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Lock-up in professional firms: turning time into cash sooner
Work in progress and unpaid bills together make up lock-up: cash a firm has earned but cannot spend. Bringing it down is often the fastest way to fund growth.
In a consultancy, law firm, agency or practice, the product is time. Until that time is billed and paid, it is cash tied up in the business. Lock-up, the sum of work in progress days and debtor days, measures how long that takes. Many firms carry well over 100 days.
From work to cash
- RecordTime recorded daily, against the right matter or project.
- BillInvoices raised monthly or at milestones, not at the end of the job.
- CollectReminders on a schedule, with a partner or director responsible for each client.
- ReviewLock-up reported monthly, by client and by fee earner.
Quick wins
- Agree billing points and payment terms in every engagement letter.
- Take money on account for new clients or one-off work.
- Bill disbursements as they are incurred.
- Review old work in progress monthly and either bill it or write it off.
Recording time also matters for tax and accounts: work in progress at the year end is part of a firm’s profit, and valuing it consistently avoids surprises.
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This insight is general information, not advice for your circumstances. Talk to us before acting on it.