Collection realization

Cash collected divided by fees billed: what clients refused, disputed or never paid after the bill went out.

DefinitionCash collected divided by fees billed: what clients refused, disputed or never paid after the bill went out.

Collection realization is cash collected over fees billed, per client, over a stated period after billing. It is the second of the two realizations and the one credit control owns. A firm quoting a single realization figure is usually quoting this one, because it is the higher; the product of the two is what partners receive.

How it is computed

Cash collected divided by fees billed, per client, over a stated period after billing.

Example

Of $8.8 million billed, $8.36 million was collected within the period: 95 percent. Three clients account for $310,000 of the shortfall.

Where it goes wrong

Quoted as the firm's realization because it is the higher of the two. What partners receive is billing realization multiplied by collection realization.

Articles that use this term

Board and management reporting · Law firms

Realization by client: the clients whose discount grew without anyone deciding it

How a law firm measures realization per client from time entries and bills: billed value over worked value at standard rates, the write-downs and write-offs behind the gap, the trend per client and per partner, and the clients whose effective discount has widened year on year through a hundred small decisions that nobody made as a policy.

Sep 16, 20262 min read Wallet share and penetration · Consulting and advisory

What is a good realization rate? The answer depends on three things you can measure

The honest answer to what realization rate a law, accounting or consulting firm should have: the 85 to 95 percent figures quoted depend on which realization is meant, billing realization against recorded time or collection realization against billed, on the rate card the time was valued at, and on the client and matter mix. This page gives the ranges by firm type, the three measurable things that set the right figure for one firm, and the table to compute before anyone quotes a percentage.

Sep 17, 20263 min read