Seventy-One Days to Get Paid: A Capstone Proposal to Shorten Collections at a Commercial Electrical Contractor
Student Name
Master of Business Administration Program, Aspen University
BUS 799: Graduate Capstone
Instructor Name
Month Day, Year
Seventy-One Days to Get Paid: A Capstone Proposal to Shorten Collections at a Commercial Electrical Contractor
A graduate capstone should solve a real problem that matters to the organization and can be completed within the course. This proposal describes such a project at Keystone Electric, a composite commercial electrical contractor where the author works as a project controls analyst. Keystone collects its receivables too slowly, and the delay forces it to borrow against its credit line to meet payroll. The proposal defines the problem, explains its significance, sets objectives and scope, describes the method, and lists the deliverables and timeline.
The Organization
Keystone Electric installs electrical systems in commercial buildings, schools, and health care facilities in a three-state region. It has 210 employees and annual revenue of about $38.0 million. Most work is performed as a subcontractor to general contractors, and the company bills monthly through progress payment applications, which the general contractor and project owner must approve before paying. Contracts typically allow the general contractor to hold back 10 percent of each payment as retainage until the project is complete.
The Problem
Keystone's days sales outstanding, accounts receivable divided by average daily revenue, averaged 71 days over the last four quarters. At $38.0 million in revenue, each day of receivables represents about $104,100, so Keystone carries roughly $7.39 million in receivables. The company's owners have set a target of 50 days. Reaching it would free about $2.19 million in cash. Because Keystone draws on a credit line at about 8 percent interest to cover payroll while it waits to be paid, the lower balance would save about $175,000 a year in interest and reduce the risk of a cash shortage during a slow month. Keystone is profitable on paper and short of cash in practice, and the gap between the two is 21 days.
Significance
The link between collection speed and business performance is well documented. In a study of 1,009 large Belgian firms, Deloof (2003) found that managers could increase profitability by reducing the number of days of accounts receivable and inventories, and a study of 8,872 small and medium-sized Spanish firms reached a similar conclusion, that shortening the days accounts are outstanding and the cash conversion cycle improved profitability (García-Teruel & Martínez-Solano, 2007). In construction specifically, a survey of New Zealand practitioners found that payment problems cluster around contractual issues, the financial strength of other parties, disputes, shortcomings in payment processes, and knock-on effects along the payment chain (Ramachandra & Rotimi, 2015). Some of these causes lie outside a subcontractor's control, but process shortcomings and disputes can be addressed from within.
Objectives and Scope
The project has three objectives: to measure how each stage of Keystone's billing and collection process contributes to its 71 days; to identify the causes of delay that Keystone can control; and to design, cost, and plan the implementation of changes expected to bring days sales outstanding to 50 within 12 months. The scope includes progress billing, change order documentation, retainage release, and collections. It excludes renegotiating contract terms with general contractors, changing the company's credit line, and pursuing legal claims on disputed accounts, which are decisions for the owners. The capstone will deliver a plan and a pilot on two projects; full implementation will follow after the course.
Research Questions
Three questions will guide the analysis. First, how many of Keystone's 71 days are attributable to each stage: the time from the end of a billing period to submission, the general contractor's and owner's review, payment after approval, rejected applications, unapproved change orders, and retainage? Second, which of those stages are within Keystone's control, and what specific practices cause delay in each? Third, what combination of changes would plausibly remove 21 days, at what cost, and in what order should they be introduced? The first two questions are descriptive and diagnostic; the third is prescriptive and will be answered with a costed plan.
Method
The project will follow the DMAIC structure used in Six Sigma process improvement: define, measure, analyze, improve, and control. Linderman et al. (2003) argued that Six Sigma's effectiveness comes partly from setting specific, challenging goals and pursuing them through a structured method, which fits a project with a clear numerical target. Data will come from the accounting system's receivables aging and 24 months of payment applications, a sample of late invoices coded by cause, and interviews with project managers, the controller, and two general contractors' accounts payable staff.
Confidentiality and Ethics
The project uses Keystone's financial records and the payment histories of its customers, which are confidential. The owners have approved the project in writing on three conditions: customer names will be replaced with codes in all course documents, no contract terms will be quoted, and interview participants will be told that their comments are for internal improvement and will not be attributed to them by name. Because the author is an employee, there is a risk of bias toward conclusions that favor the project controls department. To reduce it, the controller will review the cause coding of late invoices, and the analysis will report findings that reflect poorly on any department, including the author's own.
Assumptions and Project Risks
The proposal assumes that 24 months of payment application data are complete in the accounting system, that project managers will be available for interviews during the busy summer season, and that two general contractors will agree to share how they review subcontractor applications. If the data prove incomplete, the analysis will rely on a larger sample of invoices traced by hand. If general contractors decline to participate, their review process will be inferred from rejection notices and email records. The largest risk is that the pilot projects end or change phase during the course, which would be managed by selecting pilots with at least six months of billing remaining.
Deliverables and Timeline
The capstone will produce a literature review, a data collection plan, a current-state analysis with causes ranked by their contribution to days outstanding, a stakeholder and change plan, recommendations with an implementation schedule, a financial justification, and a final report and presentation to Keystone's owners. The work will follow the eight modules of the course, with the current-state analysis complete by the fourth module and the pilot running during the sixth and seventh.
Conclusion
Keystone Electric waits 71 days to collect what it bills, which ties up about $2.19 million beyond its target and costs about $175,000 a year in interest. This capstone will measure where those days come from, focus on the causes the company controls, and deliver a costed plan to reach 50 days, benefiting the organization and developing the author's skills in process improvement and financial analysis.
References
Deloof, M. (2003). Does working capital management affect profitability of Belgian firms? Journal of Business Finance & Accounting, 30(3-4), 573-588. https://doi.org/10.1111/1468-5957.00008
García-Teruel, P. J., & Martínez-Solano, P. (2007). Effects of working capital management on SME profitability. International Journal of Managerial Finance, 3(2), 164-177. https://doi.org/10.1108/17439130710738718
Linderman, K., Schroeder, R. G., Zaheer, S., & Choo, A. S. (2003). Six Sigma: A goal-theoretic perspective. Journal of Operations Management, 21(2), 193-203. https://doi.org/10.1016/S0272-6963(02)00087-6
Ramachandra, T., & Rotimi, J. O. B. (2015). Causes of payment problems in the New Zealand construction industry. Construction Economics and Building, 15(1), 43-55. https://doi.org/10.5130/ajceb.v15i1.4214
How this BUS 799 Module 1 example is structured
Aspen's catalog describes BUS 799 as an individualized, work-related capstone that benefits the organization. Aspen does not publish module deliverables, so check your classroom for the exact prompt. This example describes the organization, quantifies the problem, grounds its significance in research, sets bounded objectives, names the method and data and maps deliverables to the course.
BUS 799 Module 1 questions, answered
What does BUS 799 Module 1 usually ask for?
The opening work in a graduate business capstone typically asks for a project proposal: the organization, the problem, its significance, objectives, scope, method and timeline. Aspen does not publish module deliverables, so your classroom's instructions govern.
How do I choose a capstone project at work?
Pick a problem that matters financially or operationally, that you can measure with data you can access, and that can be analyzed and planned within the course, with implementation continuing afterward if needed.
What is days sales outstanding?
Accounts receivable divided by average daily revenue, which shows how many days of sales are waiting to be collected.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Aspen University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.