Cash, the Float & Collections

Payroll goes out every two weeks. Cash arrives months after the work. In between, the firm is the client’s bank, interest-free.

Grace’s $1.4M fee across a twelve-month design schedule earns roughly $115k in a typical month. The team works through the 31st. Pre-bills are reviewed by the 25th, the invoice goes out by the 7th, and terms are net-30. Even a client who pays on time pays about six weeks after the middle of the work. A client who pays “normally” stretches that past two months.

That $230 to 350k is the float, money Grace has earned, has paid payroll against, and has not yet received, on one project. Across every active project in the studio, the float reaches the size of a small office’s annual payroll, permanently loaned out. The firm covers it with cash reserves or a line of credit, and a line of credit charges interest. The consequence is direct: the firm pays interest so the client can hold Grace’s money longer.

Module 2 covers scorecard columns ① to ⑥. This module covers column ⑦, the day counts. Three numbers measure the pipe.

For scale: design-firm receivables industry-wide average around 70 days Illustrative · confirm in BST. A well-run project beats the industry average. Most of what makes cash slow is the invoice itself: sent late, sent wrong, or sent and never followed up.

The aging buckets: each one triggers a defined action

Half the Oakhaven fee was never Grace’s. The billing rhythm is the structural engineer’s payroll.

Oakhaven’s total design fee is $2.8M. Consultants carry $1.4M of it. That money moves through Grace: the consultant bills Grace, Grace bills the client for the full month’s work, and, where the contracts say pay-when-paid, the consultant is paid when the client’s cash arrives. Follow the chain: the invoice sits two weeks in WIP → the client pays six weeks later → the structural engineer waits two months for completed work. The billing habit sets the consultant’s cash flow.

• 1Consultant pre-bills in by the 20th Illustrative · confirm per agreement so the consolidated invoice makes the 7th. A consultant who bills late makes Grace late. Set the expectation at kickoff, not at the first missed cycle.
• 2Review consultant invoices like internal pre-bills: right phase, right amounts against their agreement, clean backup. A disputed consultant line holds the entire invoice.
• 3When cash is slow, tell them. Silence reads as disrespect. A consultant who hears “client paid, yours releases Friday” stays a partner. One who hears nothing for 90 days staffs the next deadline accordingly.

The collections call is a service, the same reframe as the fee conversation. Invoices stall in approval workflows rather than in bad faith. Surfacing a problem in week two helps the client.

Most PMs avoid the money follow-up for the same reason they absorb scope changes: it feels like an imposition. A client whose AP process stalled an invoice wants to know before it becomes a quarter-old balance. The craft is a rhythm, an early touch, and a fixed escalation ladder:

• By the 25thPre-bill review. Right phases, clean descriptions, backup attached, consultant lines verified. Most disputes originate on a sloppy invoice. Resolve them here.
• By the 7thInvoice out. Everything earned, every cycle. The rhythm is the control.
• Day 7 to 10The receipt check. Accounting confirms the invoice arrived and nothing needs clarifying. One short message. Thirty seconds that saves thirty days.
• Day 45The specific ask. Accounting monitors and asks specifically: “Is anything holding the March invoice?” Find the cause: missing PO, wrong contact, an approver out of office.
• Day 60The call, with the PIC aware. PM involvement typically requested. Name the number, ask directly, agree a date. Warm, clear, unembarrassed.
• Day 90Leadership engaged. Firm-level conversation. Contractual remedies considered deliberately. The PM remains the relationship holder, and the earlier steps are what make that possible.

Each line gives the client clarity and a clean next step. Never go silent on money. Silence converts a process delay into an awkwardness, and an awkwardness into a write-off. A clean money relationship is part of the client’s experience of Grace, and value multiplies performance by experience.

Module 2 covers the planned earned-value curve, how the fee will be earned across the schedule. Shift that curve twice to get the firm’s cash forecast: earned work becomes a billing curve on the invoice rhythm, and billings become a cash curve offset by days-to-cash. That is how the firm predicts in June whether November makes payroll.

Two consequences follow for the project manager: percent-complete honesty feeds the firm’s cash forecast, and days-to-cash sets how far the firm reaches into its reserves. The Planning Studio (Modules 5 to 6) builds the full planning machinery: baseline curve, labor demand, and the plan behind the invoice schedule. The pipe in this module is the last stage of a plan that started before the first hour was worked.

This module follows the Owner’s money, backlog to cash. One more Owner number sits on the PM desk, and it dwarfs the fee. Grace builds a fee, $1.4M on Oakhaven. The Owner asks most often about their building, the ~$40M required to construct it.

Hold two numbers separately. The fee is what Grace earns. The Opinion of Probable Construction Cost (OPCC) is what the building costs. Never blur them. A construction cost number treated casually becomes a liability.

An early schematic number is given verbally, the Owner records it, and nobody revisits it. Design matures, scope firms up, and the estimate climbs. At the Construction Documents phase review the Owner learns the project is 20% over the figure carried for eight months. On a ~$40M building, that is an ~$8M surprise. At that point it is a trust problem rather than a design problem.

An estimate is a range that tightens as design resolves

Cost accuracy is a function of how much has been drawn. At Schematic Design the estimate prices intent. By Construction Documents it prices a defined building. Carry the estimate as a band that tightens at each phase review, the cone of uncertainty. State the band and its phase out loud.

*Illustrative bands following AACE estimate-class logic. The band tightens as the design resolves. Refer to Grace Legal / General Counsel and the Finance and Accounting Team for project-specific and client-specific guidance for specific scenarios, and to review specific internal policies.

Say it in writing, every time: the disclaimer

Grace is a design professional, not a contractor and not a cost-estimating firm. Every construction-cost number that leaves the office carries the standard-of-care language in writing.

The disclaimer is the practical form of Protect Integrity: name what the number is and what it is not, so nobody mistakes an opinion for a commitment.

The behavior: reconcile at every phase review

The estimate is a control to run, not a document to produce and file.

On your throughline project, this week:

• 1Pull your unbilled days and receivable days from BST. Add them for days-to-cash. Write it down and re-measure it in a month.
• 2Find the oldest open invoice. If it is past 45 days, make the specific ask today, using the day-45 line above.
• 3Check your contract for retainage and pay-when-paid terms. Confirm what releases the retainage before closeout.
• 4Bring your days-to-cash number and what you learned from the call to the live session.

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