Two Jobs Need Cash. Which One Should the Shop Finish First?

Imagine this.

A small manufacturer has two jobs waiting for outside finishing. The owner wants to send the larger one first because it carries a better margin. The production manager wants the older job off the floor before it becomes another broken promise.

“We’ve already spent so much on the big one. Let’s get it done.”

The advisor asks how much more each job needs before a customer payment can reach the bank. The smaller job needs $6,000 and could bring in a $34,000 balance in two weeks. The larger job needs $18,000, with a $62,000 balance expected six weeks from now.

After protecting payroll and existing commitments, the company has $12,000 available for the next step. The larger job cannot be finished with that amount alone, even though its total margin looks better.

This is an instructional composite. The people, company, dialogue, amounts, timing, and payment assumptions are invented to explain the decision.

The owner has to choose a production sequence. Before making that choice, the advisor needs to separate money already spent from money still required and verify what actually releases the customer payment.

More work waiting does not tell you what to finish

The Census Bureau’s October 2 manufacturing report put August unfilled orders at $1,609.6 billion, up 0.6% from July. Manufacturing inventories rose 0.5% to $972.4 billion, while shipments were virtually unchanged. Work-in-process inventories increased in both durable and nondurable manufacturing.

These are national dollar estimates, adjusted for seasonality but not price changes, from a panel of manufacturing reporting units. They cannot establish why a particular shop has unfinished work or whether its next job will pay promptly.

The obvious reading is that more money sits in inventory and more orders remain unfilled. An advisor should resist turning those national totals into a recommendation to speed up every job.

The missing question is about the sequence: which piece of unfinished work can produce a usable cash receipt with the money and capacity available now?

A backlog report ranks work by several useful measures, including age and promised delivery date. A margin report helps explain expected profitability. Neither one, on its own, shows whether the next $12,000 gets a customer payment moving or leaves another job partly funded.

That is where the cash conversation needs to go. Ask the owner what happens after the next payment to the finishing vendor, including what remains before the customer can be billed.

Inspect the work still between the shop and the bank

Pick the two jobs competing for cash and walk through the remaining work with the person responsible for production. Use current vendor quotes and the actual job records, including unpaid bills for work already completed.

For each job, establish the remaining cash requirement through collection. Include finishing, delivery, and any additional payroll the job requires. Keep costs already paid visible for the profitability review, but don’t make the company fund them a second time in the cash forecast.

Then inspect the customer agreement. Completion might allow an invoice, or it might only allow the shop to request inspection. A missing acceptance certificate can leave a finished job waiting for payment just as surely as a missing part.

Check deposits already received so the forecast contains only the unpaid customer balance. Ask the person handling collections whether the expected receipt date reflects payment history or merely the terms printed on the invoice.

A useful meeting question is: “What would prevent this customer from paying after we spend the money to finish?”

The answer may be a quality issue, a disputed change, or a document nobody has submitted. Resolve that uncertainty before treating the receipt as available to fund another job.

This is the same discipline used in a 13-week cash forecast: each expected receipt needs a supported amount and date. Here, the immediate purpose is to compare the cash consequences of two feasible production sequences.

Compare the next dollar, not the money already gone

Return to the composite. Call the smaller order Job A and the larger one Job B. Assume both customers accept the work, the stated balances are collectible, and the remaining costs include every job payment needed before collection.

Finishing Job A uses $6,000 in week one. Its $34,000 receipt in week two leaves $40,000 in the job-funding pool: the original $12,000, less $6,000, plus $34,000.

The owner can then fund Job B’s $18,000 completion cost in week three, leaving $22,000 in that pool. If B’s $62,000 balance arrives in week six, the pool reaches $84,000, before any uses outside this example.

That is an incremental cash comparison, not a profit calculation or the company’s entire bank balance. The advisor still has to put the sequence beside every other company receipt and payment in the forecast.

Starting with Job B presents a different problem. Spending the available $12,000 leaves another $6,000 needed to finish it. Unless another verified source covers that amount, the company has committed its available cash without reaching a collectible milestone.

The money already spent on B cannot answer that question. The decision depends on the spending still required and the receipt it can produce.

Now test A’s collection date. Suppose its payment moves from week two to week five. Only $6,000 remains after finishing A, so funding B in week three would leave a $12,000 gap.

Move B’s spending and collection dates together if production waits. Alternatively, evaluate a customer-supported progress payment or another approved funding source. A receipt that slides three weeks cannot keep financing an unchanged production schedule.

Make the sequence conditional and check it

The advisor has identified the issue and traced the payment conditions driving it. The next step is to evaluate workable choices with the owner, model their cash effects, and agree on the condition for moving.

Job A first looks workable under the example’s assumptions. That recommendation changes if its customer disputes acceptance, if finishing costs rise, or if delaying B violates a delivery commitment. Production capacity and contract obligations remain part of the decision.

Don’t tell the shop to favor cash without checking those limits. The owner and responsible specialists determine which sequences are operationally and contractually available. The advisor shows what each allowed choice does to cash.

Write down the agreed release condition for B: A’s receipt has cleared, its completion costs are covered, and the updated company forecast protects the owner’s cash floor. Assign someone to confirm acceptance and someone to follow the receipt through collection.

At the next review, compare the remaining-cost estimate with the actual vendor bill. If the customer payment moves, update the sequence before issuing the next purchase order.

The owner in the opening can still choose the larger job first if a verified plan funds its completion. A better margin alone doesn’t supply the missing $6,000.

The next job should earn its place in the schedule with a cash plan, not with the money already spent on it.

Clear Path To Cash Advisor Membership helps advisors practice this decision process, with education and tools that support applying it. The system supports the work; the advisor checks the evidence and helps the owner choose a sequence the business can carry.