Hey all,
I'm sorry if the title was a bit vague, but I didn't know if a term existed or if there was a more succinct way of describing what I'm trying to achieve.
So, our business is having some cash flow problems with receivables terms being much later than payables. My boss wants to take on some very large projects with the mindset that it's a large payout eventually. I want to figure out what's the amount of money we need to have set aside in order to cover payroll for a project of X size.
After going about it in a very round about way, I realized the only thing I managed to do was average the costs of our services and got a ballpark figure that overestimated the cost of labor and underestimated the net revenue when applied to a job. Essentially it reduced to
(cost of service / charge of service)1 + (cost of service / charge of service)2 ... n / number of services rendered
Anyway, I'm stumped as to how to figure this out short of adding everything up line by line, project by project. If anyone has a better way of figuring this out, please let me know.
I'm sorry if the title was a bit vague, but I didn't know if a term existed or if there was a more succinct way of describing what I'm trying to achieve.
So, our business is having some cash flow problems with receivables terms being much later than payables. My boss wants to take on some very large projects with the mindset that it's a large payout eventually. I want to figure out what's the amount of money we need to have set aside in order to cover payroll for a project of X size.
After going about it in a very round about way, I realized the only thing I managed to do was average the costs of our services and got a ballpark figure that overestimated the cost of labor and underestimated the net revenue when applied to a job. Essentially it reduced to
(cost of service / charge of service)1 + (cost of service / charge of service)2 ... n / number of services rendered
Anyway, I'm stumped as to how to figure this out short of adding everything up line by line, project by project. If anyone has a better way of figuring this out, please let me know.