Contractor Collection Rate & DSO Benchmarks
The single widest gap in contracting is between the revenue you bill and the cash you actually collect. Two of these figures are Level measured, collection rate and billing speed. Days in AR and retainage are cited from external industry sources, and aged AR is a Level field observation. Each row below says which is which.
Key Finding
Level measures a median collection rate of 85.1% (n=464). The top quartile collects 92.7%.
Run the math on the bottom end. A bottom-decile contractor collects a snapshot collections-to-billings ratio below 40% (p10 is 38.8%). An illustrative $10M billing denominator leaves a $6.12M difference, not a certified A/R balance. Reconcile the snapshot periods, opening receivables, credits and unapplied cash to the GL aging before treating that difference as collectible debt. Even a median comparison at 85.1% leaves about $1.5M not converted to cash within that $10M comparison. The 96% top-decile comparison illustrates a smaller ratio gap, but does not establish how much can be recovered. That would be a cash-timing improvement if those balances are valid and collected, not new profit at 100% margin. No new jobs, no new crews, no new trucks.
Collections can be a fast cash unlock when the underlying balances are valid, due and collectible. The measurement window is not published; reconcile aging, credits, retainage and cutoff before estimating available cash.
Collection Benchmark Distribution
Collection rate and billing speed come from the founding team's contractor analysis, aggregated and anonymized, and published in contractor.json. Days in AR and retainage are cited from external industry sources (Level does not measure them), and aged AR is a Level field observation. Each row is labeled with its source and, where applicable, sample size.
| Metric | Bottom Quartile | Median | Top Quartile | Note & Source |
|---|---|---|---|---|
| Collection Rate | 70.7% | 85.1% | 92.7% | Top decile 96.0%, bottom decile 38.8%. Before estimating cash you can collect, check each open invoice for payment timing, credits, disputes and collectibility.Level measured, n=464 |
| Days in AR (DSO) | Separate reference values (not quartiles): ~100+ days (GC / heavy-civil); 56.6 days; ~55 days (MEP / service) | Level does not measure DSO in days. The external CFMA statistic and separate work-type ranges have different populations; they are not Level quartiles.External: CFMA 2024 Construction Financial Benchmarker (days in AR, n=1,290); specialty-contractor filings run ~55 to 100+ days CFMA 2024 | ||
| Billing Speed | not published | 1 day | not published | Slowest decile of post-completion invoicers: 30+ days. Median 1 day includes the ~25% who progress-bill; among post-completion invoicers the Level median is 7 days. Independent commercial mechanical-service research reports a 4-8 day average and says 16% take more than 15 days.Level measured, n=733. External comparison: MSCA 2022 Benchmark Survey MSCA 2022 |
| Retainage Held | Separate reference values (not quartiles): 10% (federal cap); 5% to 10%; ~5% common | Held per progress payment until closeout. Level does not measure retainage.External: federal cap 10% per FAR 32.103; measured averages private 7.59%, federal 3.26% (Bausman, Clemson University) FAR 32.103 | ||
| % of AR Over 90 Days | Separate reference values (not quartiles): 25%+; ~10% to 15%; under 5% | Rough practitioner range from client work, not a measured distribution.Level field observation | ||
What the data tells us
The collection gap is the cheapest cash you will ever raise
Level-measured median collection is 85.1% (n=464), top quartile 92.7%. That cross-company spread is a comparison, not a measured recovery opportunity. For your own book, check aging, credits and retainage, then collect valid invoices that are due; account for incremental collection costs. Before you chase a single new lead to fix a cash crunch, chase the invoices you already sent.
Billing speed is the lever, DSO is the scoreboard
Level measures a median billing speed of 1 day from work complete to invoice (n=733), and about a quarter of contractors progress-bill before the job is even done. Among post-completion invoicers the median is 7 days and the slowest decile hits 30. Days in AR is an external anchor: the CFMA 2024 benchmarker reports about 56.6 days across 1,290 companies. Every slow billing day is an interest-free loan to a customer who never asked for one. Use the DSO calculator to see your own number.
Retainage is contractual cash that quietly disappears
Level does not measure retainage. A 5% to 10% contractual range is a planning reference for private work, separate from the measured federal average, with a 10% federal cap under FAR 32.103, and measured practice averages of 7.59% private and 3.26% federal (Bausman, Clemson University). Well-run shops track it invoice by invoice and bill it back the day the punch list clears. Undisciplined shops finish the job, move the crew, and forget the retainage exists. That is cash still held by the customer while your business carries the receivable.
