PC Legal Technology
Tools

Lock-up calculator

Lock-up is the time between doing the work and having the cash in the bank. Work out your firm’s lock-up days, the cash tied up in it, and the habits that would reduce it most.

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Watch how it works 1-minute video and step-by-step guide
  1. Enter the fees your firm billed in the last 12 months, your unbilled WIP and the share of it you expect to bill.
  2. Enter your debtors, and say whether they include VAT.
  3. Optionally, add money on account held against unbilled work, the days you aim to remove and your cost of borrowing.
  4. For a more accurate figure, open “Use monthly figures” and enter fees for each of the last 12 months. The calculator then uses the count-back method.
  5. If your firm already reports lock-up, open “Match your own report” to include disbursements, deduct a bad debt provision, use recent months of fees or net off money on account. The result lists every choice, so you can check it against your own report.
  6. Answer the questions about how your firm bills, collects and reports. Each answer changes where the summary tells you to focus.
  7. Read the result: lock-up days split into WIP days and debtor days, the cash tied up, what removing days would release, and up to four areas to focus on first.
  8. Change any figure or answer and the result updates instantly. Print or save it if you want to keep it.

Your figures

Time and fees recorded but not yet billed.
Values WIP at what it is really worth. Use 100 if your WIP is already at recoverable value.
Billings are grossed up to match, so both sides are like for like.

Optional

Shown separately, so you can report lock-up with and without it.
An overdraft or loan rate, to put a yearly cost on the cash tied up.
More accurate: use monthly figures (count-back method)

Enter fees billed, excluding VAT, for each of the last 12 full months. The calculator then works back month by month until your WIP and debtors are used up, which handles seasonal billing and growth better than a yearly average. Leave all 12 blank to use the simple method.

Match your own report: disbursements, bad debts, recent months

Firms work lock-up out in slightly different ways. Set these to match the report your firm already uses, then keep them the same every month. The result says exactly how the figure was worked out.

Some firms net money on account off WIP when they report lock-up.
Recent months suit a firm that is growing or shrinking. Not used with monthly figures.
Added to WIP in full. Leave at 0 to exclude disbursements.
Added to fees, so both sides match. With monthly figures, include them in each month instead.
Deducted from debtors, for bills you do not expect to be paid.

How your firm bills and collects

Answer what you can. Each answer changes where the summary tells you to focus.

How this is worked out. Lock-up days are WIP days plus debtor days. With the simple method, WIP days are your recoverable WIP (WIP times the share you expect to bill) divided by fees billed in the last 12 months, times 365. Debtor days are your debtors divided by the same year’s billings, times 365, with billings grossed up for VAT if your debtors include it. With monthly figures, the count-back method works back from the most recent month until each balance is used up, counting each full month as 365 ÷ 12 days. Under “Match your own report”, unbilled disbursements are added to WIP in full and billed disbursements to fees, a bad debt provision is deducted from debtors, recent months of fees are multiplied up to a year, and money on account can be netted off the headline figure. The result lists every choice used. The cash figures use your average fees per day. The focus list ranks each habit by how much it usually matters, how far your answer is from good practice, and whether it acts on WIP or debtors, weighted by where most of your lock-up sits. The weightings are our judgement from experience, not research.

About this tool

The lock-up calculator works out how long your firm waits, on average, between doing the work and being paid for it, and shows which habits would shorten that wait the most.

Why lock-up matters

Lock-up is cash the firm has earned but cannot use. It funds the gap between paying salaries and receiving fees, often through an overdraft. Reducing it releases cash, cuts borrowing and makes the firm more resilient, without winning a single new client.

Who it is for

Partners, finance directors, COFAs and practice managers who want a quick, consistent measure of lock-up and a practical list of where to start.

Getting the figures from your system

  • Fees billed: your fee income for the last 12 months, excluding VAT, from your practice management or accounts system.
  • WIP: your unbilled time and fees today. If your system values it at full charge-out rates, use the share you expect to bill to bring it down to its real value.
  • Debtors: bills sent but not yet paid, usually including VAT. Decide whether disbursements are in or out, and treat them the same way on both sides.

Use it as a trend

Lock-up varies widely by type of work, so a comparison with your own figures last month and last year tells you more than a comparison with another firm. Work it out the same way each month, and report it by team and fee earner.

Reducing lock-up

Most practice management systems already include interim billing, bill approval workflow, payment links, automated reminders and aged WIP and debt reports that firms never switch on. We help firms set them up, agree the billing and credit control habits that go with them, and report lock-up so the improvement lasts. Read more in our insight Lock-up is fixed in billing habits, not chasing.

Talk to us about lock-up