SUBCONTRACT FINANCIAL TERMS, DEFINED.
The contract terms that decide when a subcontractor gets paid include retainage, pay-when-paid versus pay-if-paid, the schedule of values, the pay application, lien waivers, and backcharges. Each one moves cash timing, and misreading any of them is how a profitable job turns into a cash problem. Plain-language definitions are below.
Most subcontractors learn these terms the expensive way, after a pay-if-paid clause leaves them holding a loss or a backcharge reduces a job's margin. Inside the language is everything that decides how fast you bill, how much gets held back, what you have to sign before a check moves, and who can charge what against your work. The definitions below are grouped by the part of the cash cycle each term touches, so you can read a subcontract for what it does to your money rather than for what it says about scope.
WHAT IT MEANS.
A subcontract is a cash flow document before it's anything else: the financial terms inside it decide how fast you bill, how much gets held back, what you have to sign to get paid, and who can charge what against your work.
Billing and collection, how and when you bill. The schedule of values divides your contract price into line items you bill against as work completes. A pay application is the formal request for payment, submitted on the GC's schedule, showing work completed against the SOV. Time-and-material work is billed at actual labor and material plus a markup, instead of a fixed price.
Holdbacks and payment risk, what gets held and who pays. Retainage, also called retention, is a percentage of each payment, often 5% to 10%, that the GC holds until the job is complete. Pay-when-paid means the GC pays you within a reasonable time after the owner pays them, so the risk is timing. Pay-if-paid means the GC only pays you if the owner pays them, so the risk is the entire loss. Liquidated damages are a pre-agreed dollar amount charged per day of delay you cause.
Changes and charges, what moves the contract value. A change order is a written modification to the contract value for work added or changed. A backcharge is a deduction the GC or another trade applies to your payment for cost they claim your work caused, whether cleanup, damage, or delay. A lien waiver is a document releasing your right to file a mechanic's lien for the amount paid.
WHAT THESE TERMS COST YOU.
Billing and collection: a back-loaded SOV leaves the early months short of cash
A flat or back-loaded schedule of values leaves the early months short of cash, when your costs are highest, because the billing curve is behind the cost curve for the whole first half of the job. T&M billed monthly instead of within 48 hours creates permanent uncollected float, since the cost goes out now and the bill goes in weeks later. Both are structural, and both get decided before the first crew reaches the site.
Holdbacks and payment risk: retention gets forgotten and pay-if-paid gets signed
Forgotten retention is the most common uncollected cash a subcontractor is owed, because it's money you earned that nobody tracks as its own receivable. Pay-if-paid moves the owner's nonpayment onto you, and it's the single most dangerous clause in a subcontract. Liquidated damages come alongside both of those, priced per day, in language most subs read once and never model against a real schedule.
Changes and charges: unsigned work and unchallenged deductions
Work built without a signed change order is work you gave away, and the conversation about it gets harder every week that passes. An undocumented or disputed backcharge can take margin off a job without anybody deciding to let it. Signing an unconditional waiver before the check clears can leave you with no claim and no payment, which is the worst of both outcomes.
WHAT IT LOOKS LIKE IN DOLLARS.
Retainage is often 5% to 10% of each payment, held until the job is complete, and it belongs in your books as its own receivable rather than folded into general AR. T&M tickets should be billed within 48 hours of the work rather than at the end of the month, because every day between the cost going out and the bill going in is float you're financing yourself.
RESEARCH FROM OTHER SOURCES.
These figures come from another company's survey, not from SPM's clients. Each one cites the report and the page.
Billd's 2026 National Subcontractor Market Report found 89 percent of business owners negotiate their contracts, and that liquidated damages, payment terms, retainage, scope and project schedules were negotiated most often.
Source: Billd, 2026 National Subcontractor Market Report, page 17 (survey of 623 respondents, published May 13, 2026).
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
Built for subs doing $1M to $12M. Above $12.5M we quote.
| Last 12 months revenue | Core | Strategic | Platinum | One-time onboarding |
|---|---|---|---|---|
| Under $1M | $1,900 | $3,100 | $3,300 | $1,000 |
| $1M to $3.5M | $2,600 | $4,100 | $5,300 | $1,500 |
| $3.5M to $6.5M | $3,800 | $5,900 | $8,300 | $3,000 |
| $6.5M to $9.5M | $5,100 | $7,600 | $11,800 | $4,500 |
| $9.5M to $12.5M | $6,100 | $8,900 | $14,900 | $6,000 |
| Above $12.5M | Quoted | Quoted | Quoted | Quoted |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers, and it moves with your revenue band. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
The three tier columns are the whole price. Which one fits depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
- Online software only: QuickBooks, Sage, Viewpoint and similar. No VPN or hosted desktop.
- Not in any tier: payroll, pay applications, collections on receivables.
- Pricing valid through 2027.
CFO work. Your own bookkeeper keeps doing the books.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
Core, plus bookkeeping and bank reconciliations, plus job costing and WIP software set up and managed for you. Use your own online accounting software or we supply it, one price.
Every job shows its margin while it is still open.
Everything in Core, plus the bookkeeping and bank reconciliations done for you, and the job costing and WIP software set up, loaded with your cost codes, and managed every month. Use your own online software, or move to ours and we cover it.
A bookkeeper we choose does the books and reconciliations. No payroll.
Strategic, plus a controller who handles payables and receivables the way an in-house controller would. You approve every payment.
You approve, and the money side gets handled.
Everything in Strategic, plus a controller we choose who handles your bills and receivables for you the way an in-house controller would. They call vendors, pay the bills and keep the accounting current. We plan the cash flow first, and you approve every payment because it is your money.
A controller we choose does the payables and receivables. No payroll, no pay applications, no collections.
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