How To Increase Your Realization Rate

Tim Sines

Realization rates (or realisation rates, as they’re known in the UK) reveal how effectively your accounting firm turns billable work into actual revenue. Improving them is one of the fastest ways to strengthen your bottom line.

We’ll break down why realization rates matter, share industry benchmarks, and outline 7 clear, proven strategies to raise them.

What is a Realization Rate?

The realization rate is the percentage of your firm’s billable work that actually gets billed and collected from clients. It shows how efficiently your firm turns work into revenue. If your work isn’t being realized, you’re essentially giving your time away.

Firms calculate this metric by dividing the billable hours invoiced to clients by the total billable hours worked.

Realization rate = (Billable hours invoiced ÷ Total billable hours worked)

A rate of 75%, for example, means that for every 100 hours of billable work, only 75 hours are invoiced and paid for by clients. This is because some billable time gets lost when hours are:

Not properly tracked
Written off
Discounted for a client
Not billed at all when a project runs over scope

Understanding where those lost billable hours go and why is the first step to improving your realization rate.

What is a Typical Realization Rate for Accounting Firms?

The latest Rosenberg MAP survey offers useful realization rate benchmarks for accounting firms:

Firms under $2 million in net fees average 92.5% realization
Firms over $20 million in net fees average 86.2% realization

Realization rates depend on your firm's size, service mix, and pricing model, but they also come down to how disciplined your team is about tracking time. The more accurate, prompt, and consistent your time entries are, the stronger your realization will be. That means:

Logging all billable time promptly and accurately
Writing clear, detailed time entries
Ensuring managers review and approve timesheets regularly
Enforcing policies around write-downs and scope changes

Rates in the mid-80s range is a healthy benchmark for most full-service firms. Smaller firms can often push higher thanks to tighter control over billing.

Your target realization rate should be realistic. Reaching 100% is rare, but there are practical ways to get closer. It starts with understanding why these rates matter so much in accounting.

Why is a Realization Rate Important?

The realization rate is a direct measure of your firm’s financial health, billing efficiency, and client relationships. Understanding and optimizing yours helps ensure that the work your team delivers translates into benefits you can measure: revenue, growth, and long-term success.

What is a realization rate

It Directly Impacts Profitability

Your realization rate drives your firm’s bottom line. A higher rate means a greater share of billable work is actually billed and paid for, supporting higher revenue and increased profitability. It clearly shows how effectively your firm converts effort into financial return.

Without a strong focus on increasing your realization percentage, you may see your profit margins shrink with constrained cash flow and slower growth.

It Leads to Operational Efficiency

The realization rate is also a barometer of operational efficiency. It reveals how well your team allocates time and resources toward billable work. A lower rate often signals underlying inefficiencies:

Too much time spent on non-billable tasks
Underutilized staff and capacity planning issues
Poorly managed or disconnected workflows

Ignoring the realization rate can lead to time and resources being mismanaged. The impact creates costly gaps in operational efficiency that hurt productivity across the firm.

It Informs Your Pricing Strategy

Analyzing your realization rate gives you valuable insight into how well your pricing structure aligns with your goals. It helps you identify whether services are underpriced or if there’s a gap between your costs and what clients are willing to pay.

Understanding this relationship allows your firm to adjust your pricing structure to reflect the true value of your work. Without these insights to inform your pricing model, you risk underpricing your services and miss opportunities to clearly communicate your value to clients.

It Strengthens Client Relationships

Your realization rate also reflects the strength of your client relationships. A consistently high rate signals that your clients recognize and appreciate the value your firm provides.

On the flip side, a low rate can point to client dissatisfaction or a misalignment between expectations and outcomes. If clients feel they’re not receiving value for their investment, they may begin to look elsewhere.

Ultimately, your rate isn’t just about dollars and cents. It’s a powerful indicator of your firm’s overall health that shows how effectively you balance profitability, efficiency, pricing, and client satisfaction.

7 Tips to Improve Your Accounting Firm's Realization Rate

Monitoring and increasing your realization rate is an important step to improving long-term profitability and staying competitive in the accounting industry. By tightening up your internal processes and ensuring pricing aligns with the value you deliver, your firm can improve both revenue and client satisfaction.

