What is certification lag?
Certification lag is the time between a contractor submitting an RA bill and the client certifying it, and it is the stretch of the cash cycle that no standard finance report measures.
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Certification lag in plain words
The bill exists, the work is done, and nothing can be invoiced until somebody signs. Because no invoice has been raised, the wait sits outside receivables, outside DSO and outside the ageing report, which is why it survives for years unexamined.
How is certification lag calculated?
certification lag = date certified - date submitted
Measure the median and the P80. A median of 11 days with a P80 of 34 is a different problem from a median of 11 with a P80 of 14.
Why does certification lag matter?
It is usually the largest single wait on an EPC order-to-cash process, and unlike the client's payment run it can often be shortened by fixing what gets submitted rather than by asking the client for anything.
Where does certification lag mislead?
This is a measure, not a contractual term; a contract will talk about a certification period or a review window instead. And a resubmitted bill often carries only its new date, which erases the rejected pass and makes the lag look shorter than it was.
What do people get wrong about certification lag?
- Measuring from the resubmission
- The clock starts at the first submission. Measured from the last one, a bill that took thirty two days across three passes reports as twelve.
- Treating it as the client's problem
- A large share of certification lag is caused by what was submitted: a missing measurement sheet, an unagreed rate, an unapproved variation. Those are fixable without a conversation.
How does Crestline measure certification lag?
Crestline keeps every rejected submission in the trail, so a bill that went round twice shows both passes and the lag is the real elapsed time rather than the last attempt.
The order-to-cash lens