Calculator
Invoice lag calculator
Every day between finishing a job and sending its invoice keeps one day of billable work unbilled at all times. Divide your yearly billed revenue by 365 and multiply by the days you could save to see the cash tied up in the gap, and what carrying it costs.
How this is calculated
- $18,000,000 a year is $49,315 of work finished each day.
- Invoicing 8 days later than you could keeps 8 days of it unbilled at all times.
- At 8 percent, carrying that costs the amount shown, every year, before a single late payment.
Reading the result
The first number is not a yearly cost. It is a standing balance: cash that stays tied up for as long as the lag lasts. The second number is what that balance costs you each year. Closing the gap releases the balance once and removes the yearly cost for good.
Most lag comes from the same few places: tickets that ride in trucks, information that has to be retyped, and exceptions that wait for someone to explain them. The field-to-office split page describes how that happens.
Questions people ask
Why does a few days of lag matter?
Because it applies to every job, all year. A standing gap of a few days of billing is cash you have earned and cannot use, permanently, until the gap closes.
Is this the same as late payment?
No. This is the time before the customer even receives the invoice. Late payment adds to it; it does not replace it.
What cost of money should I use?
Your line of credit rate if you borrow against receivables, or what the cash would earn if you would otherwise hold it.
How do I find my real lag?
Take a month of completed jobs and compare the completion date to the invoice date for each. The guide on invoices going out late explains how.
What closes the gap?
Getting the completed job's information to billing in usable shape the day the job ends. The guides linked below list what to try first.