AR over 90 days collects at a discount, if at all
This one is a Level field observation, not a measured distribution: the shops we work with that stay disciplined keep AR over 90 days under 5%, while the strugglers let it climb past 25%. An invoice that ages past 90 days is far less likely to collect in full, and the older it gets the more it costs to chase. Rising aged A/R is an early warning to compare with your cash forecast.
The CLEAR Framework for Contractors
Learn moreEvery contractor runs on five financial pillars. Collection sits at the center of the C pillar, where completed work turns back into cash.
Expand all 5 CLEAR financial pillars (Cash, Labor, Earnings, Accounts, Risk)
DSO, collection rate, invoice speed, retainage. Level measures a median collection rate of 85.1% (n=464); a low ratio is a prompt to reconcile invoice aging, credits, retainage and timing before estimating cash to collect.
Hours vs budget, technician utilization, billable capture, callbacks. When jobs run over their hour budget, the fix is measurement by job and crew, not more headcount.
Job-level margins, service agreement profitability, install vs service mix. Most contractors know their total margin but not which jobs are underwater.
Quote conversion rate, pull-through revenue, and customer retention. Keep recurring contract value separate from downstream work so both can be managed honestly.
Customer concentration, warranty exposure, bonding capacity. A single customer above 20% of revenue prompts a downside review of margin, cash and contract durability.
Frequently Asked Questions
What percentage of billed revenue does a typical contractor collect?
The founding team's analysis puts the median collection rate at 85.1% across 464 contractors. The top quartile clears 92.7% and the top decile reaches 96%. The bottom quartile sits near 70.7%, and the bottom decile near 39%, a snapshot ratio of collections to billings, not a payment-deadline measure or proof that the remainder is uncollectible. This is not a sales problem. The work was won, the job was done, the invoice went out. It is a cash problem, and it can be faster to address than new sales once the valid, due receivables are reconciled.
What is a good DSO (days sales outstanding) for a commercial contractor?
Level does not measure DSO in days directly (it measures collection rate and billing speed), so the days figures here are cited from external industry sources. The CFMA 2024 Construction Financial Benchmarker reports about 56.6 days in accounts receivable across 1,290 companies. Public specialty-contractor filings range from roughly 55 to 100-plus days depending on segment: MEP and service collect faster, general and heavy-civil work slower, because of progress billing, retainage, and lien-waiver paperwork. The number that matters is not the average, it is how far your slowest invoices lag, because that tail is where your line of credit gets drawn down.
Why is collection a cash-flow problem and not a sales problem?
To the extent the gap reflects valid, due invoices, it is revenue already earned. Reconcile aging, credits, retainage and timing first. You bid the job, staffed it, bought the materials, and finished the work. Chasing new sales to cover a cash shortfall means paying commission and material cost again on revenue you have not collected on the first job. Closing the gap between the bottom quartile at 70.7% and the top quartile at 92.7% can release cash without winning new work. Collecting existing receivables does not create new accrual revenue or profit; recovery of previously written-off debt can have a different accounting effect.
How fast should a contractor invoice after completing work?
The founding team's analysis puts median billing speed at 1 day from work complete to invoice across 733 contractors, once you include the roughly one in four that progress-bill (they invoice before the work is even finished). Among contractors who invoice only after completion, the median is 7 days, and the slowest decile takes 30 days or more. A 10-day billing delay is a 10-day interest-free loan to a customer who did not ask for one. Billing speed is the single cheapest lever on DSO.
Operating review
Questions before escalating collections
The margin, cash, and operating questions we check first when reviewing your numbers.
Is slow collection concentrated in a few customers?
One average collection period can hide a different payment pattern among the largest balances.
Are credits or unapplied receipts making invoices look overdue?
Invoice status and cash received can disagree when applications or credits are unresolved.
Which clock does your aging report use?
Invoice date, contractual due date and the report cutoff answer different questions.
Simple pricing
Three tiers, one ladder.
$500+/mo
Bookkeeping
The clean data layer: monthly books, reconciliations, and organized financials AI can work with.
$1,500-$5,000/mo
Scale
The full AI operating layer: custom agents, weekly actions, and benchmarks to grow margin per hour.
Custom
Platform / Multi-Office
Multi-branch benchmarking and scorecards for PE-backed and multi-location groups.
How much cash is trapped in your collection gap?
Once you give us access to the agreed records, compare your cash-to-billings ratio with the 464-company research sample and billing speed with 733 companies. Review DSO and retainage against their separate sources, then reconcile which invoices are due.
No commitment. Real numbers, not generic advice.