Lockup Days

What are lockup days?

Lockup days measure the total time from performing work to collecting cash. It combines billing lag and collection lag into a single metric. If work sits unbilled for 20 days, then invoiced amounts take another 45 days to collect, total lockup is 65 days. During lockup, you have performed work and incurred costs but not received payment. Lower lockup days mean faster cash conversion.

Calculating lockup

Add average days from work to invoice and average days from invoice to payment. Some firms calculate lockup using WIP days plus AR days. WIP days measure unbilled work as days of revenue. AR days measure outstanding receivables as days of revenue. However calculated, the concept is the same: how long does your work take to become cash? This metric directly affects working capital needs.

Benchmarking and improving lockup

Professional service firms often have lockup between 60 and 120 days. Lower is better. Improvement requires attacking both billing and collection lag. Track lockup by client, matter type, and timekeeper to identify where delays occur. Set targets and review progress regularly. Even small improvements compound across many matters. A five-day lockup reduction on significant annual revenue frees meaningful working capital.