GovCon Wednesday’s
Ensuring Steady Cash Flow Through Accurate Invoicing
Estimated Read Time: 8 minutes
For government contractors navigating cost-type or T&M contracts, nothing disrupts operations faster than delayed reimbursements. And when indirect costs fringe, overhead, G&A go unbilled, it’s often because a Provisional Billing Rate (PBR) isn’t in place or properly applied.
This article Part 7 in VSINGH CPA’s 10-part series on indirect rate strategy explores the real-world impact of PBRs on your invoicing rhythm and cash flow stability. Backed by FAR 42.704 guidance, understanding this connection is essential for any GovCon serious about scaling.
The Link Between PBRs and Monthly Invoicing
A Provisional Billing Rate is more than a compliance document it’s your ticket to timely reimbursement for indirect costs while work is being performed.
Once a PBR is approved, you can start applying that indirect rate to your cost-type and T&M invoices. Without it? The indirect portion of your billing sits in limbo until the government has a final audited rate. That could mean waiting until the fiscal year closes and even longer if there are delays in final rate negotiations.
For small and mid-sized contractors, that wait can be painful.
Example:
If your monthly indirect costs total $40,000 and your PBR isn’t in place for four months, that’s $160,000 in reimbursable expenses left on the table until the final rate is determined. Meanwhile, you’re still paying rent, issuing payroll, and buying equipment.
Why PBRs Matter for Cash Flow
Timely and approved PBRs help you:
- Avoid billing delays and rejections due to missing rate support
- Ensure consistent cash inflow to cover overhead and fringe
- Prevent year-end reconciliation headaches and audit flags
Without a current PBR, indirect costs become a liability. They can’t be invoiced, and yet they’re real out-of-pocket expenses.
This cash flow strain can:
- Limit your ability to hire or scale
- Delay subcontractor payments
- Force leadership to tap into credit lines or reserves unnecessarily
Cash flow is the lifeblood of GovCon growth. With a current, accurate PBR in place, contractors stay agile and solvent.
The Compliance Perspective
According to FAR 42.704, provisional billing rates must be:
- Established or approved annually (or as needed)
- Based on prior audits and current trends
- Supported by adequate documentation
Failure to comply may result in disallowed costs, rejected invoices, or additional government oversight all of which impact your bottom line and reputation.
DCAA auditors may also use PBR submissions to evaluate your internal systems. A smooth approval process signals strong controls, which can influence future audits.
Optimize Cash Flow with Proactive PBR Management
Managing your PBR doesn’t stop after submission. As business conditions change staff growth, new contracts, or system upgrades your PBR may need to be revised.
What’s Next in the Series?
✅Part 1: Intro to PBR
✅Part 2: Do I Need a PBR? And How Do I Get One Approved?
✅Part 3: What Goes Into a PBR? Breaking Down the Numbers
✅Part 4: How Do I Calculate My Provisional Billing Rate?
✅ Part 5: What Happens After I Submit My PBR?
✅Part 6: Common PBR Mistakes – And How to Avoid Them
✅Part 7: How PBRs Impact My Invoicing and Cash Flow
8️⃣Part 8: Year End ICS
9️⃣Part 9: Can I Update My PBR During the Year?
🔟Part 10: Are You Audit-Ready? Supporting Your PBR with Documentation
Don’t let preventable billing gaps stall your growth.
At VSINGH CPA, we help GovCons align their PBRs with actual costs, contracts, and systems so cash keeps flowing and audits stay clean.
Book a strategy call today to protect your margins and keep your operations moving.
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