How Much Is Your Back Office Costing You?
Enter your revenue, trades, average number of jobs, and days to get paid. See your monthly cost in seconds.
Tell us about your business
Select all that apply
Your field service management software
Where your invoices and payments live
How this calculator works
The calculator adds up three monthly costs based on your inputs and trade-specific benchmarks.
Cash tied up in receivables
Slow payments mean you finance customer work with your own cash. The calculator applies a 9% annual cost to receivables above what top performers in your trade carry.
Bad debt
Unpaid invoices are a cost every trade absorbs over time. The calculator applies the write-off rate for your trade to revenue to estimate monthly bad debt loss.
Staff time
Collections work eats hours on reconciliation, invoice follow-up, and payment chasing. The calculator estimates those hours from your revenue band at a value of $33 per hour.
Assumptions
- Cost of capital: 9% annual on receivables above trade benchmark.
- Net margins: 4% to 10% by trade for recovery estimates.
- Collection benchmarks: 20 days for HVAC/plumbing, 30 for electrical/roofing, 35 for fire protection, 45 for MEP.
- Bad debt rates: 0.75% for HVAC/plumbing, 1% for electrical/roofing/MEP, 0.5% for fire protection.
- Manual collections: 8 to 35 hours per week, scaled to your revenue band.
- Staff hourly rate: $33, based on published US bookkeeper and office manager salaries.
Why carrying high DSO costs more than most contractors realize
When customers pay on net terms, you are financing their work with your cash. Field service contractors running commercial work average roughly 57 days in receivables. A contractor with $5 million in annual revenue and 45-day payment terms carries about $616,000 in outstanding invoices at any given time.
Every 10 days you sit above top-quartile performance for your trade locks up additional working capital that could go toward payroll, materials, or growth. When you eventually do collect that money, it drops almost entirely to the bottom line because the cost of doing the work was already spent.
Frequently asked questions
Slow collections cost contractors in three ways: financing receivables above benchmark, bad debt write-offs, and staff time chasing payments. For a $5 million contractor with 45-day payment terms, the monthly cost across all three sources often runs between $8,000 and $15,000.