Slow Pay Is a Line Item, Not an Annoyance

You know the feeling. The job's done, the work is good, the homeowner is thrilled — and six weeks later you're still waiting on the money, floating payroll and equipment rental on your own dime. Most owners file that under "the cost of doing business" and move on. It isn't the cost of doing business. It's a specific, measurable cost — and once you measure it, you can do something about it.

The number: $280 billion, and it's getting worse

According to Rabbet's 2024 Construction Payments Report — industry data from a construction finance software company — slow payments cost the U.S. construction industry an estimated $280 billion in 2024. The same survey found that 82% of contractors now face payment waits of over 30 days, up from 49% just two years earlier. Rabbet estimates those delays added the equivalent of about 14% to total construction costs for the year.

Here's the detail that tells you it's gone from annoyance to emergency: 98% of general contractors reported leaning harder than ever on personal savings, credit cards, and retirement funds to float the gap — including a 150% jump in owners tapping retirement savings to keep the doors open.

Read that last part twice. When the fix for slow pay is your retirement account, slow pay isn't a nuisance. It's a financing problem you're solving with the most expensive money you own.

The restoration translation

Restoration doesn't just share this problem — it has the worst version of it. In ordinary construction the payment chain runs owner to general contractor to subcontractor. In restoration you add two more links that don't move fast: the carrier and the mortgage company.

Walk the actual timeline. You mobilize in week one — crew on overtime, equipment out, subs lined up — and you spend real cash immediately. Then you wait. For the adjuster to approve scope. For supplements to clear. For the carrier to pay actual cash value first while holding recoverable depreciation until the rebuild is documented and finished. And on larger losses, for a mortgage company to release funds in draws. Every one of those is a delay you are financing. The homeowner is happy; your bank account is doing the work.

Slow pay has a price — and you can calculate it

Here's the CFO move most owners never make: put a dollar figure on the wait.

Say you have $80,000 in ACV and recoverable depreciation sitting on a job for 60 days, and your line of credit runs 10%. That float costs you roughly $1,300 in interest before you collect a dime of it. On a job running a 12% net margin, you just handed a slice of the profit back to the clock. Multiply that by every open job and you'll see exactly why a "great year" can leave the checking account thin.

That example is illustrative — plug in your own numbers — but the logic holds: slow pay is an interest expense whether or not you ever write it down. The industry already knows this. In the same report, over 75% of subcontractors said they now raise their bids specifically because of payment delays. They're pricing the wait in. If you're not, you're the one eating it.

Four moves that turn the wait into a managed cost

1. Bill ACV the day scope is approved — don't wait for "done." The biggest cash lever in restoration isn't doing the work faster; it's invoicing the work you've already earned the moment the carrier lets you.
2. Track recoverable depreciation as a real receivable, not "bonus money at the end." It's earned income with a completion trigger. Give it a line, a balance, and someone whose job is to chase it — or it just sits.
3. Start the mortgagee draw process on day one of a large loss. The endorsed-check, draw-schedule dance is the slowest link in the chain. Every day you wait to start it is a day bolted onto the back end.
4. Price the carrying cost into the job. If a claim is going to float 60 to 90 days, that financing cost is a real cost of the job. Build it into your margin target the way three-quarters of the industry already builds it into their bids.

Underneath all of it: set up the line of credit before you need it, size it to your worst mobilization cycle, and stop using personal savings as your working capital. A 13-week cash flow forecast that maps each open job to its expected payout window turns "why is cash so tight when we're this busy?" into a number you can see coming — and plan around.

The freeing part is the same as the uncomfortable part. If waiting to get paid is costing you real money — and across the industry, at $280 billion, it plainly is — then getting paid faster and pricing the wait are as much a part of your margin as the work itself. Revenue is what you earned. Cash is what you can actually use. In restoration, the gap between them is measured in days, and days have a price. If you want help putting a number on yours, that's a conversation worth having.

General guidance for restoration and reconstruction owners — not a substitute for advice tailored to your company's numbers.

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