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Construction B2B payment is a contract-controlled workflow, not a universal “net 30” promise. A typical payment moves from contract setup and progress measurement to a properly formatted invoice or pay application, review and certification, payment to the contracting party, and then payment down to subcontractors and suppliers. The payment clock, documents, retainage, dispute treatment and deadlines depend on the agreement and the law governing that project.
This guide shows contractors, subcontractors, suppliers and project administrators what to verify at each stage, how progress applications differ from ordinary invoices, how federal and provincial prompt-payment examples work, and how to diagnose a late or incomplete payment.
What a construction payment actually includes
Construction payment is an exchange of money for contract-defined work, materials or services after a series of checks. Submitting a document starts the process; it does not by itself prove that the application is complete, approved or due. The reviewer may still need to confirm quantities, percent complete, approved changes, stored materials, quality records, insurance, releases and other conditions.
Most commercial projects use progress billing. Instead of waiting for final completion, the contractor reports earned value for a billing period and requests the amount due under the contract. A supplier may submit a routine invoice for delivered goods, while a general contractor or subcontractor often submits a detailed payment application tied to a schedule of values.
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Every tier has its own agreement. An owner’s payment to a general contractor does not automatically establish the date on which a subcontractor or supplier is paid. Lower-tier timing, notice requirements and payment-flow provisions must be checked in the applicable subcontract, purchase order and governing law.
Step 1: Set up the payment rules before work starts
Payment problems are easiest to prevent during contract review. Create a one-page payment profile for each project and keep it with the executed agreement.
Record the commercial terms
- Legal name and address of the payee, payer and each contracting tier.
- Scope, pricing basis and the schedule of values or other method used to measure earned work.
- Billing-period dates, monthly cutoff, submission deadline and time zone.
- Required invoice or pay-application title, form, file type, portal and email address.
- Reviewer, architect, engineer, owner representative or other certification authority.
- Payment trigger: receipt of an invoice, receipt of a proper invoice, acceptance, certification or another event.
- Whether the clock uses calendar days or business days, and when day one begins.
- Payment method, remittance information and reconciliation contact.
- Retainage or statutory holdback percentage, release event and any notice needed for release.
- Notice, cure and dispute procedures, including the deadline and delivery method.
- Required insurance certificates, payroll or compliance records, lien waivers, affidavits and other backup.
- Whether payment terms and notice obligations flow down to subcontractors and suppliers.
Do not assume that a “net 30” line answers all of these questions. It may not say whether the 30 days run from invoice receipt, proper-invoice acceptance, owner certification or another event, nor whether weekends and holidays count.
Step 2: Measure work during each billing period
Progress billing requires a reliable period-end record. Update the schedule of values or pricing ledger for:
- Work completed and accepted during the period.
- Materials delivered or suitably stored when the contract permits billing before installation.
- Approved change orders and their revised values.
- Prior applications and payments.
- Current retainage or holdback.
- Remaining contract balance and approved commitments.
Keep contemporaneous evidence: delivery tickets, daily reports, photographs, inspection approvals, timesheets, subcontractor statements and change-order authorizations. A reviewer can reduce or defer a line that cannot be tied to the contract scope or supporting record.
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Step 3: Submit the right document
Routine invoice versus progress application
| Document | Typical use | What it must establish |
|---|---|---|
| Supplier invoice | Goods or services delivered under a purchase order | Purchase-order reference, delivery or service date, quantities, unit prices, tax and remittance details |
| Progress payment application | Earned value on a construction contract | Schedule-of-values detail, current and cumulative work, stored materials where allowed, changes, prior payments, retainage and amount requested |
| Final application | Closeout and final contract balance | Final quantities, releases or affidavits required by the contract, completion evidence and any other closeout certifications |
The contract controls the label and format. Sending a familiar invoice when the agreement requires a pay application can make the submission “improper” and restart or delay the payment clock.
AIA G702 and G703 as a form example
A common private-project workflow pairs AIA G702–1992, “Application and Certificate for Payment,” with G703–1992, the “Continuation Sheet.” G702 presents the application and certification; G703 supplies the continuation detail by schedule-of-values line. AIA describes the pair as tools for a contractor to apply for payment and an architect to certify the amount due. AIA also offers digital and other form versions, so G702/G703 is an example, not a universal requirement or a promise that it is current for every project.
