Billable hours are those included in customer invoices and refer to pure project work.
Non-billable time is usually spent on internal meetings, calls or emails, overcoming miscommunication, or things like fixing bugs, code refactoring and code review, etc.
You can differentiate Billable/Non-billable hours by choosing the corresponding option for every project you have. Go to your Profile, select the project you need and choose Settings/Edit. By checking/unchecking "This project is billable" you decide if all hours tracked with its mention will automatically be classified as billable as well.
Note: setting the Billable/Non-billable parameter for projects is available for admins only.
Billable vs Non-billable time ratio will be available on the organization dashboard.
Besides, you can always differentiate hours worked right on the invoice when creating it via Xero.
Our future plans blog post.