Cash flow and milestone payments

Introduction

This article will focus on:

- Cash flow

- milestone payment

- implementing the two together, ind cost management

- what advantages this have

Abstract

This article will focus on how Cash flow and milestone payment can help a manager in either program, project or portfolio to see the costs, income vs outcome, of the operation, and to help the manager to motivate the works to reach a common goal by offering the milestone payments.

The two fundamental ideas of cash flow and milestone payments are to get an overview of the following:

- Use the cash flow tool, to get an idea of how the money is flowing in the business, and to see the payments vs. the income

- Use milestone payment to set up a program to award the hired freelances, if they are doing their job according to the managers timeline and quality, or to give a group of freelancers a common goal, and give them a “team” feeling to get them to work together the best way possible.

The goal of the two combined, are to use milestone payments and cash flow in a symbiosis to get the milestones incorporated in the cash flow, to get an understanding of the payments going in/out of the company/project etc. according to the time schedule, as a tool of planning. Furthermore, to focus on how the two can be used on a daily/weekly base, to get the most out of the models.

To help understand these models, the “Cost Management” will be used as a management style, because it relates to the idea of cash flow. Because of this relation, it also relates to milestone payment, because it is also a tool to control the money coming out in form of salaries and bonuses, according to the agreed contracts between the manager/company and the hired freelancers.

References

The Milestone Payment System: Results based funding in vocational rehabilitation – 2005, volume 23 issue 2, pp 101-114 O'Brien, Dan1; Revell, Grant