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Use the exact edition and completion instructions named in your agreement. A hard-copy G702–1992 50-pack is listed by the AIA Design Shop, while electronic workflows can support fillable forms and monthly roll-forward of values. Verify availability and project acceptance before buying or standardizing a form.
Build a complete submission package
- Complete the required invoice or application form and identify the contract, billing period and payee.
- Attach the schedule of values or continuation sheet showing current, cumulative and remaining amounts.
- Add approved change orders, stored-material evidence and delivery records where permitted.
- Include certifications, insurance, payroll or compliance records and lien-waiver documents required for that period.
- Check arithmetic, tax, retainage, prior payments, bank details and file naming against the contract.
- Submit through the specified portal or address before the cutoff and save the confirmation, timestamp and submitted files.
Step 4: Understand review, certification and disputes
The designated reviewer compares the submission with contract terms, observed progress, quantities, quality, approved changes and required backup. Missing documents can delay the whole application; a disputed line can be withheld or adjusted depending on the contract and applicable law.
Track three statuses separately: submitted, approved or certified, and paid. A portal status of “received” is not an approval. Ask for a written deficiency notice that identifies the missing item, disputed amount and correction deadline.
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Where the governing rule requires payment of undisputed sums, the reviewer or payer may need to identify and pay the accepted portion while the disputed portion is resolved. The federal clause FAR 52.232-27 provides an example of detailed federal requirements for proper invoices, disputed amounts, retainage and subcontract payments; it governs covered federal contracts, not construction generally.
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Payment timing is determined by the contract and the law that applies to the project. The examples below must not be blended into one general rule.
| Framework | What the source says | Qualification |
|---|---|---|
| U.S. federal construction example | FAR 52.232-27 generally uses the later of 30 days after receipt of a proper invoice or 30 days after acceptance, subject to the clause’s terms and exceptions. | Applies to covered federal contracts. Check the current contract and clause text, including invoice content, retainage, disputes and flowdown. |
| Alberta | Official guidance says prompt-payment rules apply to new construction contracts from August 29, 2022 and sets an owner payment period after receipt of a proper invoice. | A provincial Canadian scheme; applicability, notices and adjudication requirements must be checked for the project. |
| Canadian federal projects | Public Services and Procurement Canada says federal prompt-payment legislation came into force December 9, 2023 to promote promptness, transparency and shared responsibility. | Confirm whether the project and contract are covered and review current transition guidance. |
For a private U.S. project, the applicable state statute and contract may use different triggers, periods and notice rules. Record the trigger in your payment profile rather than copying a deadline from another job.
Retainage, holdbacks and disputed amounts
Retainage (also called a holdback) is money withheld under the contract or law until a milestone, completion condition or closeout requirement is met. It is separate from an ordinary invoice dispute: an otherwise approved line may still be reduced by retainage. No single percentage is a universal construction rule. The agreement and governing statute control the amount, release event and required notices.
Maintain a retainage ledger showing the gross earned amount, current withholding, cumulative withholding, releases and balance. When requesting release, submit only the documents and certifications required by the contract, and verify whether statutory lien or payment-bond deadlines continue to run.
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Do not sign an unconditional waiver or release before the stated payment has actually cleared. Waiver language and statutory forms vary by jurisdiction; use the contract’s conditional form where available and obtain qualified legal advice for an unfamiliar release.
How payment flows through tiers
Construction money usually moves owner to prime contractor, prime contractor to subcontractor, and subcontractor to lower-tier suppliers. Each recipient should map the upstream payment trigger and the downstream obligation. Federal construction clauses include payment and flowdown provisions for subcontract tiers, but the exact requirement depends on the federal contract, incorporated clauses and applicable law.
- State which upstream event starts your payment clock.
- Require lower-tier invoices and waivers early enough to meet your own deadline.
- Match each payment to a contract, application period and remittance record.
