How the money actually works.
WHAT THE STRUCTURE IS
Fixed costs in people and premises, revenue from chargeable time.
WHAT UTILISATION MEANS
Chargeable hours as a proportion of available hours.
WHY IT DOMINATES
Salaries are paid whether hours are chargeable or not.
WHAT REDUCES IT
Business development Administration Training Idle capacity between engagements Internal work
WHAT A REALISTIC TARGET IS
Well below full occupancy, because non-chargeable work is necessary.
WHAT TO ESTABLISH
Your own achievable figure, from records.
WHAT REALISATION MEANS
Value billed as a proportion of value of time recorded.
WHAT REDUCES IT
Work beyond the agreed scope, unbilled Time written off as unjustifiable Fee caps and fixed fees exceeded Discounting at billing
WHY IT IS THE SILENT LOSS
Hours are worked, recorded and then quietly reduced at billing.
WHAT TO MEASURE
Write-offs, by engagement and by person.
WHAT THEY REVEAL
Poor scoping, poor estimating, or inefficient delivery.
WHAT COLLECTION MEANS
Cash received against amounts billed.
WHY IT MATTERS SO MUCH HERE
The cost of delivery is already incurred and unrecoverable.
WHAT TO CALCULATE
The full cycle: work performed, billed, and paid.
WHY THE FULL CYCLE
It is frequently months, and it is the practice's real funding requirement.
WHAT TO TRACK
Utilisation by person Realisation by engagement Days from work to cash Revenue per fee earner
WHAT TO REVIEW
Whether each engagement type is actually profitable.
