Everhour reporting turns billed, collected, and written-off amounts into practical views for billing and cash review.
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Collection rate answers one practical question: of the amount you billed, how much did the client actually pay? The calculation is useful after invoices go out, especially when payments arrive late, clients dispute line items, or a firm writes off part of an invoice. It turns billing follow-up into a percentage instead of a stack of open balances.
Use the same base consistently. For most service businesses, the cleanest collection-rate base is fees billed, not gross invoice total with pass-through expenses or jurisdiction-specific tax added. In the United States, there is no federal VAT/GST or single national sales-tax rate for billed professional time, so taxable services need a state and local tax input when tax applies.
The standard formula is: collection rate = amount collected / amount billed × 100. If the invoice has multiple rates, calculate the billable value first, apply approved write-downs, then compare cash collected with the final billed fee amount. Do not include unpaid balances as collected money, even when payment is expected.
For example, a client strategy project includes 18 approved strategy hours at $190 per hour and 12 implementation hours at $125 per hour. That creates $4,920 in gross fees. After a $420 write-down, the billed fee amount is $4,500. If the client pays $4,050, the collection rate is 90%.
A common mistake is treating an invoice as collected the day it is sent. That overstates cash performance and hides follow-up problems. Billed amount belongs in the denominator. Cleared payments belong in the numerator. Credit memos, write-offs, and discounts need a consistent policy before you compare clients, matters, or months.
Payment timing also changes how you read the percentage. A 70% collection rate two days after invoicing means something different from 70% after the payment term has passed. For federal-agency vendor invoices, Prompt Payment rules generally use the contract date, accepted discount terms, an accelerated-payment rule, or 30 calendar days after receipt of a proper invoice.
A one-off calculation is enough when you are checking one invoice, one client balance, or one month of payments. You need only three inputs: billed fees, collected payments, and any approved write-downs or credits. That gives a fast percentage for a billing conversation or month-end review.
A managed workflow matters when collection rate needs to be tracked by client, project, person, invoice status, or date range. Everhour Reporting supports customizable reports with 45+ columns, grouping, filters, exports, scheduled email delivery, and profitability dashboards, so billing review can use the same time and money data repeatedly instead of rebuilding it in spreadsheets.
This content is for general information only, may not be fully up to date, and is provided without any warranty or liability.
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A higher collection rate means more billed fees turned into cash. The useful benchmark is your own trend by client, project type, or billing period because collection policies, payment terms, write-down practices, and dispute rates differ. Compare the same definition each time: collected payments divided by billed fees, not collected payments divided by total hours worked.
For service billing, calculate a clean fee collection rate before tax unless your internal policy defines collection rate on the full invoice total. The United States has no federal VAT/GST or national sales-tax rate. State and local tax treatment varies, so taxable services need the correct jurisdiction-specific tax input when you calculate invoice totals.
Partial payments count only for the amount actually received. If you billed $8,000 and received $5,000 by the review date, the collection rate for that invoice is 62.5%. When another payment clears, update the numerator. Do not count promised payments, pending transfers, or disputed balances as collected cash.
Use one method consistently. For net collection rate, subtract approved write-offs, discounts, or credit memos before calculating the percentage. For gross collection rate, keep the original billed amount in the denominator to show how much value was lost after billing. Net rate is useful for cash review; gross rate is useful for pricing and client-quality analysis.
Collection rate measures cash received against billed fees. Realization rate measures billed fees against the value of billable work before write-downs. A project can have strong realization and weak collection if the invoice was billed as expected but the client has not paid. Both metrics are needed to see pricing quality and payment performance.
Everhour Reporting lets admins build reports with columns such as billable time, billable amount, cost, profit, invoice status, and project details. Reports can be filtered, grouped, exported to CSV, Excel/XLSX, or PDF, and scheduled by email for recurring billing review.
Track billable work, invoice status, and payment-facing metrics in repeatable reports. Everhour Reporting gives teams cleaner collection reviews without rebuilding the same spreadsheet each month.
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