Here’s how to start.

1. Review and Adjust Billing Practices

Proper billing practices are the cornerstone of any firm’s financial health. Inaccuracies or inefficiencies can lead to lost revenue. Regular reviews ensure up-to-date practices reflect the true value delivered to clients.

Strong billing practices are the cornerstone of your firm’s financial health and directly impact your realization. Inaccurate or inefficient billing opens the door to lost revenue. Regular reviews and a shift to value-based billing can give your realization rates and revenue a meaningful boost.

Conduct Comprehensive Billing Audits Bi-Annually

Twice a year, you should examine every aspect of your billing process, from time tracking accuracy to invoice clarity. Look for gaps where billable hours may be missed or incorrectly billed.

Transition to Value-Based Billing

For predictable projects, shift from hourly billing to value-based fees. Start by analyzing past projects to determine fixed fees that reflect both the work involved and the value delivered. Pilot this approach with a small segment of clients before a full rollout.

Update Billing Guidelines and Communicate Changes

Regularly update your billing guidelines to reflect any changes in billing practices. Communicate these changes to both your team and clients. Explain the benefits and how it ensures fair pricing for the value provided.

Consider the potential impact on client relationships when adjusting billing rates or practices. Offer transparent rationale to clients about changes. Also, ensure your billing software can accommodate new billing models, like fixed fees or value-based billing, to streamline the transition.

Learn more about how Mango Practice Management can help streamline your billing practices.

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2. Enhance Time Tracking

Accurate time tracking is how you'll determine the true cost of the services you provide, even if you don’t bill by the hour. Knowing each team member’s complete time investment into every task and project highlights inefficiencies and time sinks that inflate your non-billable hours. Track your time precisely to easily identify areas for improvement.

What is a realization rate

Select the Right Time Tracking Software

Choose time-tracking software for accountants that allows for the detailed level of tracking the industry demands, including the type of activity and the client project. Look for features like mobile accessibility, integration with your billing systems, and real-time tracking capabilities.

Mango’s integrated time-tracking software makes this process easy by letting your team start a timer, capture time entries accurately, and automatically convert them into professional invoices.

Implement Daily Time Entry Policies

Encourage your staff to enter their time every day, not at the end of the week. Daily time entry ensures accuracy while the details of each task are still fresh. This simple habit gives your firm a clear, real-time view of where hours are being spent and how effectively that time contributes to billable work.

Over time, consistent daily time entry helps identify inefficiencies, reduce missed billable hours, and ultimately improve your firm’s realization rate.

Regular Analysis for Continuous Improvement

Every month, analyze your firm’s time tracking data to identify trends. You may find tasks that consistently take longer than anticipated or projects that frequently exceed budgeted hours.

Use this data to refine your time estimates, improve project management, and address process bottlenecks that interfere with your realization rates.

Don’t miss these essential time management tips for busy accountants.

3. Streamline Work Processes

More efficient work processes will minimize your firm’s wasted time and resources. Every process you can streamline becomes a productivity enhancer and supports higher realization rates.

Map Current Processes

Document your current workflows for all major services, laying out each step in order with estimated duration, staff responsibility, and tools used to complete each step. With a map of your workflows, it’s easier to identify bottlenecks, redundancies, and non-value-adding steps.

Implement Process Improvement Methodologies

Apply methodologies like Lean or Six Sigma to eliminate waste and increase efficiency in as many processes as possible. Focus on reducing steps that do not add value from the client's perspective and find ways to trim your time investment without sacrificing the result you hand to clients.

Automate Whenever Possible

Administrative work is perfectly suited for automation, and each task you can set up to run on autopilot reduces your non-billable time commitment within a given process. Identify any tasks that can be automated, including:

Data entry
Report generation
Standard communication with clients

Automating essential but low-value tasks gives you and your staff more time to work on the profit-generating tasks that help increase your realization rates.

4. Focus on High-Value Services

Concentrating on high-value services allows your firm to allocate resources to the most profitable and in-demand offerings. This strategic focus enhances overall realization by prioritizing work that yields the highest return on investment.

