Getting paid on commercial work

Commercial subcontract payments can pass through owner, lender and general-contractor review before reaching you. Before bidding, establish the billing cutoff, required documents, payment trigger and retainage terms. Use those dates to check how much cash you need to fund the work.

How the money actually moves

When you subcontract to a GC on a financed private project, the payment chain may look like this:

Owner → (construction lender) → general contractor → you.

On a financed project, the owner may request lender draws supported by inspections and payment certification. The financing and construction contracts determine who reviews the work and releases funds.

The GC may combine subcontractor applications into its application to the owner. Check any clause linking your payment to the owner’s payment: pay-when-paid addresses timing, while pay-if-paid attempts to make upstream payment a condition of your right to payment. Effect and enforceability depend on the wording and state law. Have a construction attorney review the actual clause before signing.

How work, billing and payment dates can differ

The following is an illustrative cycle, not a measured average or a payment deadline. Replace each step with the dates and terms for your project.

Your subcontract, applicable prime-contract terms and payment law govern the actual deadlines. A GC’s historical check run does not by itself extend a legal due date. The two dates worth writing on the wall are your pay app cutoff and the day the GC historically cuts checks. Missing the cutoff can move your application into the next billing cycle. Confirm the actual submission, approval and payment dates before forecasting the delay.

Check whether the GC requires a payment application

A commercial contract may require a payment application with a detailed progress breakdown and supporting documents. AIA’s G702 instructions explain one established format, used with the G703 continuation sheet. Ask which forms or portal your GC requires.

The continuation sheet lists your scope broken into line items — the schedule of values — with the contract amount for each. Each month you record completed work and eligible stored materials. On AIA G702, the current payment due is total earned less retainage, minus previous certificates for payment. Those previous certified amounts may still be unpaid: track their outstanding balances separately instead of requesting the same work again in the current application. Materials delivered and stored on site can sometimes be billed before installation, if the contract allows it and you can document delivery.

Two consequences follow. Your schedule of values is set at the start and you bill against it for months, so a lumpy breakdown haunts you — do not bury 40% of the contract in a single "finishes" line. For extra work, record the description, price and schedule impact and obtain approval from an authorized person before starting. Follow the subcontract’s change procedure; a superintendent’s verbal instruction may not satisfy it.

The paperwork that gates the first check

Ask accounts payable for its vendor and billing checklist. Depending on the job, it may include:

• A signed subcontract and any exhibits
• A completed W-9 with the taxpayer name and TIN required by its instructions; a disregarded entity generally identifies its owner on line 1 and uses the owner’s applicable TIN
• Evidence of the insurance limits and additional-insured coverage the subcontract requires; obtain the actual endorsement where needed, not just a certificate
• Proof of workers' comp coverage, or a state-accepted exemption if you have no employees
• Your contractor license number, and a purchase order number if the job uses them
• Certified payroll reports where the contract or applicable law requires them
• The appropriate conditional lien waiver with a current pay application, and releases for previous payments as required

Get all of it in before you start. Confirm receipt and acceptance of the package rather than assuming silence means it is ready for payment.

Lien waivers, retainage and the cost of payment terms

Each of these has its own guide, because each can cost you real money on its own.

• Lien waivers. A contract may require one with each draw, and signing the wrong form can release rights you still need. See lien waivers explained.
• Retainage. An amount held from progress payments that can tie up cash, including some or all of the job’s profit. See retainage on commercial work.
• Whether you can afford the terms at all. See Net 30 for small contractors.

Separately, on federal construction work, FAR 52.232-27 sets payment obligations where incorporated. On public or bonded work, payment-bond rights may be the remedy when payment stops instead of a mechanic’s lien on public property. The deadline and notice rules are statutory and can be short. Ask who the surety is at signing and get state-specific advice before one runs.

Can you afford to be a sub on this job?

This is the number to run before you bid, not after you win.

Initial cash gap ≈ monthly cash cost × days to first payment ÷ 30
Retainage exposure = contract amount × retainage percentage

For an illustrative $60,000 four-month tenant improvement, suppose cash costs run $12,000 a month. A first payment on day 70 leaves an initial gap of about $28,000. Ten percent retainage would total $6,000 by closeout. These are separate exposures at different points; build a dated cash-flow schedule to find the actual peak rather than automatically adding them. If your account cannot absorb $28,000 for two months on top of your existing work, the job is not too big for your crew — it is too big for your bank balance. Bidding a smaller first scope with that GC is a legitimate way to find out how they actually pay.

Keeping the priced breakdown and the billed one the same

Everything above assumes your schedule of values matches what you priced. In DoneQuote you build the scope as line items with the numbers you calculated, so the breakdown you agreed to is the one you carry into each month's pay application — and when a change comes up mid-job, record its scope, price and schedule impact and get approval before starting. Prepare and track the pay applications separately, carrying over the approved breakdown manually.

What to do on your first commercial job

Ask for the pay app cutoff date and the GC's check-run schedule in the same conversation as the price. Submit your compliance documents the week you sign, not the week you first bill. And put the date of your first expected payment in your calendar so you find out early whether this GC pays the way they said they would.