Following one dollar from cost to cash.
Walk one dollar both ways: costs plus overhead equal revenue, revenue equals billed plus not yet billed, and billed equals paid plus still open.
How federal sponsors pay
Either you invoice them, or you draw the money down from a letter of credit, usually against actual allowable costs.
Draw only what you need right away: advances usually sit in an interest-bearing account, and interest over $500 a year goes back to the government.
One more trap: cost reimbursable does not always mean billing transaction by transaction. Prepaid awards work differently, so do not assume.
A worked example
$10,000 of lab supplies posts to a grant with 50% overhead. The system adds $5,000 of overhead and recognizes $15,000 of revenue.
That $15,000 becomes ready to bill, goes on the sponsor invoice or into the next draw, and is applied when cash arrives. Then tie it out with the three equations above.
Three exceptions to plan for
- A cost after the grant ended. A repair dated after the end date gets held, and it will not bill until someone decides on purpose.
- The sponsor rejects something already billed. Say $2,000. Move it off the grant and the overhead and revenue come off with it, $3,000 in total. Then credit the sponsor the way they want to see credits.
- Spending goes over the limit. The system bills up to the authorized amount and holds the rest until the limit goes up.
Two ways to take this further
The free health check runs sixteen checks on your grants area, and the free Effort Certification Review tests your own export in your browser.
The Sponsored Award Review is the scored version, $1,950 for your whole institution.
More guides like this: Workday Grants guides from an independent consultant.