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Project Finance 2 — What You Need to Know

Profit is an opinion; cash is a fact. Work only becomes cash when someone bills it, prices it, and collects it — and that someone is you.

On a live project

✓ What to do

Bill it: pre-bill by the 25th, invoice by the 7th — bill everything earned.
Price it: every scope change is additional services — price it and log it.
Collect it: watch receivables; chase the final invoices at closeout.
Know your earned-but-not-billed number on your busiest project.

⚠ What to watch for

Finished work aging as WIP, unbilled.
Invoices aging as AR, un-chased.
A full backlog mistaken for cash.
The last 10% drifting for months after closeout.

✕ What to avoid

Treating billing & collections as accounting’s job.
Absorbing a scope change to avoid the conversation.
Letting finished work sit unbilled.
Confusing profit with cash.

Grace process anchors

The pipeline

Backlog → WIP → Receivables → Cashonly cash pays a salary

The rhythm

Pre-bill 25th · Invoice 7thdon’t let earned work sit

Changes & record

Additional services via change log · BSTprice on the spot, in writing

Archetype quick-tells

Competent CoordinatorBilling is ‘accounting’s job’ → own the money to cash; bill on the rhythm.

Obsessed DesignerInvoicing slips for the next deliverable → close the billing loop first.

People PleaserAbsorbs the $40k change → name it kindly, price it, give a clean choice.

Accountable OwnerTurns work into cash → prices on the spot, bills monthly, collects to the last invoice.

The fee-to-cash pipeline

Backlog	Won, not done — a promise. Can’t pay anyone.
WIP	Done, not invoiced. Bill it.
Receivables (AR)	Billed, not paid. Collect it.
Cash	In the bank — the only stage that pays a salary.

Try it — move the money through the pipe

ToolMove the money — backlog to cash

From the video: ~$150k of finished work sat as WIP. Only cash pays a salary. Move the money through the pipe and watch how much is actually spendable at each step.

Backlog

$150k

›

WIP (done, unbilled)

›

Receivables (billed)

›

Cash (spendable)

Cash you can spend today: $0. The work is earned — but none of it pays anyone yet.

ToolFee-to-Cash building blocks

Watch one month of work move through a six-month project. Each row is a month’s work ($50k); follow it as it turns from earned work (WIP) to a sent invoice (AR) to cash. Slide the lag to see what collecting faster does.

Months from finished work to cash 2

WIP — earned, unbilled AR — billed, unpaid Cash — spendable

Quick drills — spot it

A full backlog and a great year on paper. Can the firm make payroll?

Not necessarily. Backlog and profit aren’t cash. If work sits unbilled (WIP) or uncollected (AR), the money can’t pay anyone.

Mid-project the client requests clearly extra work. The fee is large. Absorb it to keep them happy?

Price it. Unpriced work never enters the pipe and can never become cash. Name it, price it as additional services, log it.