deadlines, and track progress. Each time entry is linked to a project/task, which keeps everything organized and billing-ready.
• You can assign billable or non-billable status to tasks and set custom hourly rates per client, project, or team member.
• Paymo includes a built-in invoicing system, letting you generate invoices from your timesheets. You can customize templates, apply taxes or discounts, and send invoices via email or download them as PDFs.
• You can connect Paymo to Stripe or PayPal to accept online payments and see when clients view or pay your invoices.
• You can create estimates based on projected hours and rates and track additional project expenses to include in invoices.
• You can generate time reports by client, project, or team member.

Paymo is a three-in-one platform that connects the dots between work, time, and money. If you are tired of using several project boards, timesheets, and invoice generators and can settle for manual time tracking, Paymo can replace all three.

#6 TimeCamp

If you want to keep your time tracking simple and tied to your billing workflow, TimeCamp deserves a deeper look.

The app offers automatic and manual time tracking, as well as native support for invoicing, budgeting, and billing rates. TimeCamp claims it can keep your time logs complete, organized, and ready to be invoiced.

Here are some of the tool’s key features:

• TimeCamp’s desktop app tracks time automatically in the background based on your activities. You can also use timer-based or manual time entries.
• You can tag time entries as billable or non-billable and apply custom hourly rates per task, user, or project. You can also set up flat-rate billing when needed.
• You can generate invoices from your timesheets.
• You can set time or cost budgets for projects and get alerts when you’re approaching limits to ensure you keep projects profitable.
• You get detailed reports on time spent, billable hours, team performance, and profitability.
• TimeCamp connects with tools like QuickBooks, Xero, FreshBooks, and over 100 others.

TimeCamp is ideal for those who want manual and automatic time tracking precision. It captures time in the background, lets you assign custom rates, generates invoices, and keeps you on budget.

#7 DeskTime

If your only goal is to capture every minute of work without manual input, DeskTime is a solid solution. It provides automatic time tracking and productivity analysis, supporting billable hours and basic project tracking.

The app doesn’t offer full invoicing capabilities; it helps ensure billable time is actually captured.

Here are DeskTime’s key features:

• Similar to Memtime, DeskTime runs in the background and tracks time based on app usage, websites visited, file activity, and idle time.
• Apps and websites are marked as productive, unproductive, or neutral. 
• You can manually assign tracked time to projects and tasks. (This part isn’t automatic.)
• You can mark time as billable and assign hourly rates to projects or tasks. DeskTime calculates total billable amounts.
• You can generate reports on productivity, tracked time, billable hours, and project effort. You can export these to spreadsheets or send to your invoicing software of choice.

DeskTime isn’t a billing tool per se, but it can capture your activity. But when paired with the right invoicing platform, it can help you get paid for all those billable hours.

To conclude

I’ve said it once, and I’ll say it 47 billable times more: time tracking for billing is either going to make you or break you. The only way it’s going to break you is if you don’t have a robust time tracking system that fits your workflow.

You don’t have to manually log your hours like it’s 2003, reconstruct your week based on calendar invites, or trust your memory (that’s a bold move!). You now know more than enough tools that can help you log accurate times.

So here’s the final invoice-free truth: stop treating time tracking like a chore, and start treating it like a part of your revenue protection plan. Your team and your bank account will thank you.