- Escalate a missed downstream payment separately from an owner dispute; the remedies and notices may differ.
Compare payment arrangements before choosing a workflow
| Arrangement or feature | Questions to compare | Operational effect |
|---|---|---|
| Progress billing | How is earned value measured, and who certifies it? | Earlier cash collection but recurring measurement and documentation. |
| Milestone or lump-sum billing | What event makes a milestone payable, and can partial completion be billed? | Fewer applications, but larger timing gaps and sharper acceptance disputes. |
| Invoice-triggered terms | What makes an invoice “proper,” and when is it deemed received? | Administrative accuracy directly affects the start of the clock. |
| Acceptance- or certification-triggered terms | Who can accept or certify, and what is the response deadline? | Reviewer availability becomes a cash-flow dependency. |
| Retainage or holdback | What percentage, release milestone and notices apply? | Reduces current cash even when work is approved. |
| Dispute carve-out | Must undisputed sums be paid, and how must disputed lines be itemized? | Can prevent a single line from freezing the entire application when the rule requires separation. |
| Electronic payment | Which bank details, approval controls and reconciliation records are required? | Faster settlement and clearer audit trail, subject to fraud controls. |
Digital controls that reduce payment friction
Software is useful when it mirrors the contract rather than forcing every project into one template. Look for support for:
- Contract-specific pay-application forms and schedule-of-values roll-forward.
- Role-based review and approval routing with timestamps.
- Versioned change orders and links between quantities, photos and delivery records.
- Electronic invoice submission, payment-status tracking and bank reconciliation.
- Conditional and unconditional waiver handling, expiration alerts and document retention.
- Export to accounting systems and an audit trail that preserves the submitted file.
Digitization and electronic payments were identified by Chris Doyle, CEO of Billd, in a 2024 PYMNTS Intelligence report as high-order problems to solve. That is a vendor executive’s opinion, not an independent industry finding. Select tools only after confirming that the owner, architect and lower tiers will accept the format and that access controls protect bank information.
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Material-heavy contractors can face a timing gap between paying a supplier and collecting an approved application. Working-capital or material-financing products may bridge that gap for eligible purchases, but compare the effective cost, repayment trigger, credit requirements, personal or corporate guarantees, lien rights and effect on margins. A January 2025 trade report names Billd as an example of a construction financial-services provider offering financing terms for eligible materials; current terms and eligibility require direct verification. Financing does not change the owner’s payment obligation or cure an incomplete application.
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Troubleshoot a late or reduced payment
The application was rejected as incomplete
Request the exact missing field or attachment in writing, correct it using the prescribed format and resubmit through the required channel. Preserve both submissions so the record shows when a proper application was delivered.
The amount was reduced
Reconcile each schedule-of-values line against field measurement, approved changes, prior payments and retainage. Ask for the reviewer’s line-item explanation and separate a factual quantity disagreement from a contractual entitlement dispute.
The clock has passed but no payment arrived
Confirm the trigger date, calendar-versus-business-day rule, acceptance status, bank details and any permitted withholding. Send the contract-required notice before escalating to a formal claim, adjudication, bond notice or other remedy.
A waiver is requested before payment
Use the contract’s conditional form if one exists and limit the release to the amount and period actually being paid. Do not sign an unconditional release merely to move an application forward.
Closeout without losing the final balance
Final payment often requires more than a final invoice. Check the agreement for completion certificates, as-built information, warranties, operations manuals, consent of surety, affidavits, statutory declarations, lien releases, punch-list sign-off and confirmation that stored materials are installed or otherwise accounted for. Because requirements differ by project and jurisdiction, build a closeout checklist from the contract instead of relying on a universal list.
Keep the final application, approval, payment confirmation and releases together. If a balance remains disputed, identify it expressly rather than signing a document that could waive it.
Practical takeaway
A dependable construction payment process starts with the contract’s trigger and document rules, measures earned work consistently, submits a complete application, tracks approval separately from payment, and follows retainage, dispute and lower-tier obligations through closeout. Federal U.S., Alberta and Canadian federal examples show why a deadline from one jurisdiction cannot be treated as an industry-wide “net 30” rule.
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