Getting paid on commercial work

A general contractor calls about a tenant improvement. Four months of steady work, roughly $60,000 for your scope, no homeowner second-guessing the price. It might be the best job you have been offered all year.

It is also a completely different way of getting paid. On residential work you hand over an invoice and a person writes a check. On commercial work your money travels through two or three other companies first, and each has its own cycle, its own reviewer and its own list of documents you have to hand in before anything moves.

How the money actually moves

Your invoice is not going to the person who has the money. On a typical private commercial job the chain looks like this:

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

If the project is financed, the owner is not paying out of a checking account. They are requesting a draw from a construction lender, and the lender releases funds after someone inspects the work — a lender's inspector, the project architect, or both. The architect's job is to certify that the amount being billed matches the work in place.

The general contractor sits in the middle. It collects a pay application from every subcontractor, checks each against the schedule of values, rolls them into one application to the owner, and pays subs after the owner pays. That last part is often written into your subcontract as a pay-when-paid or pay-if-paid clause. The two are not the same thing, and states treat them very differently — some void pay-if-paid clauses outright, others enforce them if worded precisely. Have a construction attorney read that clause before you sign with a new GC, not after the first slow month.

Where the weeks go

Nothing in the chain is unreasonable on its own. Stacked, they turn a month of work into a two-and-a-half-month wait.

Every one of those windows comes from your subcontract and the prime contract above it, so treat the table as the shape of the cycle rather than a promise. The two dates worth writing on the wall are your pay app cutoff and the day the GC historically cuts checks. Miss the cutoff by one day and your work sits unbilled for a full extra month — the single most expensive administrative mistake in commercial subcontracting.

The pay application is not an invoice

Commercial billing runs on a pay application, not a one-page invoice. The industry-standard format is a pair of AIA forms: the G702 application and certificate for payment, and the G703 continuation sheet. Many GCs use their own version, or a portal like Procore, Textura or GCPay that produces the same thing on screen. The structure is what matters.

The continuation sheet lists your scope broken into line items — the schedule of values — with the contract amount for each. Each month you fill in the percentage complete per line, and the form calculates what is now due: earned to date, minus retainage, minus what has already been paid. 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. And work nobody signed for cannot be billed. A superintendent's verbal go-ahead is not a change order; get it written and priced before you do it, or it becomes a closeout argument you will lose.

The paperwork that gates the first check

New subs are usually surprised that the delay on payment number one is theirs, not the GC's. Before the accounting department will process anything, expect to have submitted:

• A signed subcontract and any exhibits
• A completed W-9 with your legal entity name and EIN, so the GC can issue a 1099-NEC or process you as a corporation
• A certificate of insurance for general liability at the limits the subcontract requires, naming the GC as additional insured
• 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
• A signed lien waiver with each pay application

Get all of it in before you start. An invoice missing a PO number or a current certificate of insurance does not get rejected loudly — it just sits.

Three mechanics that decide what you clear

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

• Lien waivers. You sign one every month, and signing the wrong form can release rights you still need. See lien waivers explained.
• Retainage. A percentage of every payment held back until closeout, which is your profit sitting in someone else's account. See retainage on commercial work.
• Whether you can afford the terms at all. See Net 30 for small contractors.

Separately, 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.

Cash to carry = monthly cost of your work × (days from first day on site to first payment ÷ 30)
                + retainage held to closeout

On that $60,000 four-month tenant improvement, say your labor and material run about $12,000 a month. If your first payment lands around day 70 and retainage is 10%, you carry roughly $28,000 through the gap and another $6,000 to closeout. 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, you price it and get it approved in writing before it turns into unbillable work.

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 — because the second commercial job is worth taking only if the first one paid.