How much of billable work do we actually capture?
№ 096 · Realization rate
Definition
MetricValue billed and collected as a share of the standard value of hours worked (billing realization times collection realization)
Unit% of standard value of worked hours
Line of (billed hours divided by worked hours) over time. Below 85% means write-offs or scope drift. Build from timesheet data plus billing data. Falling rate signals projects underestimated or clients pushing back. Example: 92% Q1, 84% Q3 (deteriorating, investigate).
Benchmarks
| Bottom 30% | Median | Top 30% |
|---|---|---|
| 80% or below; below 85% indicates a systemic pricing, scoping or collections problem rather than isolated write-offs | 85-92% for US professional services where realization is a standard KPI | 95%+ overall realization; disciplined write-off policy and short billing cycles |
US professional services, law and accounting weighted (the industries that publish realization), 2023-2026; overall realization = billed-to-standard multiplied by collected-to-billed where sources report the stages separately · Definitions vary: billing realization (worked to invoiced), collection realization (invoiced to collected) and overall realization are all called realization in different sources. Large law firms run near 75% because of negotiated institutional discounts, midsize near 85% (Thomson Reuters via 8am), so segment matters more than the headline. SPI's revenue leakage (4.5% in 2025) is the adjacent but different services-industry metric: it measures contracted value never billed, not hours written down.
Category split omitted: The large-firm vs midsize split traces to a single ultimate source (Thomson Reuters) even where quoted by multiple outlets, so no split meets the two-independent-source rule.
When it looks bad
The line drifts down one or two points each quarter with no single visible event, while the gap between hours worked at standard value and cash collected quietly widens.
Standard value of March work $310k, invoiced $262k, collected $248k: 80% overall realization, the equivalent of giving away one working day per week.
What to do about it
- Enforce same-day time capture and cut the invoice cycle to under a week after period close; PointOne identifies late and vague entries plus slow billing as the largest realization leaks.
- Introduce a write-off approval policy: any write-down above 5% of an invoice needs partner sign-off with a reason code, and the reason codes feed quarterly pricing and scoping reviews.
- Re-price scope changes on fixed-fee work through change orders; scope creep (52% of projects in PMI's dated but directional data) is realization loss that never shows up as a write-off.
- Run a fixed collections cadence (invoice day 5, follow-ups day 15 and 30); Thomson Reuters shows firms with collection discipline sustain rate increases that undisciplined peers cannot.
Sources
- PointOne Most US firms convert 85-92% of billable work into cash; main leaks are late or vague time entries, pre-bill write-downs, OCG violations and slow billing cycles pointone.com ↗
- 8am (citing Thomson Reuters) Thomson Reuters benchmarks: many firms target 80-85% realization; midsize firms average ~85%, large firms ~75% due to negotiated rates and volume discounts 8am.com ↗
- Thomson Reuters Institute 2026 Rates Report: firms self-sort into distinct rate-and-realization strategies yet collect roughly the same hourly amount; collection discipline underpins the ability to sustain 7%+ annual rate increases thomsonreuters.com ↗
- Karbon Accounting definition and worked example (90% = $18k billed on $20k standard); training gaps and inconsistent billable classification named as common realization drags karbonhq.com ↗
- Centsight Top-performing firms target 90%+ realization; below 85% signals a systemic problem in pricing, scoping or collections that utilization gains cannot fix centsight.com ↗
- Rocketlane (SPI Research data) Adjacent services metric: revenue leakage at a five-year low of 4.5% in 2025 with a sub-5% healthy threshold (different definition, contracted value never billed) rocketlane.com ↗
- Project Management Institute Scope creep hit 52% of projects (2018 data, dated); on fixed fees, uncontrolled scope is realization loss that never appears as a write-off line pmi.org ↗