Conduct a Service Portfolio Analysis

Review your current service offerings and analyze profitability, client demand, and realization data for each. Identify services that consistently perform well across these metrics and place more focus on these moving forward.

Solicit Client Feedback

Ask your clients which services they value most and why. Use surveys, interviews, or feedback sessions to gather these insights.

Be mindful of your firm’s core competencies and the market demand. The focus on high-value services should align with your firm's strengths and client needs.

5. Improve Project Management

Effective project management ensures that services are delivered efficiently, on time, and within budget. This directly impacts your firm’s realization rate by minimizing scope creep and over-servicing.

Use Project Management Software

The right project and task management software will centralize all the tools you need to run your practice with clear, smooth workflows that ensure no step is missed. Look for a tool like Mango that allows you to create task assignments, track time, monitor budgets, and communicate with clients within one platform.

Define Project Scope and Milestones

For each client engagement, clearly define the project scope, deliverables, and milestones. Ensure all team members and the client agree to these terms.

Regularly Review Project Progress

Schedule regular project review meetings to assess progress against milestones and budget. Adjust project plans as necessary to stay on track.

Effective project management requires clear communication with clients about expectations and any adjustments needed as the project progresses. Manual tracking leaves room for error, but with a comprehensive tool to help manage projects with precision, your entire team can get full support through every workflow.

6. Regularly Review Client Accounts

Not all clients are equally profitable for your firm. Some may consistently yield lower realization rates because they demand more time than you can realistically bill for.

Regular reviews can help you identify less profitable clients and facilitate necessary adjustments to boost your realization percentage.

Perform Client Profitability Analysis

Analyze the profitability of each client by comparing the revenue they generate to the time and resources they consume. Consider both direct costs and the opportunity cost of time spent.

The easiest way to analyze client profitability is with dedicated accounting client reporting software. You’ll instantly see which client accounts bring in the most revenue, support profitability, and make fiscal sense for your firm to hang onto.

Develop Strategies for Low-Realization Clients

For clients you identify with low realization rates, consider strategies such as renegotiating terms, adjusting service levels, or, in some cases, discontinuing services. Disengaging with a low-realization client can free up considerable time for your team to focus on higher-value clients.

Communicate Changes to Clients

If changes to service terms are necessary, communicate these professionally and clearly. Be sure to emphasize your desire to provide them with the best value and service.

Be prepared for tough conversations. While renegotiating terms or discontinuing services can be challenging, it’s essential for maintaining your firm’s profitability and focusing on high-value work. Use data and analysis to inform these discussions.

7. Use Engagement Letters

Engagement letters protect you and your clients by establishing a transparent, mutually beneficial working relationship from the start. They set clear expectations, define the scope of work, and reduce the risk of misunderstandings.

In an industry where trust and clarity are essential, clear engagement letters are a must. A well-crafted engagement letter is your best defense against escalating client demands and one of the most effective tools to prevent scope creep.

Write Letters in Minutes from a Template

Mango Practice Management offers a built-in engagement letter feature that allows you to automate the creation of engagement letters and produce legally binding documents in seconds.

By starting with a solid template, you can customize each letter to ensure it’s tailored to the specific needs and circumstances of each client without starting from the ground up.

Regularly Update Your Letters

The accounting industry and its regulatory environment are always shifting. Regularly review and update the engagement letter templates to reflect any recent changes in laws, standards, and best practices.

Want to craft the best engagement letter possible? Check out our ultimate engagement letter checklist here.

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Bring Every Billable Hour Full Circle

Improving your accounting firm’s realization rate puts you in control of your profits. When you pocket more of what you’ve earned, every hour your team works translates into value that’s recognized, billed, and collected with precision.

Optimizing realization is an ongoing effort, but with the right tools, you can turn billable work into predictable revenue and long-term success. With Mango Practice Management, you have everything you need to make that happen: accurate time tracking, seamless billing automation, clear engagement letters, and powerful reporting tools that keep your realization rate on track.

See how Mango helps your firm capture every dollar you’ve earned. Start with a free demo today.

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