Every leak that has a complaint attached to it gets fixed. A customer disputes an invoice and someone chases it down. A vendor calls about a late payment and it clears that afternoon. A machine goes down and the plant manager is in your office before lunch.
The leaks that cost the most have no one on the other end of them. Nobody calls to tell you a quote went out at last year's material cost. Nobody calls to say the change order the field agreed to in March was never added to the billing schedule. Nobody calls to say the job shipped Tuesday and the invoice went out the following Wednesday.
Silence is not evidence that something is working. It is usually evidence that nobody owns it.
Put days into dollars first
Start with the cheapest number to get. Take a shop doing 40 million in revenue collecting in 62 days. That is 40M ÷ 365 × 62 ≈ 6.8 million dollars sitting in receivables at any moment.
That 6.8 million is money you have already earned and already spent to produce. It is financed by your line, your vendors, or your own equity.
Now move one variable. Pull five days out of that cycle: 40M ÷ 365 × 5 ≈ 548 thousand dollars. That is a one-time release of cash that stays released as long as the new pace holds.
Here is what matters about that figure. Five days is rarely a collections problem. It is more often the gap between when the truck leaves and when the invoice is releasable — a missing signed ticket, a milestone nobody marked complete, an approval sitting in someone's queue while the customer's payment clock has not even started.
The extras that were never billed
Second place to look is scope you delivered and never charged for. Field changes, expedites, extra material, a redesign the customer asked for verbally on a Thursday.
Run the arithmetic on your own shop. Say a job carries 15 thousand of unbilled extra work. Three of those in a year is 45 thousand — and because the cost is already sunk in your WIP, close to all of it is margin.
That 45 thousand is not revenue you have to go win. It is revenue you already produced.
The reason it stays hidden is structural. The person who knows the work changed is on the floor or at the customer's site. The person who builds the invoice is reading a contract that was signed before the change happened. Neither one is wrong, and neither one complains.
Quote drift and stale WIP
Third is pricing that has not caught up with cost. If a line of work runs 30 percent material content and your input costs are up 8 percent since the quote sheet was last refreshed, that is 2.4 points of margin gone on every job priced off it.
On 5 million dollars of that work, 2.4 percent is 120 thousand dollars of margin. You will not see it as a variance. You will see it as a quarter that came in a little softer than expected.
Fourth is inventory and WIP that stopped moving. Raw material bought for a program that changed. A job 90 percent complete, waiting on one part, holding cost you cannot bill until it ships.
Where to start
The useful question is not which of these is worst. It is which one you can size this week.
- Days from ship or milestone to invoice released — measure the actual distribution, not the average
- Dollar value of approved changes with no corresponding billing line
- Date your standard costs were last refreshed against actual purchase prices
- WIP with no movement in 60 days, valued at cost
Each of those is a number you already own. None of them require a system change to compute. All four are quiet, which is exactly why they are still there.
Written from the controller’s chair — the same discipline the diagnostic runs on your own numbers.