Cash Flow Part 2

Episode 7: Cash Flow Part 2

Contract to cash: the money coming in

AI won't get you paid faster. What it does change is the accuracy of the first bill, billing screens that fit each contract type, certified payroll for subcontractors, and a cash flow report the CFO can trust.

Contract to Cash · 9 min

Opens December 8, 2026 at 9:00 AM ET

Read the transcript

When you think about, you know, the money out part of this equation, you have to also think about the money in.

Yep. That's right. So you know take for example you know you know we call this one contract to cash, getting paid, collections, as part of this cash flow equation.

Absolutely. Talk about this one. What's what's the kind of state of the workflow today and where do you see AI changing how contractors get paid?

Yeah they I if I stood here and said AI will get you paid faster. I'd be lying. Your owners and if you're a sub, your GCs don't want to pay you faster. So AI going to do any of that. You're not getting more money in. They're g they're going to stretch you. AI is not until AI becomes a physical robot with a baseball bat, you're going to get stretched. So let's just call that frank. You if somebody tells you I got an AI AR system that's going to make you or building system that are going to get you paid faster, they're lying.

Hang up the phone, run away, scream, whatever. What I would say is going to happen though is the accuracy of the first bill is going to be higher. And so, you know, when we think about pencil copies, we're going to think again in GC and subcontract. As a GC world, if I'm what we call a guaranteed maximum price contract contractor, I'm actually really billing, you know, basically time and materials, right? I'm billing my general conditions. I'm billing my markups. I'm billing subcontractor invoices.

That's what I'm billing. I'm going to attempt to frontload the invoice. Everybody does. Okay, that's where the art comes in. I don't think AI is going to help you frontload an invoice. I think you can do that quite well as your on your own. What AI does in the case of Otto is the generative approach which allows depending on the invoice allows the invoice management or billing screen to be malleable to what you're billing. So let's say I'm a general contractor but I have two jobs.

I'm PM two jobs. One is lump sum, one is guaranteed maximum price contract. In the traditional accounting or PM world, I have to use the same screen for both invoices. So I have 25 fields on this screen that I don't care about and I have 5,000 rows on that screen I don't care about. In both cases, I hate my life. What I what I end up doing of course is I do it in Excel breaks everything do in Excel and then I send it off and then maybe at some point it gets entered into AR as one line item revenue.

That's it. That's the general approach. What we want to stress here for contract to payment or cash isn't that you're going to get paid faster. It is yes it will be more accurate. What it will do is allow the magician behind the scenes, that Wizard of Oz, your PM, who is a billing scientist, who will who knows things that no AI can know. No AI can know that they can get away with advanced billing subguard or stretching out some retainer bill. That's a human that a human has to do that.

But what we say is AI is going to help that wet interface between machine and human get out of Excel and into a malleable interface because Otto is generative. It's building itself for that invoicing process. It's going to build the right interface in real time based on the project, based on the reality, and it's going to raise a hand when there's something to flag your humans. This is the most important job a PM can do is that pencil copy if you're a GC is the percent complete bills for a subcontractor making sure every cost is captured.

That's where AI helps you. AI is not going to help you get paid faster. It'll help you do it faster. Eyes wide open. Sunshine, sunlight, disinfectant. It'll help you make sure you're building everything that you spent money on. And that's where the catches are. And you know the last segment of that is the change order an analogy which is you have listen if I AI is not going to stop you from doing work that isn't fully executed. You this is a full contact sport.

You're going to be asked to do work and you're going to do it. So let's stop lying to ourselves that we can somehow train away proceeding change orders. You can't. That's not how this works. We proceed on change orders in real time that are not fully executed by a client. That's just the reality. That is the reality. But that risk is never calculated. It's just shoved to the end into a stage called the claim stage where we just all yell at each other and try to get as many pennies on the dollar as we possibly can.

We'll talk about that. But the reality is billing isn't about billing. A human needs to do that bill. Billing is about orchestrating. It's about being generative and speaking to you when there's an issue. There isn't as much autonomy that an agent can do. This is your most important relationship. It's with your client and it's the dollar relationship. You want to own that. So, in contract to cash, autonomy is in the 20 to 30% range, not the 60 to 80% range. But that's okay.

That 20% saves you a little bit of time. But it's that it's what boils up and this is the punch line. It's that cash flow report that your CFO looks at which you send to the bonding company which you use for your line of credit which you use for growth plans. That cash report will be pristine and yes we're helping the AR a little bit but we're helping the company a lot. That's the key.

How about how about on the subcontractor side? You want to talk a little bit about where you see that changing on the on the specialty?

Yeah, the biggest thing that I see is materials, purchase orders that you know billing those it's a little bit easier if you've been invoiced you can get those build where subcontractors fail a lot of subcontractors fail is on billing their labor and we've made it infinitely harder with certified payroll. So billing has become kind of a little bit of a misnomer. If you don't have your cert report accurate, you don't have your roster given to the superintendent from your GC, you're not getting paid, you know, you're paying your guys and girls every week.

You might get paid every six weeks. And if you get a rejection notice because your certified payroll is wrong, then all of a sudden you're not getting paid every six weeks. You're getting paid out of 12 and you're frantic because you're stretching your cash flow. You are not going to be cash flow positive. Your cash flow report is going to be a lot of reds if you can't get those right. So even when I talk about accuracy, I'm talking about accuracy for a subcontractor on billing around labor management.

It's around who am I building in my crew? How much are they being build for and did I fill out my certified payroll? Did I give you my compliance? That's really again your GC is going to drag you out as long as possible. Every sub knows that. But it's going to help you create more accurate outcomes. The other side of it is it's going to tell instead of creating a cash flow report and this is really the punch line where a you know CFO doesn't have enough hours in the day so they use the same cash flow curve on every line item.

This one could be by GC by project type, by location. So now you're getting accurate cash flow. I don't love the billing process. I think it's very art less science. AI helps. It helps doing the collection of information, helps analyzing it, helps raising a hand saying, "Hey, this is right. This is wrong." It manages your AI, your AR, your, you know, your age report, your collections. Yes, it helps there. But where it crushes, where AI absolutely crushes is on taking that information along with the procure to pay to change how you manage your cash flow.

Because if you're not a business owner looking at your cash flow daily in this industry, which is so fraught with risk, you might wake up out of business one day.

And AI helps you reverse that. Y we hope that this series was genuinely helpful. If it sparked new ideas, if it gave you an inspiration to pursue new AI projects in the business, reach out to us. We're here to help. So we thank you for your time and we thank you for watching.