If the roof's been done for weeks and you're still waiting on insurance money, your accounts receivable needs a system built for how insurance jobs pay. Managing receivables for a roofing contractor comes down to tracking each insurance job through its separate payments (the first check, the depreciation check and any check that has to clear the mortgage company), assigning one person to chase each stage and reviewing an aging report every week. When every job has a stage, a date and an owner, insurance money stops stalling between the homeowner, the carrier and the lender.
It's a strange feeling to have a full schedule and an empty bank account. The crew got paid, the supplier wants their money and the shingles are already on the house, but the check is sitting in someone's mailbox waiting for a signature. That waiting is predictable once you know how insurance claims pay, and the rest of this post walks through each step and how to keep it moving.
Why do insurance roofing jobs take so long to pay?
Insurance jobs pay slowly because the money usually comes in more than one check, and each check depends on someone other than you. The Texas Department of Insurance explains that with replacement cost coverage, "the company will pay with two checks," where the first is a partial payment and the rest comes "after you've started repairs." Policies and state rules differ, so read the carrier's paperwork on each job, but the two-check pattern is common enough that your process should plan for it.
On top of that, the homeowner holds the checks, the mortgage company may need to sign off, and the carrier needs proof the work started. Each handoff is a place where a job can sit for weeks unless someone on your team owns the follow-up.
How do the first check and the depreciation check work?
The first check usually covers the actual cash value of the damage, and the second check pays the depreciation that was held back once repairs are underway. The Texas Department of Insurance's storm claim FAQ puts it this way: "The first check your company will send you will likely be for the actual cash value," and "Once you've started repairs and show proof to your company, they'll send you the remainder to equal the replacement cost."
For your receivables, that means two things. You need the homeowner's first check to cover your deposit and materials, and you need to send the carrier proof of the work, such as photos, the final invoice or a certificate of completion, as soon as the job is done so the depreciation check gets released. If nobody sends that proof, the second check can sit unclaimed while your invoice ages.
What happens when the mortgage company is on the check?
When the homeowner has a loan, the check often comes made out to the mortgage company as well, and the lender has to release the money before it can reach you. The same Texas FAQ says that "the company will usually send the check to your mortgage company," and the homeowner then has to work with the lender "to get the money released for repairs." Texas sets timelines for lenders to respond, and other states have their own rules, so ask the homeowner early who holds their loan.
The practical fix is to start the lender's paperwork the day you sign the job. Ask the homeowner for the loan number and the lender's contact for insurance claims, find out what the lender needs before it will release the funds and put a reminder on the calendar to call every week until the funds are released.
How do I track every insurance job until it's paid in full?
Track each insurance job by stage, with a date and an owner for every step, instead of one open invoice. A simple list works, and so does your roofing software or CRM, as long as everyone uses the same stages.
Here's a set of stages that covers most insurance jobs:
Claim approved, with the scope and the carrier's estimate in the file.
First check received from the homeowner, or waiting on the mortgage company.
Work completed, with photos and the final invoice sent to the carrier.
Depreciation check requested, with the date it was requested.
Depreciation check received and deposited.
Deductible collected from the homeowner.
Paid in full and closed.
Each stage gets the name of the person responsible and the date it moved. When a job sits at one stage longer than you'd expect, it shows up on the weekly review, and someone makes a call before it turns into a 90-day problem.
Never waive the deductible
The homeowner owes their deductible, and covering it for them can break the law. Texas, for example, states plainly on its page about deductibles that "It's illegal for contractors to waive your deductible or help you avoid paying it," and that contractors who do it "could be fined or go to jail." Rules vary by state, so if you work in Oregon, Washington or Idaho, check with your state's insurance regulator, and collect the deductible like any other part of the bill.
What weekly A/R routine keeps roofing cash moving?
A short weekly review of your aging report, with a call list at the end, keeps cash moving better than any one big collection push. In Roofing Contractor's "The Art of Accounts Receivable," Tanja Kern and Trent Cotney recommend reviewing A/R reports weekly, paying close attention to accounts approaching 60 or 90 days, and following a standard sequence of reminders, phone calls and then formal demand letters. Cotney also notes that a call from company leadership can move a stalled account, and says "That personal touch makes all the difference."
If you use QuickBooks Online, Intuit's help page shows where the report lives. Go to Reports, then Standard reports, and in the "Who owes you" section choose the accounts receivable aging summary, or the detail version to see which invoices are past due and by how long. Here's a routine that takes about 30 minutes:
Run the aging report every Monday and compare it to your insurance stage list.
Mark every job that moved backward or didn't move at all since last week.
Assign each one a next step and a name, whether that's a call to the homeowner, the adjuster or the lender.
Send reminders on anything past 30 days and call anything past 60.
Decide as a team which accounts over 90 days need a demand letter or a call to your attorney about lien rights.
Our accounts receivable page covers how we set this up for contractors, and the roofing page talks about the other places margin slips on roofing jobs.
Questions owners ask
Can I waive or cover a homeowner's deductible?
No, and in some states it's illegal. Texas says contractors who waive deductibles could face fines or jail, and padding an estimate to cover one can be fraud, so collect the deductible and check your own state's rules.
When should I send a demand letter or file a lien?
Send a demand letter after reminders and calls haven't worked, usually as an account passes 60 to 90 days. Lien rights have strict deadlines and notice rules that vary by state, so talk to a construction attorney early, ideally before you start the job.
Should my A/R person be paid on collections?
It can help. Kern and Cotney suggest tying collections pay to performance, since hourly roles often lack urgency, but make sure the bonus rewards collecting cleanly and keeping customers, and check how it affects overtime if the person is hourly.
How do I run an A/R aging report in QuickBooks Online?
Go to Reports, then Standard reports, and choose the accounts receivable aging summary or detail under "Who owes you." You can change the aging periods under General options and save the report so it's one click every Monday.
So think back to that finished roof and the check that hasn't come. With every insurance job tracked by stage, someone assigned to each step and a Monday review that catches the stalls, you'll know exactly where that money is and who's going to go get it.
If you'd like to see where else money and handoffs get stuck in your company, the free Foundation Inspection follows a job from the moment a lead comes in to the moment the money's in your bank and asks who owns each step along the way. It takes about an hour with no paperwork in front of you, and it shows you which handoffs would free up the most of your week.
I'm Tim Volner, and I run Sentric Group in Salem, Oregon, where I work with contractors who've built a solid company but have reached the point where it can't seem to run for a single day without them.