Preparing for “the float”

The sigh I made when I finally understood "the float" was not a quiet one.

I had spent two decades inside federal service overseeing budget structures, indirect rates, invoicing requirements, and the full compliance apparatus that governs how federal money moves. I understood government contracts about as well as a person can without having been a contractor. And then I became one, took on my first subcontract gig, and discovered very quickly that there is a difference between understanding how the system works and understanding what it costs you personally to participate in it.

The float is that difference. And if you are new to GOVCON work, especially as a fractional or a small subcontractor, it is the thing most likely to catch you off guard before anything else does.

What the float actually is

Here is the basic math. You win a contract. The total value looks healthy. You map your deliverables, set your rates, build out whatever staffing or support structure the work requires. On paper, everything works the way it is supposed to.

But federal contracts pay on invoicing cycles, and invoicing cycles create gaps between when you do the work and when you get paid for it. If your invoicing window opens at the end of the month and payment terms are net 30 after receipt of a proper invoice, you are floating anywhere from 45 to 60 days of costs before the first dollar arrives. That is on every invoice, for the entire life of the contract, and it assumes the contracting office is fully staffed and processing without delays, which is not always the case right now.

For a small business or a sole practitioner, 60 days of float on a single contract is manageable if you have reserves. The problem comes when you start growing: adding capacity, taking on additional awards, building infrastructure. Every new contract adds another 60-day float to the stack. Your revenue is increasing on paper while your cash position is getting tighter in practice, and those two things feel like a contradiction until you understand what is actually happening.

Why coming from government makes this harder to see

When you spend your career inside a federal agency, you are trained to watch budget execution. You track obligations, monitor actuals against plan, reconcile your SF-133. You develop real discipline around how money is authorized and spent.

What you are not trained to watch is cash timing, because inside the government, cash timing is not your problem. The institution absorbs it. Appropriations are there. The payment infrastructure runs. You never have to think about whether you can make payroll on Friday, because that problem exists several layers below where you operate.

Stepping out of that system and into a consulting or contracting role means absorbing that problem yourself, and the transition is not automatic. You bring your budget execution instincts with you, which are genuinely useful, but they are not the same thing as cash flow management. A budget tells you whether the work is profitable. Cash timing tells you whether you can sustain operations while you wait to get paid for it. Those are different questions, and until you have had to answer the second one from your own bank account, you may not fully appreciate how different they are.

What it looks like when the float stacks

When supporting multiple primes simultaneously, the float compounds in ways I had not modeled. One client is consistent, paid reliable, no issues. Another runs slow because their contracting officer was buried under a reorganization that had nothing to do with me and that nobody had told me about. A third has a payment hold that I find out about two weeks after it started. None of this is unusual by GOVCON standards. It was just the normal texture of the work.

What’s disorienting is my accrual-based financials looks fine during all of it. Revenue is recognized. The work was billable. On the P&L, the business is performing. What the P&L cannot tell me is that my actual cash position is running two months behind the story the financials were telling, and that the gap between those two pictures is widening as I take on more work.

This is the part that catches people who have financial training, not just people who don't. You know how to read a P&L, and you know how to build a budget. Unfortunately, both of those things can look healthy while cash timing is slowly building a problem you haven't fully mapped yet.

The discipline I’m building

What this knowledge is forcing me to develop is cash flow tracking as its own separate practice, completely independent from the budget and the income statement. Not revenue and expense projections, but actual timing: when does money land in the account, when do obligations go out, and what is the minimum balance I need at any given point to operate without disruption.

In practice, this means maintaining a rolling cash flow forecast that maps receipts to specific expected payment dates, not just the billing period. It means knowing which clients have a history of paying on time and which don't, and building that pattern into your projections. It means knowing your minimum viable cash threshold well enough that you can look at next month's picture and tell whether you need to make any decisions now, while you still have time to make them.

It also means separating what your books say from what your bank account says, and understanding exactly what accounts for the difference at any given point. Unbilled work. Submitted but unpaid invoices. Restricted funds that aren't available for operations. Each of those represents a gap between the financial story and the cash reality, and managing the gap is a different skill from managing the financials.

What to build before you need it

If you are in the early stages of your GOVCON journey, whether as a fractional, a subcontractor, or a small prime, here is what I would suggest putting in place before the float teaches you the hard way.

First, build a simple cash flow forecast and update it weekly. It does not need to be complicated. It needs to reflect actual expected receipt dates for every outstanding invoice, actual outflow dates for every obligation, and a running picture of where your balance lands. The discipline of updating it weekly matters as much as the tool itself.

Second, know your float by client. Some primes pay faster than others. Some contracting offices are better resourced than others. Some contract types (cost-plus versus firm-fixed-price, for example) have different invoicing dynamics. The more specifically you understand the payment patterns of the work you're actually doing, the more accurately you can forecast.

Third, set a minimum cash threshold and treat it as a real constraint, not just a metric. Knowing what number represents "I need to make a decision" is more useful than any amount of retrospective analysis after the fact.

And fourth, open a line of credit before you need one. Lines of credit are dramatically easier to establish when your financials are healthy and you are not in a cash timing squeeze. Waiting until the squeeze is happening is one of the more common and avoidable mistakes I see in small GOVCON firms.

Coming from government, you were trained to watch budget execution. Nobody trained you to watch cash timing because the institution absorbed that problem for you. Building that discipline yourself, early, is one of the better investments you can make in your first year.

The float is not a crisis if you can see it coming. It only becomes one when it surprises you.

If this is a gap you're working through right now, I'm happy to talk through what how I'm trying to build that level of visibility and what it actually looks like in practice. See link and email in the comments.