It doesn’t matter if you bill your client by the hour or by the project, it’s a good idea to utilize a time tracking tool for everything that you work on for each client.
For the per project clients, those you bill a flat fee for a project like webdesign or graphic work you should still time your work as this will help you when determining your rates for future projects.
For the hourly or retainer clients, using time tracking software is an essential part of the billing process. You should be tracking everything you do for every client on a daily basis.
There are many time tracking software options on the market, many are free and simple to use, and others are more complex and costly.
TimeStamp by Syntap (http://www.syntap.com) is free and very simple to use.
You can save as many project files as needed. It’s a good idea to create a folder for each client and start a new project file each month, or at the beginning of each billing cycle for each client. If you email your time report to your client each month with their invoice, you might want to save the timestamp report in pdf format. It looks clean and emails well.
Online Project Management tools such as myclientspot.com offer built in timers that work quite well and integrate with invoicing systems like Freshbooks.com. Freshbooks.com also offers a built in timer.
Whichever system you use, stick with it and be consistent. Your monthly billing will go much more smoothly and your clients will appreciate your attention to detail.