Realization rate
Factual definition
The realization rate is a measure of how much of a service firm’s standard-rate work value is billed or collected. The convention must be stated: billing realization and cash realization measure different stages.
Compare collected cash with the same work’s standard value
Hypothetical cash-realization example: for the same completed hours and collection cohort, standard-rate value is US$245 per hour and cash collected by the stated cutoff equals US$196 per hour. Cash realization is 196 ÷ 245 = 80%, a shortfall of US$49 per hour from standard value.
Amounts not yet collected at the cutoff may arrive later.
Locate the loss between recorded work and cash
Clio’s KPI definitions separate invoicing of billable work from collection of invoices. State whether “realization” refers to billing or to the whole conversion from standard value to cash.
Hypothetical March 2026 work cohort: 100 completed billable hours at a standard US$250 rate have US$25,000 standard value. After agreed discounts, the firm invoices 22,500 on 31 March.
By 30 April it has collected 18,000 on those same invoices, with no taxes, expenses or other cohorts mixed in. Billing realization is 22,500 ÷ 25,000 = 90%; collection is 18,000 ÷ 22,500 = 80%; cash realization against standard value is 18,000 ÷ 25,000 = 72%.
The 2,500 billing reduction and 4,500 unpaid invoice balance need different follow-up. Review pricing and write-down approval for the former; review due dates and collection for the latter.
The unpaid amount at 30 April is not automatically a permanent write-off.
Where Realization rate fits
Explore this term in the glossary cloud →