By Josh LaSharr, Well Built Construction Consulting
In the world of construction, the most complex challenges often arise not from the technical aspects of building, but from the intricacies of payment practices. For specialty contractors, managing extended payment timelines and inconsistent cash flow can be just as challenging as the work itself.
Industry norms include “Paid-when-Paid” clauses in subcontracts, whereas prime contracts typically stipulate payment terms of 30 to 60 days. This discrepancy frequently results in actual payments arriving 60 to 90 days after work is completed. Specialty contractors, in effect, become the financial backbone of projects, fronting costs for general contractors and clients alike. The situation worsens when payments are short-paid, delayed, or withheld entirely.
However, there are proactive strategies that can help ensure timely and full payments. One effective approach is the implementation of detailed payment checklists. These checklists should be developed during initial project meetings with general contractors or clients and must reflect all contractual requirements.
A well-structured checklist typically consists of straightforward yes/no items. It should include all necessary documentation to support the general contractor’s Schedule of Values (SOV), such as:
- Monthly lien waivers
- Detailed schedule of values
- Documentation for stored materials (e.g., bills of lading, photographs)
- Insurance certificates
- Pencil copies of expected billings submitted at least five days before final billing
Each billing should undergo a thorough review by a second set of eyes to verify format compliance, completeness of backup documentation, and checklist accuracy. This diligence minimizes resubmissions, delays, and missed billing cycles.
Pencil copies serve a dual purpose: they allow general contractors to preliminarily approve the status of work and provide an opportunity to resolve discrepancies before final submission. Since general contractors often face strict deadlines tied to client payment schedules or financial institution draw requirements, missing these windows can push billing into the next month’s cycle.
Understanding the specific billing terms of each contract is essential. Assumptions can be just as damaging to cash flow as missed submissions. Consistency and attention to detail in billing not only streamline processing but also build a reputation for reliability. Repeated omissions signal poor quality control and can erode trust.
Timely payments are not a matter of luck. Every general contractor follows a process dictated by their client, and every client adheres to procedures tied to cash flow or loan draws. While these timelines may be rigid, they exist for a reason. Specialty contractors who understand and align with these processes can realistically expect payment within 45 days.
About the Author:
Josh is a Senior Consultant for Well Built Construction Consulting, based in the Pacific Northwest. His professional background includes roles across Estimating, Project Management, and field execution for both a Glazing Contractor as well as a General Contractor.
