The Construction AR Playbook
Master retainage tracking, GC payment cascades, and back-charge disputes. Best practices for specialty contractors, GCs, and suppliers.
Why construction AR is different
Construction AR isn't about chasing late invoices—it's about navigating complex payment chains, managing retainage, and protecting lien rights while maintaining relationships you'll need on the next project.
Retainage Tracking
5-10% of every invoice sits in retainage for months or years. Tracking what's releasable across hundreds of projects is a full-time job.
Automated retainage aging with milestone tracking and release triggers
GC Payment Cascades
When the GC doesn't get paid, neither do you. But you often don't know there's a problem until it's too late.
Payment chain visibility and early warning when upstream payments stall
Back-Charge Disputes
Back-charges appear months after work is complete. Documentation is scattered. Resolution takes forever.
Centralized dispute tracking with document attachment and automated follow-up
Lien Rights Management
Miss a notice deadline and you lose your lien rights. Every state has different rules.
Automated preliminary notice tracking with state-specific deadline alerts
Project-Based Complexity
Every project has different terms, different contacts, different billing requirements. Standard collection approaches don't work.
Project-aware collection workflows that understand construction billing
Construction AR benchmarks
How does your AR performance compare?
Average DSO
Industry Typical
65-85 days
With Able Collect
45-60 days
Retainage Recovery Rate
Industry Typical
85-90%
With Able Collect
95-98%
Dispute Resolution Time
Industry Typical
45-90 days
With Able Collect
15-30 days
Bad Debt Write-off
Industry Typical
2-4%
With Able Collect
0.5-1.5%
Best practices for construction AR
Strategies that work for specialty contractors, GCs, and construction suppliers.
Segment by Project Type
Commercial, residential, and government projects have different payment patterns. Your collection strategy should reflect this.
- Government projects: Focus on compliance documentation—payment is usually reliable once paperwork is complete
- Commercial projects: Watch the payment chain; GC cash flow issues cascade quickly
- Residential: Tighter follow-up cadence; smaller contractors have less cash buffer
Track Retainage from Day One
Don't wait until project completion to think about retainage. Start tracking at first invoice.
- Record retainage terms for each project at setup
- Track milestone completions that trigger release eligibility
- Send retainage release requests immediately upon eligibility—don't wait
- Follow up every 30 days on unreleased retainage
Document Everything
In construction disputes, documentation wins. Make it easy to attach and find docs.
- Attach delivery tickets, signed work orders, and change order approvals to invoices
- When disputes arise, gather documentation before engaging with the customer
- Create standardized dispute response templates with document checklists
Know Your Lien Rights
Lien rights are your ultimate leverage. Don't let them expire.
- Track preliminary notice requirements by state and project type
- Set automatic reminders 30, 14, and 7 days before deadlines
- Escalate to legal review when approaching lien filing deadlines
- Use lien rights as leverage—the threat of filing often accelerates payment
Build GC Relationships
Your collector's relationship with GC AP departments can make or break your cash flow.
- Assign dedicated collectors to your largest GC relationships
- Regular check-ins even when accounts are current
- Understand each GC's pay cycle and plan follow-up accordingly
- Escalate to project managers when AP isn't responsive
5 Proven AR Recovery Programs
Based on what works for companies like yours. Configure the triggers, thresholds, and escalation paths to match how your team operates.
Early Delinquency Outreach (30-60 Days)
The problem: Invoices drift to 90+ days simply because no one followed up early.
The approach: Automatically identify at-risk invoices, generate professional outreach, track promises, escalate when needed.
Configure it: Set your balance thresholds, aging windows, and escalation timing.
High-Risk Recovery (90+ Days)
The problem: Large aged balances linger with no structured plan—then become write-offs or deep discounts.
The approach: Surface high-risk projects automatically, consolidate the full picture, generate recovery strategies and customer communications.
Configure it: Define your risk thresholds, escalation paths, and settlement approval workflows.
Dispute Fast-Track
The problem: Disputes sit open for months. Cash stays stuck. Write-offs grow.
The approach: Centralized dispute queue, AI-generated investigation summaries, automatic escalation when disputes age past your target.
Configure it: Set resolution targets (e.g., 30 days), escalation triggers, and approval workflows.
Credit Risk Monitoring
The problem: By the time you see the warning signs, the damage is done.
The approach: Continuous monitoring of payment behavior, promise patterns, and dispute frequency. Early warning alerts before accounts go delinquent.
Configure it: Define your risk thresholds, alert recipients, and recommended actions by risk level.
Project Close-Out
The problem: Retainage and small balances leak at project end. No one owns the follow-through.
The approach: Detect projects entering close-out, generate checklists, track retainage release conditions, assign tasks to PM and AR.
Configure it: Set your close-out triggers, retainage thresholds, and task assignments.
$1.5M-$2.4M
Combined annual improvement for mid-size construction companies
*Based on outcomes from companies with $100-200M revenue and $15-20M in open AR. Impact scales with your AR volume—larger companies with more AR outstanding see proportionally larger results.
See Able Collect for construction
We'll show you how Able Collect handles retainage, payment chains, and construction-specific disputes.