Payment Collection Delays Hurting Cash Flow? How to Get Paid Faster
Payment collection delays hurt cash flow and limit your shop's ability to grow.
The average countertop fabrication shop waits 30-45 days to collect payment after installation, tying up $80,000-$200,000 in outstanding receivables at any given time - cash that could be used to buy material, make payroll, or invest in equipment instead of sitting in a customer's unpaid invoice pile. Slow payment collection is the #1 cash flow problem in countertop fabrication, and it's almost entirely caused by manual invoicing processes, unclear payment terms, and the absence of easy online payment options.
TL;DR
- Average collection time in countertop fabrication: 30-45 days after installation
- Outstanding receivables at any given time: $80,000-$200,000 for a mid-size shop
- Late or unpaid invoices affect 15-25% of all jobs
- Automated invoicing with online payment reduces collection time to 7-14 days
- Milestone-based billing (deposit + pre-install + final) reduces outstanding balance risk by 60%
- Online payment options increase on-time payment rates by 40-50%
- Every day of faster collection frees working capital that compounds over time
The Cash Flow Squeeze
Countertop fabrication is a capital-intensive business. You buy expensive material upfront ($2,000-$8,000 per slab), pay labor weekly, and don't get paid until the job is done and the customer writes a check - or, increasingly, until the contractor's AP department processes your invoice 30-60 days later.
The Cash Flow Timeline Problem
| Event | Day | Cash Impact |
|---|---|---|
| Material ordered and paid | Day 0 | -$3,000 to -$8,000 |
| Templating labor | Day 3-5 | -$100 to -$200 |
| Fabrication labor + overhead | Day 7-12 | -$400 to -$800 |
| Installation labor + delivery | Day 14-18 | -$300 to -$500 |
| Invoice sent | Day 18-25 | $0 (waiting) |
| Payment received (residential) | Day 30-45 | +$5,000 to -$12,000 |
| Payment received (contractor) | Day 45-75 | +$5,000 to -$12,000 |
From material purchase to payment receipt, you're carrying $3,800-$9,500 in costs per job for 30-75 days. Multiply that by 80-100 active jobs, and your receivables balance can easily hit $150,000-$300,000.
What Slow Collections Actually Cost
Beyond the obvious cash flow constraint, slow collections create hidden costs:
Credit line interest: If you finance material purchases or payroll through a line of credit because cash is tied up in receivables, you're paying 7-12% annual interest on money that customers owe you.
Supplier discounts lost: Many stone suppliers offer 2-3% early payment discounts (2/10 net 30). If you can't pay within 10 days because you're waiting on your own receivables, you forfeit that discount on every order. At $200,000/month in material purchases, a lost 2% discount costs $4,000/month or $48,000/year.
Mental overhead: Chasing late payments takes time and energy. The office manager who spends 3-5 hours per week sending reminder emails, making collection calls, and reconciling partial payments is not spending that time on activities that grow the business.
Bad debt risk: The longer an invoice goes unpaid, the less likely it is to be paid at all. Invoices over 90 days old have a 20-30% probability of becoming uncollectable.
Why Customers Pay Late
Understanding the reasons behind late payment helps you design a system that prevents them.
The Top Reasons for Late Countertop Payments
| Reason | Percentage | Solution |
|---|---|---|
| Invoice not received or lost | 25-30% | Automated digital invoicing |
| Inconvenient payment method (check-only) | 20-25% | Online payment portal |
| Dispute about final amount or scope | 15-20% | Clear quotes with detailed line items |
| Customer waiting for contractor payment | 10-15% | Direct homeowner billing when possible |
| Simply forgot | 10-15% | Automated payment reminders |
| Cash flow issues (customer's side) | 5-10% | Milestone payments to reduce final balance |
Notice that only 5-10% of late payments are due to the customer's inability to pay. The other 90% are process problems on your side that you can fix.
Building a Faster Payment System
The goal is to reduce your average collection time from 30-45 days to 7-14 days. Here's how.
