What are utilisation and realisation rates?
Utilisation and realisation are two measures of an accounting firm's productivity. The utilisation rate is the share of a person's available hours spent on chargeable client work. The realisation rate is the share of the standard value of that work, time multiplied by charge-out rates, that the firm actually bills, or in a stricter version, collects.
Also calledrealization rateutilization ratechargeable hoursrecovery rate
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- Utilisation
- Chargeable ÷ available hours
- Realisation
- Billed ÷ standard value of time
- Stricter version
- Collection realisation
How utilisation and realisation are calculated
Utilisation is chargeable hours divided by available hours, so a person with 1,600 available hours who records 1,200 on client work is 75% utilised. Targets vary by role: junior staff are expected to be highly chargeable, partners less so because of business development and management. Realisation compares what is billed with the value of recorded time: if £10,000 of time is billed at £8,500, billing realisation is 85%; collection realisation also counts what is finally paid. Low realisation points to under-quoted fixed fees, scope creep or inefficient work. Firms that move to fixed fees and value pricing still use both measures to test whether prices cover the time spent. Karbon reports utilisation from time and capacity data, and Aiwyn tracks realisation through billing and collections.
Common questions
What is a good realisation rate?+
It depends on the firm and the work, but rates well below the value of recorded time signal under-pricing, scope creep or inefficiency. Firms compare rates by client, service and partner rather than relying on one figure.
What is the difference between utilisation and realisation?+
Utilisation measures how much time is spent on client work. Realisation measures how much of the value of that time is turned into fees billed or collected.
Do utilisation and realisation matter under fixed fees?+
Yes. Recording time against fixed-fee jobs shows whether the agreed price covers the work, which informs the next year's pricing.
Practice software that reports utilisation and realisation
Part of Accountio’s accounting technology coverage · Glossary
