On Every Restoration Job, Either You Finance the Work or the Customer Does

On every job you either finance the work or the customer does. Most restoration owners could not tell you, job by job, which one it is. The answer is sitting in your billing terms, and for a lot of shops it is you.

Here is how that happens. A crew mobilizes on Monday. Payroll, equipment, disposal fees and subcontractors go out that week and every week after. The invoice goes out when the scope is written, and the money comes back when the carrier or the homeowner gets to it. The gap between those two dates is a loan, and you made it without a term sheet, an interest rate, or a credit check on the borrower.

Why this is a billing problem, not a collections problem

When cash runs tight, the instinct is to chase receivables harder. That helps, but it treats the symptom. Collections only start after you bill, and the timing of your billing was decided when you set the job up.

A healthy contractor shapes billing so cash comes in step with costs going out. Construction has done this for a long time with deposits, milestone billing and progress draws. Restoration owners often skip it because the work starts as an emergency and the paperwork feels like a delay. The result is a business that finances its customers and calls it "slow pay."

This is practice, not a study. I am not citing a statistic here, because the right structure depends on your contracts, your state and your carriers. The logic, though, is plain arithmetic: every day a dollar sits between your bank account and someone else's, you are paying for it with your credit line or your own working capital.

The restoration translation

Restoration has three payers, and each one calls for a different tool.

Homeowner-paid work. Deductibles, uncovered scope and cash jobs are the cleanest case. A deposit at signing, and progress billing tied to stages of the work, keep you out of the lender's chair. Where your contract and your state's rules allow it, a reasonable deposit is not aggressive. Deposits and draws are standard practice across the construction trades.

Carrier-paid mitigation. You usually cannot demand money up front from a carrier, but you control when the invoice leaves your office. The job that finishes Friday and is invoiced the following month has cost you an extra month of financing. Bill on completion of each phase, with the documentation attached, so the invoice is never the thing holding up payment.

Carrier-paid reconstruction. Many policies pay the actual cash value (ACV, meaning replacement cost less depreciation) first and release the recoverable depreciation later. The move is to invoice the ACV promptly once the scope is approved, then bill the holdback separately when the work is complete. Treat those as two receivables with two clocks, because they are.

Four moves that shift the financing

1. Add a deposit and a draw schedule to your standard contract language. Have your attorney review it against your state's rules. A schedule that says when money is due removes the awkward conversation, because the answer is already in writing.
2. Invoice ACV the day the scope is approved. Put a named person on it. Approval without an invoice is cash you earned and did not ask for.
3. Bill mitigation by phase, not at the end. Drying, demolition and equipment days can be invoiced as they complete, with logs and photos ready. Smaller, earlier invoices are also harder to dispute than one large one.
4. Track net cash position per job. For each open job, add cash collected and subtract cash spent. If the number is negative on a job that is still running, you are the bank on that job, and you should know by how much.

The fourth move is the one that changes behavior. Once a job shows a negative cash position on a dashboard, "we will get paid eventually" stops being a comfortable answer.

The goal

The target on any job is a net-positive cash position from start to finish, not a heroic collection at the end. Some jobs will not get there, because a carrier will not pay early and a homeowner has no cash. Those are the jobs to price for, and to size your credit line around, on purpose.

Setting billing terms, watching net cash by job and forecasting when the next deposit or draw lands is a large part of what a fractional CFO does for a restoration company. If you want help building that, see our CFO subscription, or reach out and we can look at your open jobs together.

General guidance for restoration and reconstruction owners, not a substitute for legal or tax advice tailored to your company, contracts and state.

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