Most agencies do not have a time tracking policy. They have a set of conventions that the longest-serving people know, that new starters absorb incorrectly over about six months, and that nobody can point to when a disagreement comes up.
The cost is not disputes. It is that your numbers stop meaning one thing. If three people answer "is travel billable?" three ways, your billable percentage is partly a measure of who happened to do the travelling.
This should be one page. Here is what has to be on it.
1. What this data is used for — and what it is not
Start here, because everyone reading it wants to know and will assume the worst if you do not say.
State the uses plainly: project profitability, quoting, resourcing, invoicing. Then state the non-uses just as plainly: not an input to performance reviews, not compared between individuals, not used to question someone's hours without talking to them first.
Only write the second part if it is true. A policy that promises this and is then contradicted once does more damage than never having said it.
2. When entries are due
Same day, ideally. End of the following working day at the latest.
Say why in one line — recall of a working day decays within hours, and reconstructed timesheets are systematically wrong — because a rule with a reason gets followed and a rule without one gets negotiated.
3. The smallest unit you want
Fifteen minutes is common. Six-minute units are a legal-profession convention and overkill for most agencies. Whatever you pick, say it, so people stop wondering whether a ten-minute call is worth recording.
Also say whether short interruptions get logged. Most agencies say: if it broke your concentration and lasted more than a few minutes, log it — that time is real and it is invisible otherwise.
4. What counts as billable
The four arguments, answered:
- Travel time — billable, half rate, or absorbed? Say which, and whether it differs by contract.
- Internal meetings about a client — billable, or non-billable but tracked against the client?
- Rework caused by our own error — almost always non-billable, and worth tracking in its own category so you find out what it costs.
- The quick question — the small, frequent, unlogged category that adds up to a person. Say explicitly that it gets logged.
There are no correct answers. There is only a correct property, which is that everyone uses the same ones. See billable vs non-billable.
5. The non-billable categories
List them, with a sentence each. Something like: new business, internal delivery, company, development, rework.
Without a list, non-billable becomes one undifferentiated bucket and you learn nothing from a third of your agency's time.
6. How to describe an entry
One line, in language you would be comfortable a client reading — because on hourly contracts they may well be.
"Fixed the thing" is useless in three months when you are estimating a similar job. "Amends to homepage hero after round 2 feedback" is worth having. Two examples in the policy do more than a paragraph of instruction.
7. Corrections
Say that correcting a past entry is normal and expected, that it does not need permission before the week is approved, and how to do it after approval.
If fixing a mistake feels like an admission, you get fewer corrections and worse data. This line is doing more work than it looks.
8. Approvals
Who approves, by when, what they are checking, and what happens if the approver is away. See the approval process.
What not to put in it
Targets. No billable-hours target per person. The moment one exists, people optimise for it, and the cheapest way to raise your own number is to stop doing the unbillable work that keeps the agency running.
Threats. Consequences for late timesheets belong in a conversation, not a policy. A policy that leads with sanctions gets compliance and fiction.
Anything you will not enforce. An unenforced rule teaches people the document is decorative, which undermines the rules you do care about.
Keep it to a page
Nobody reads two. If it does not fit, you are writing a manual rather than a policy — put the detail in help documentation and keep the decisions on the page.
Review it once a year, and re-issue it when it changes rather than editing in place, so people know something is different. Mid-year changes to billable definitions break your own historical comparisons, so save them for the review unless something is genuinely wrong.