May 1, 2026
Why is AR aging different for restoration companies? Restoration AR aging is structurally different from other industries because payment depends on insurance claim processing timelines — not just customer payment behavior. A job in the 90–120 day aging bucket may be perfectly healthy (awaiting supplement approval) or a serious collection problem (disputed claim). Managing restoration AR requires understanding the reason behind aging, not just the duration.
Standard AR aging buckets — 0–30, 31–60, 61–90, 90+ — were built for businesses where slow payment means the customer is in trouble. In restoration, a job sitting at 75 days may be waiting on a supplement approval that was filed on day 10. A job at 110 days may be in active escalation with an adjuster who disputed the scope on day 45. Neither of these is a bad debt situation — they’re normal insurance claim timelines. Managing restoration AR well means understanding the reason behind the aging, not just the number.
A restoration AR aging report needs four dimensions that standard accounting software doesn’t provide by default. First: payment source bucket. Separate insurance AR, TPA program AR, direct commercial AR, and self-pay residential AR. Each bucket has different expected payment timelines and different follow-up protocols. Combining them into a single aging report obscures what’s actually happening. Second: reason code. For every job past 45 days, there should be a note — awaiting supplement approval, disputed scope, awaiting COC signature, in escalation, or genuinely past-due. A job at 90 days with a “supplement submitted day 12, awaiting adjuster review” note is not the same as a job at 90 days with no note. Third: last contact date and next action. Every aging invoice should have a documented follow-up trail. Fourth: estimated collection probability. 90%+ for jobs in normal processing, 70% for jobs with open disputes, 30–50% for jobs in escalation, lower for genuinely contested coverage situations.
Standard insurance work (non-program): Target average days to payment: 35–50 days. Healthy aging: 80%+ of AR under 60 days. Yellow flag: more than 20% over 90 days. Red flag: more than 10% over 120 days. TPA program work: Target average days to payment: 45–65 days (portals add processing time). Healthy aging: 75%+ under 75 days. Direct commercial (net-30 terms): Target average days to payment: 30–45 days. Invoices 60+ days should trigger active follow-up. Self-pay residential: Target collection within 14 days of job completion. This AR ages fastest and has the highest bad-debt risk — get COC signatures and payment agreements before job start.
Day 30: Confirm invoice was received and is in processing. Document the confirmation. Day 45: Status check — is there a specific reason for delay? Supplement pending? Documentation requested? Get a specific expected payment date. Day 60: Escalation call — not to the adjuster, to the adjuster’s supervisor or TPA portal dispute process. Document. Day 90: Formal written demand. Reference prompt pay statute if applicable. Copy the supervisor. Day 120+: Evaluate for public adjuster referral, attorney engagement, or write-off decision. The write-off decision should be made deliberately — not because the invoice aged out of sight, but because a conscious choice was made that further collection effort isn’t cost-effective.
A healthy distribution for insurance-heavy restoration: 60%+ of AR under 45 days, 25–30% in 45–90 days (normal insurance processing), less than 10% in 90–120 days, and less than 5% over 120 days. If your 90+ bucket consistently exceeds 20% of total AR, you have either a supplement discipline problem, an invoicing speed problem, or a follow-up cadence problem — usually all three.
Supplement disputes are usually resolvable with additional documentation — the original claim was paid, you’re negotiating additional scope. These typically resolve within 30–60 days of escalation. Outright claim denials involve a coverage question — the carrier is disputing whether the loss is covered at all. These are harder, longer, and often require homeowner-side advocacy (public adjuster or attorney). Know which category you’re in before allocating collection resources.
When the estimated cost of further collection effort exceeds the estimated probability-weighted recovery. For most restoration companies, this threshold arrives somewhere between 150–180 days for genuinely disputed claims with no clear resolution path. Do not write off passively — the write-off should be a documented decision with a clear reason code, so you can track patterns across your AR portfolio.
Mike McCabe is The Profit Detective — a 36-year restoration industry veteran and Fractional Operations Manager at Floodlight Consulting Group.
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