Net realization

Net realization is cash collected divided by the value of time recorded at standard rates, which equals billing realization times collection realization. A firm at 88 and 95 has net realization of 83.6 percent. It is the figure that reaches the partners and the one to put beside the standard rate on every rate discussion.

How it is computed

Cash collected divided by the value of time recorded at standard rates, which equals billing realization times collection realization.

Example

Billing realization of 88 percent and collection realization of 95 percent give net realization of 83.6 percent.

Where it goes wrong

Only one of the two quoted, usually the higher.