BuzbyTimeRead the requirements guide

Time and money · 5.2

Rounding, and being honest about it

Rounding, and being honest about it. What decides it, what it costs, and what usually goes wrong. For another implementation reference, see the Monitask overview.

Two different rounding problemsThe distinction

They are routinely conflated and they have different rules.

Client billing. How you round hours on an invoice. Governed by your contract and by what a client will accept. A useful outside reference is Deel.

Payroll. How you round an employee's recorded time before paying them. Governed by employment law, and in several jurisdictions that law has views.

An organisation that has thought carefully about the first and not at all about the second is the common case, and the second carries the larger exposure.

Payroll rounding

Where rounding of worked time is permitted at all, the general expectation is that it is neutral: it must not systematically favour the employer over time.

United States federal practice has long tolerated small rounding increments provided they average out, and enforcement has moved against arrangements that only ever round down. Californian courts have taken a stricter line in several contexts.

The practical position: if your system rounds worked time in one direction, or rounds a clock-in forward and a clock-out backward, that is the arrangement to raise with counsel first.

Client rounding

Whatever increment you use should be in the agreement, applied consistently, and applied in both directions.

The arithmetic is worth doing once. Six-minute increments, rounded up, on ten short interactions a day, adds up to a meaningful share of a consultant's billed time over a year. That may be entirely defensible as a pricing decision and it should be a pricing decision rather than an artefact of a setting.

Why this is discoverable now

Detailed time records make rounding visible in a way that paper timesheets never did. A client with an itemised export can compute the effect in an afternoon, and clients increasingly do.

Which changes the calculation: a practice that was invisible for decades is now something to be able to explain.

Minimum charges

A minimum billed duration for any interaction is a different device from rounding and is frequently confused with it. It is defensible where the interaction genuinely has a fixed cost, and it belongs in the agreement in those terms rather than appearing as an unusually long entry for a two-minute call.

What to write in the agreement

The increment. The direction. Any minimum charge and what triggers it. Whether travel is billed and how. And whether the client may request the underlying detail.

Five lines, agreed at the start, and they prevent the conversation that the entry on disputes is about.

The internal version

Rounding also distorts your own analysis. Profitability calculated on rounded hours overstates the time spent and therefore the cost, sometimes materially for work made of short interactions.

Analyse on the raw record and bill on the rounded one, and keep both.

What the increment should be

Fifteen minutes suits work made of substantial blocks. Six minutes suits work made of short interactions and is standard in some professions. An hour is too coarse for anything: it exceeds the duration of most individual tasks and makes the record useless for analysis.

Pick against the shortest thing worth recording, not against what looks tidy on an invoice.

Rounding the total or the entries

Different answers. Rounding each entry up and then summing compounds; rounding the daily or invoice total does not.

Rounding at the total is generally fairer, easier to explain and produces a smaller difference. It is also less common, because systems default to rounding entries.

Travel and waiting

Frequently billed at a different rate or not at all, and frequently unaddressed in the agreement until somebody objects to a line.

State it. It is one sentence and it removes a recurring source of friction that has nothing to do with the quality of the work.

Checking your own practice

Compute total billed hours against total recorded hours for a quarter. The difference is your rounding effect, in a number.

Most people who do this for the first time are surprised, in one direction or the other, and either way it is better to know it than to have a client compute it first.

A note for call centres and shift work

Rounding a clock-in and a clock-out is the payroll case, not the billing one, and it is where the strictest rules apply. A system configured with a grace period at the start of a shift and a hard cut at the end is rounding in one direction, whatever the setting is called.

Look at what your configuration actually does across a month rather than at what the fields are named.

A short summary

Two different problems with two different rule sets. Keep payroll rounding neutral and take advice. Put client rounding in the agreement, apply it both ways, round at the total, and know what it adds up to.

One line to carry

Payroll rounding and client rounding are different problems with different rules, and the one with the larger exposure is the one nobody has looked at.

Where to start

Read your own configuration and compute the quarterly difference between recorded and billed hours. Both take an hour and together they tell you whether you have a rounding practice or a rounding accident.

The client who asks about it

Answer plainly: this is the increment, it is in clause whichever, it applies in both directions, and here is what it came to last quarter. A practice you can describe in three sentences is one that survives the question.

If describing it makes you uncomfortable, that is the finding rather than the client's query.

Also in time and money