Every project in Operating has a billing type that determines how revenue is calculated. You set the billing type when creating a project — it can be changed later, but doing so recalculates all financial data for the project.

Time-and-materials

The client pays for actual hours worked at agreed billing rates. Revenue is earned directly from time entries: each tracked hour generates earned revenue at the applicable rate from the rate card.

This is the most common billing type for consulting engagements. Use it when the scope is flexible or when the client contract is structured around hourly rates.

→ How to set up a time-and-materials project

Capped time-and-materials

The client pays for actual hours worked at agreed billing rates, exactly like time-and-materials — but total earned revenue cannot exceed the project's budget. Once the cap is reached, further work is still tracked and planned, it just earns no additional revenue.

Use this when a client has approved a maximum spend ("not to exceed") but billing is still hourly.

How revenue is recognized:

• Each tracked hour earns revenue at its billing rate, the same as time-and-materials.

• Revenue accumulates against the budget until the cap is reached. Work that crosses the cap earns partial revenue up to the remaining amount; work after that earns zero.

• Expenses consume the budget before work does.

• Work that has already been invoiced keeps its earned revenue and counts against the cap first, so recalculations never change what you have already billed.

• A project can have several budgets covering different date ranges. Each budget caps independently — unused room in one budget does not roll over into the next.

• Work that falls outside every budget's date range earns no revenue.

You must add at least one budget, because the budget is the cap. Unlike fixed-price, there is no revenue recognition method to choose — capped time-and-materials uses a single built-in method.

Invoicing works from time entries, the same as time-and-materials. When you build an invoice, Operating warns you in the invoice review if any time entries or expenses would take the project over its budget cap.

Fixed-price

The total contract value is agreed upfront. Revenue is not driven by hours — instead, it's determined by the project's budget and the revenue recognition method you choose. You must add at least one budget for revenue recognition to work.

Use this when the client is paying a fixed amount for a defined scope, regardless of how many hours the work takes.

→ Fixed-price projects → How revenue recognition works for fixed-price projects

Non-billable

Internal work that does not generate revenue. Costs are still tracked if cost rates are configured, but there are no billing rates and no invoicing.

Use this for internal projects such as R&D, training, company events, or other non-client work. Every organization also has a special Time off project, which is a system-managed non-billable project for holidays and vacations.

Choosing the right billing type

Known limitations (early 2026)

• No real support yet for retainer billing type – you must create fixed-price budgets back to back

• All budgets in the same project have to have the same billing type. We intend to keep it this way. Hybrid billing types can get extremely complex and confusing. Consider running multiple parallel projects when that is the reality.