Would you book overtime after payment terms change?
Check the revised cash against the floor and say what would reverse the decision.
The question
You support an invented maintenance business. All figures are in USD. Each job is completed and billed in the same month.
| Plan | Latest | |
|---|---|---|
| Jobs | 1000 | 900 |
| Charge per job ($) | 100 | 110 |
| Variable cost per job ($) | 60 | 65 |
| Fixed cost ($) | 20000 | 20000 |
Fictional monthly inputs. Rates apply to each completed job.
Opening cash is $25,000. Collect 70% of invoices this month. Pay all operating costs this month. The cash floor is $5,000. Optional overtime costs $4,000 now and helps clear confirmed backlog next month. You can defer it before booking.
“Would you book overtime after payment terms change?”
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A strong answer, step by step
Open each step in turn. This is one strong answer, not the only one.
Step 1: Make the first call
What would you do here? Open the move you’d make.
Make the first call
The strong move. At 70% collection, $25,000 + $69,300 − $78,500 − $4,000 = $11,800. Book overtime for the confirmed backlog.
Defer even though the cash floor holds
Tempting, but it misses something. The backlog is confirmed and overtime is useful when the floor holds.
See how a strong candidate says it
“At 70% collection, $25,000 + $69,300 − $78,500 − $4,000 = $11,800. Book overtime for the confirmed backlog.”
Why it works: The backlog is confirmed and overtime is useful when the floor holds.
Step 2: Update the payment timing
What would you do here? Open the move you’d make.
Keep 70% because profit is unchanged
Tempting, but it misses something. The constraint is cash available at month end.
Update the payment timing
The strong move. A customer now pays later. The revised in-month collection rate is 60%. Receipts fall by $9,900, with no change in billed revenue.
See how a strong candidate says it
“A customer now pays later. The revised in-month collection rate is 60%. Receipts fall by $9,900, with no change in billed revenue.”
Why it works: The constraint is cash available at month end.
Step 3: Revise the call
What would you do here? Open the move you’d make.
Revise the call
The strong move. With overtime, ending cash is $1,900. Defer to end at $5,900 and tell operations what the delay means for the backlog.
Book overtime because profit beat plan
Tempting, but it misses something. Booking would breach the $5,000 floor.
See how a strong candidate says it
“With overtime, ending cash is $1,900. Defer to end at $5,900 and tell operations what the delay means for the backlog.”
Why it works: Booking would breach the $5,000 floor.
Step 4: Check the downside
What would you do here? Open the move you’d make.
Assume deferral always protects the floor
Tempting, but it misses something. At 55%, deferral alone leaves a $4,050 gap.
Check the downside
The strong move. At 55%, ending cash is $950 even after deferral. Escalate a $4,050 gap and confirm collection dates.
See how a strong candidate says it
“At 55%, ending cash is $950 even after deferral. Escalate a $4,050 gap and confirm collection dates.”
Why it works: At 55%, deferral alone leaves a $4,050 gap.
The answer, in short
- Decision
- At 55%, ending cash is $950 even after deferral. Escalate a $4,050 gap and confirm collection dates.
- Because
- With overtime, ending cash is $1,900. Defer to end at $5,900 and tell operations what the delay means for the backlog.
- What would change it
- Book at 64% collections if the floor still holds and the backlog is confirmed.
Common traps
- Defer even though the cash floor holds
- Keep 70% because profit is unchanged
- Book overtime because profit beat plan
- Assume deferral always protects the floor
Check your answer
- Make the first call
- Update the payment timing
- Revise the call
- Check the downside
Last reviewed Nov 10, 2026