Lock-up days: the cash your firm has earned but can't touch

Professional-services firms — agencies, law firms, consultancies, accounting practices — sell time. They do the work first and get paid for it later, and the metric that captures that wait has a blunt name: lock-up. It's the cash a firm has genuinely earned but can't yet touch. For a lot of service businesses it's the single largest use of working capital on the books, larger than payroll owed or any line of credit. And yet most owners watch profit and utilization obsessively while barely tracking lock-up at all — which is exactly how a firm can look profitable on paper and still be scraping to make payroll.

What lock-up actually measures

The standard formula, used by agency and law-firm finance advisers alike, is simple: lock-up days = WIP days + debtor days. WIP days measure the time between finishing the work and sending the bill. Debtor days measure the time between sending the bill and the money landing — trade receivables divided by annual revenue, times 365.

The useful way to read the number is this: each lock-up day is, by definition, roughly one day of revenue sitting in working capital instead of in your bank account. A firm running 70 lock-up days has about ten weeks of revenue tied up at any given moment. That's not a rounding error — it's the difference between a firm that can invest and one that lives invoice to invoice.

The two halves fail in different ways

WIP is mostly an internal problem. If work sits unbilled, the fix is on your side of the table: close out matters, raise invoices on time, don't let a finished project drift for three weeks before anyone cuts a bill. Advisers who benchmark agencies note that most firms track debtor days closely but overlook WIP entirely — which means a firm with "excellent" debtor days can still be hiding a large cash problem in unbilled work.

Debtor days are the other half, and they're external. Once the bill is out, collection depends on the client. Agency benchmarks put a healthy debtor-day figure somewhere in the 25-to-40-day range; law-firm advisers describe total lock-up routinely climbing past 90 or even 120 days when billing and collection run slow. The debtor half is where a late-paying client quietly converts revenue you've already earned into an interest-free loan you never agreed to make.

Why the debtor half gets worse if you wait

Overdue invoices don't hold their value while they sit. In the U.S., roughly 43% of credit-based B2B sales are already overdue, and about 5% of long-overdue invoices end up written off entirely, according to Atradius's 2025 payment-practices data. An aging receivable is a depreciating asset: the further past due it drifts, the less of it you tend to see.

For a service firm there's a second cost the general statistics miss — the relationship. Your late payer is often a repeat client, someone you want to keep. So the invoice that's 60 days over sits untouched because nobody wants to sour a good account with a heavy-handed chase. It ages to 90, then 120, and by the time it feels urgent enough to escalate, collectibility has already dropped and the only tool left — a third-party agency taking a large contingency cut — is the one most likely to end the relationship for good.

Where the cash actually is

Lower WIP days by billing faster; that's housekeeping and it's within your control. But the recoverable cash — the money already invoiced and simply not yet paid — lives in the debtor half, worked early. That's the pre-collections window, roughly 30 to 120 days past due, while the invoice is still fresh, the relationship is intact, and the person who approved the work still remembers signing off. The goal isn't louder reminders; it's the right message to the right person at the right moment, with a credible signal about what comes next.

The payoff is concrete. Cutting debtor days by even a single week releases about a week of revenue back into the business — no new clients, no rate increase, not one additional billable hour. It's cash you already earned, brought home before it depreciates.