Strategy 1: Milestone-Based Billing
Instead of billing 100% after installation, split the payment into milestones:
| Milestone | Percentage | When Collected |
|---|---|---|
| Deposit on contract signing | 40-50% | Day 0 |
| Pre-fabrication payment | 25-30% | Before production starts |
| Final payment | 20-35% | Day of installation |
With this structure, you've collected 65-80% of the job value before you even start cutting stone. The remaining 20-35% is due at installation - not 30 days later.
Why this works for customers too: Spreading the payment across milestones is easier for homeowners than paying a lump sum at the end. Most customers prefer predictable payment stages because it matches how they budget for a remodel.
Strategy 2: Automated Digital Invoicing
Replace manual invoice creation with automated invoicing that triggers at each milestone:
When the contract is signed: The system automatically generates and sends a deposit invoice with a "Pay Now" button.
When the template is verified: The system sends the pre-fabrication invoice, reminding the customer that production starts upon payment.
On installation day: The final invoice is sent before or immediately after the installation, with a one-click payment link.
Automated invoicing eliminates the 5-10 day gap between "job complete" and "invoice sent" that exists in most shops.
Strategy 3: Online Payment Options
Accepting online payments isn't optional anymore. Customers expect it.
| Payment Method | Customer Preference | Your Cost (Processing Fee) |
|---|---|---|
| Credit card (online) | 45-50% prefer | 2.5-3.5% |
| ACH bank transfer | 20-25% prefer | 0.5-1.0% |
| Check | 15-20% prefer | $0 (but slow) |
| Financing (third-party) | 10-15% prefer | 3-8% (dealer fee) |
Yes, credit card processing fees cost 2.5-3.5%. But consider the math: collecting a $5,000 invoice 30 days sooner saves you $35-$50 in interest charges on your credit line, recovers $100 in potential supplier early-pay discounts, and eliminates 30-45 minutes of collection effort. The net cost of the processing fee is minimal - and the cash flow benefit is substantial.
Strategy 4: Automated Payment Reminders
Set up a reminder sequence that fires automatically:
| Timing | Method | Message |
|---|---|---|
| Invoice sent | Email + Text | Invoice details with "Pay Now" link |
| 3 days past due | Friendly reminder | |
| 7 days past due | Text + Email | Second reminder with pay link |
| 14 days past due | Phone call | Personal call from office staff |
| 21 days past due | Formal notice with late fee warning | |
| 30 days past due | Certified letter | Final notice before collections |
Automated reminders catch the 25% of late payments caused by "forgot" or "lost the invoice" without requiring any staff time.
Strategy 5: Contractor Payment Terms
Contractor payments require a separate strategy because builders typically operate on 30-60 day payment cycles.
Net-15 terms for established contractors: Offer a modest discount (1-2%) for payment within 15 days. Many contractors will take the discount if the payment process is easy.
Progress billing for large projects: On multi-unit or commercial jobs, bill at defined milestones (every 10 units completed, or every 2 weeks of production) rather than waiting until the entire project is done.
Credit application and limits: Require a credit application for contractor accounts and set credit limits based on payment history. A contractor with a $50,000 credit limit who hits $48,000 in outstanding invoices should be flagged before the next job ships.
Lien rights documentation: Know your state's mechanic's lien filing deadlines and maintain proper documentation. Preliminary lien notices sent at the start of every job are standard practice and motivate timely payment.
Measuring Collection Performance
Key Accounts Receivable Metrics
| Metric | Current (Typical) | Target |
|---|---|---|
| Days Sales Outstanding (DSO) | 35-50 days | 10-18 days |
| Percentage of invoices paid within 14 days | 25-35% | 70-80% |
| Percentage of invoices over 60 days | 8-15% | Under 3% |
| Bad debt write-off rate | 1-3% of revenue | Under 0.5% |
| Collection calls per week | 10-20 | 2-5 |
| Staff hours on collections | 4-6 per week | 1-2 per week |
The Improvement Timeline
| Phase | Implementation | DSO Impact |
|---|---|---|
| Month 1: Milestone billing | Split payments across 3 milestones | DSO drops to 20-30 days |
| Month 2: Online payments | Add credit card and ACH options | DSO drops to 14-22 days |
| Month 3: Automated reminders | Set up reminder sequences | DSO drops to 10-18 days |
| Month 4+: Optimization | Adjust terms based on data | Maintain 10-15 day DSO |
Frequently Asked Questions
What is Days Sales Outstanding (DSO) and why does it matter?
