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What is the difference between debtor days and lock-up days?
Debtor days measures only the time from invoice to payment: receivables divided by billings, times the days in the period. Lock-up days adds the unbilled work waiting to be invoiced, so it covers the full time from doing the work to getting paid.
Lock-up days equal WIP days plus debtor days.
It matters because a firm can collect invoices quickly and still be cash-starved if it invoices late.
Commonly misread:
- Reporting debtor days alone, so slow invoicing stays invisible.
- Mixing different billing figures when calculating the two parts.
- Averaging across clients, which hides one client with a very large unpaid balance.
Track both parts monthly and view the oldest balances by client. Improving invoicing frequency often cuts lock-up faster than chasing payment.
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