Find the maximum cash exposure on the dated timeline
At each dated event, subtract cumulative project receipts from cumulative project outflows. The maximum cash exposure is the largest positive result. Keep the invoice event and bank-receipt event separate.
| Dated event | Cumulative outflows | Cumulative receipts | Outflows − receipts |
|---|---|---|---|
| Initial project outflow | 4,000 | 0 | 4,000 CU |
| Second outflow before receipt | 6,500 | 0 | 6,500 CU |
| Downside: further outflow before delayed receipt | 8,000 | 0 | 8,000 CU |
| 6,000 CU received | 8,000 | 6,000 | 2,000 CU |
Define the decision before calculating
Record these inputs and boundaries
- Define deliverables, acceptance evidence and approval owners. (not complete)
- Map supplier, labour and other project outflow dates. (not complete)
- Separate earned, invoiced and collected amounts. (not complete)
- Record contractual payment terms without assuming on-time receipt. (not complete)
- Set a change trigger for delayed approvals, disputed scope or cost movement. (not complete)
Compare a labelled base and downside scenario
| Decision input | Base case | Downside or boundary case | Decision checkpoint |
|---|---|---|---|
| Project outflows | 4,000 on 1 August + 2,500 on 20 August = 6,500 before receipt | Same 6,500, plus 1,500 on 10 September = 8,000 before delayed receipt | Keep these dated cash movements separate from project profit |
| Milestone approval and invoice | Observable milestone approved and 6,000 invoice issued on 5 August | Approval and 6,000 invoice shift two weeks to 19 August | Move the expected receipt date with the invoice event |
| Expected receipt and funding gap | 6,000 expected on 4 September; first project funding gap peaks at 6,500 | 6,000 expected on 18 September; gap peaks at 8,000, an increase of 1,500 | Revise milestone terms or funding plan before relying on the delayed case |
- Place observable delivery and approval events on the project timeline.
- Attach the invoice event and contractual terms to each milestone.
- Model expected receipt dates separately, including a delay case.
- Overlay dated labour, supplier and other cash outflows.
- Revise scope, billing or funding plans when the gap exceeds the chosen boundary.
| User-proposed structure | Observable event | Invoice date | Expected receipt | Project-profit boundary | Local-review boundary |
|---|---|---|---|---|---|
| Pre-work payment sometimes described as a deposit | Accepted quote plus the specifically agreed pre-work event | User-entered date after that event | Separate user-entered collection date and delay case | Earlier cash does not increase project profit by itself; price and the defined cost boundary still determine profit | Check whether the structure, wording, refund treatment and remedies are suitable and enforceable locally |
| Milestone billing | Named deliverable or acceptance evidence completed and approved | User-entered date tied to that approval evidence | Separate user-entered collection date and delay case | Billing timing does not change the underlying project profit unless price or cost also changes | Review acceptance, dispute, cancellation and payment wording for the applicable agreement and jurisdiction |
| Progress billing | Observable work stage, measured progress or agreed review point | User-entered date after the recorded progress event | Separate user-entered collection date and delay case | Cash exposure changes with timing; do not infer revenue recognition or profit from the invoice alone | Obtain local review for measurement, approval, invoice, tax and industry-specific requirements |
Model retention withholding and release as separate cash events. When a user-entered agreement includes retention, keep measured work, withholding, invoicing, release and receipt as separate dated records; the cash sequence does not establish a legal entitlement or accounting treatment.
| Event or record | User input | Keep separate from |
|---|---|---|
| Work measured or certified under the user’s agreement | Eligible or certified amount and date | Invoice, cash and legal entitlement |
| Retention scenario | Entered basis or rate and withheld amount | A standard percentage or right to withhold |
| Main invoice | Amount and date under the user’s recorded event | Expected receipt and project profit |
| Release event | User-entered condition and date | Proof the condition is enforceable or satisfied |
| Release invoice or claim | User-entered amount and date | Collected cash |
| Receipt and project outflows | Expected or actual receipt and dated costs | Revenue recognition and project contribution |
Interpret the result and choose the next step
A milestone should identify an observable delivery event, approval owner, invoice action and expected receipt date. The project profit view and dated cash view remain separate.
Run the exact calculation in the registered planner
- Progress Billing Cash Planner
Align milestone billing with cost timing and retention
Decision questions
- Is an issued invoice the same as cash?
- No. Keep the invoice date and expected receipt date as separate events, then update the forecast when collection evidence changes.
- Should every project use the same milestone percentages?
- No universal percentages are supplied. Align milestones with observable work, approval evidence, cost exposure and the actual agreement.
Method and source scope
- Progress Billing Cash methodology — Margin101: Product-owned calculation, units, assumptions and limitation contract used by this guide.
- Prepare a contract — business.gov.au: Process support for recording payment instructions and observable stage-payment events; no Australian legal rule is globalised.
- Getting invoices right — UK Small Business Commissioner: Invoice-process support only; UK rights and rules are excluded from the global article.