DSO measures the average number of days it takes to collect payment after a sale. For countertop shops, this means days from installation to payment receipt. A DSO of 40 means your average invoice takes 40 days to collect. Reducing DSO from 40 to 15 frees up significant working capital - for a shop doing $200,000/month, that's approximately $166,000 in additional available cash.
Should I require a deposit before starting work?
Absolutely. A 40-50% deposit at contract signing is industry standard for residential countertop work and provides several benefits: it confirms the customer's commitment, covers your material costs, and reduces the final balance that you need to collect after installation. Most customers expect to pay a deposit.
Is it worth accepting credit cards despite the processing fees?
Yes. Credit card processing costs 2.5-3.5% per transaction, but the speed of collection more than offsets the fee. A $5,000 job collected by credit card on installation day versus a check that takes 35 days to arrive saves you interest, collection effort, and bad debt risk. The effective cost of the processing fee is far less than the cost of slow collection.
How do I handle a contractor who consistently pays late?
Start with a direct conversation about payment expectations. If the pattern continues, implement stricter terms: require a deposit before releasing materials to production, shorten payment terms from net-30 to net-15, and charge late fees (1-2% per month, where legally permitted). As a last resort, require prepayment before scheduling installations.
What payment terms should I offer contractors?
Net-15 is ideal for contractors. Net-30 is common but slows your cash flow significantly. Offering a 1-2% discount for payment within 10 days motivates faster payment from contractors who are managing their own cash flow carefully. Always put terms in writing as part of your contractor agreement.
How do I reduce disputes that delay payment?
Provide detailed, itemized quotes that clearly list every charge: material per square foot, edge profiles, cutouts, backsplash, demolition, installation, and tax. When the invoice matches the quote line-for-line, there's nothing to dispute. Change orders should be documented and approved in writing before proceeding.
Should I charge late fees?
Late fees (1-2% per month on overdue balances) are standard practice and legal in most states. The fees serve two purposes: they motivate timely payment, and they compensate you for the cost of carrying the receivable. Always disclose late fee terms in your contract before the job starts.
What is the best way to send invoices?
Digital invoices sent via email with a "Pay Now" link produce the fastest payment. Include the invoice as a PDF attachment for record-keeping, but the payment link should be the most prominent element. Sending invoices by mail adds 3-5 days to the collection timeline and significantly increases the probability of the invoice being lost or ignored.
How do I protect myself from non-paying customers?
Three layers of protection: (1) collect 40-50% deposit before starting work, (2) collect a pre-fabrication payment before cutting stone, and (3) know your state's mechanic's lien filing requirements and send preliminary notices on every job. With milestone billing, your maximum exposure on any job is limited to 20-35% of the total.
Can payment collection be fully automated?
The invoicing, reminders, and online payment processing can be fully automated. The human element remains important for dispute resolution, contractor relationship management, and escalated collection situations. Automation handles the 85% of payments that don't need personal attention, freeing your staff to focus on the 15% that do.
Calculate Your Collection Improvement
Use our free Cash Flow Calculator to see how faster collections would impact your business. Input your monthly revenue, current DSO, and outstanding receivables. See how much working capital you'd free up by cutting your collection time in half.
[Try the Cash Flow Calculator →]
SlabWise includes automated milestone invoicing, online payment processing, and payment reminder sequences built into the same platform that manages your production workflow. Get paid faster without adding administrative work. Start your 14-day free trial today.
Sources
- ISFA, "Financial Management Guide for Surface Fabricators," 2025.
- Countertop Fabricators Alliance, "Cash Flow and Collections Survey," 2024.
- National Kitchen & Bath Association, "Business Operations Benchmarks for Remodelers," 2025.
- SCORE/SBA, "Cash Flow Management for Small Manufacturers," 2024.
- Stone World Magazine, "The Business Side: Getting Paid on Time," January 2025.
- Construction Financial Management Association, "Collection Best Practices for Specialty Trades," 2025.
- QuickBooks, "Small Business Cash Flow Survey: Construction and Trades," 2024.