What Slow AR Really Costs a Construction Business

Most construction and oilfield finance teams know their receivables run slow. Fewer have put a number on what that costs, and the number is usually bigger than expected, because it hides in three different places.

The short version: slow AR costs you in cash tied up on the balance sheet, the financing cost of carrying that cash, and the staff hours spent chasing it. Sizing all three is the first step to fixing it.

The cash trapped in receivables

Every day of DSO is roughly one day of revenue sitting in someone else's bank account. A firm doing $20 million a year carries about $55,000 of revenue per day, so moving from a 62-day DSO to a 52-day DSO frees roughly half a million dollars of cash. That is a one-time unlock, not a yearly saving, but it is real, and for a business running on a borrowing base it directly raises availability.

The cost of carrying it, and the staff time

If you finance operations on a revolver or borrowing base, as most industrial-services firms do, the cash trapped in AR is cash you are paying interest on. At a 10 percent cost of capital, every $500,000 freed is about $50,000 a year you stop paying the bank. That one recurs. Then there is the time: a team spending ten hours a week on collections is spending roughly a quarter of an AR salary just on follow-up.

General AR advice misses what makes industrial receivables hard: retainage that sits until a job closes, pay applications on the owner's schedule, lien-waiver exchanges, and change orders that move the invoice. Generic dunning tools do not speak that language, so they either annoy good customers or quietly do nothing.

Brae is an AI agent for accounts receivable, built for industrial services companies on QuickBooks Online, with Viewpoint Vista in development. It sizes the slow-AR problem and then works it, drafting prioritized follow-ups your team approves. A person approves every send. Apply to the Founding Design Partner Program →