PAY-WHEN-PAID COSTS YOU REAL MONEY. HERE'S HOW MUCH.
Pay-when-paid clauses in commercial subcontracts make GC payment timing contingent on owner payment, which pushes the owner's payment delay risk down onto the subcontractor. On $4M in annual subcontracts under net 60 pay-when-paid terms, the annual financing cost of delayed payment is $40,000 to $80,000, absorbed silently. The fix is a pay-when-paid markup added to every bid, lien rights preserved from day one, and a 13 week cash flow forecast that maps the payment delays into planning so they stop being surprises.
The reason this cost stays invisible is that it never gets its own line anywhere. It appears in no job cost code, in no overhead line, and in no variance against a bid. It comes out as interest on the line of credit, or as the opportunity cost of money held in receivables instead of funding the next mobilization. That's why most subcontractors can feel it without being able to point at it, and why the first step is math rather than negotiation.
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WHAT IT MEANS.
A pay-when-paid clause is subcontract language that makes the GC's obligation to pay you conditional on the GC first receiving payment from the owner, which moves the owner's payment delay risk onto you.
Unlike a change order for changed conditions or a delay claim for owner caused delays, the financing cost of a pay-when-paid delay is almost never recoverable. It gets absorbed into operating cash and eventually surfaces as the unexplained distance between the profit on the P&L and the balance in the bank account.
The exposure compounds across the portfolio rather than staying on one job. Four active jobs under pay-when-paid terms with four different GCs means four independent owner payment risks active at the same time, and if two of those owners are slow in the same month the combined delay can create a cash crisis in a business performing well on every job.
WHERE THE MONEY GOES.
You fund the owner's slow payment
The owner is 45 days late paying the GC, so the GC is waiting. Your crews already worked and your material was already purchased, which means you're funding the owner's payment delay out of operating cash or the line of credit, at your cost of capital. The subcontract pays you nothing for that, because pay-when-paid made it your contractual responsibility.
The cost is never recovered
A change order recovers changed conditions and a delay claim recovers owner caused delays, but the financing cost of a pay-when-paid delay recovers nothing. It gets absorbed into operating cash without ever being billed to anyone. Eventually it surfaces as the unexplained distance between the profit on the P&L and the money in the account, which is the thing most subcontractors can't put words to.
It compounds across all active jobs
A subcontractor with four active jobs under pay-when-paid terms with four different GCs faces four independent owner payment exposures at once. If two of those owners are slow in the same month, the combined delay can create a cash crisis even though the business is performing well on every single job. The risk is in the portfolio, not in any one contract.
WHAT IT LOOKS LIKE IN DOLLARS.
Total annual billings under pay-when-paid subcontracts, multiplied by the average payment delay beyond 30 days, multiplied by your cost of capital, either the line of credit rate or the opportunity cost. Worked out: $4M in billings, a 30 day average delay beyond net 30 terms, and 8 percent cost of capital gives $4M times 30 divided by 365 times 8 percent, which is $26,300 in annual financing cost on that delay alone. Add the months where the delay goes past 30 days and the number grows quickly.
On a $500,000 subcontract with net 60 payment terms, in a pay-when-paid scenario where the owner pays the GC in 90 days, you wait 90 days or more for payment on work that cost you cash from day one. At 8 percent annual cost of capital, 30 extra days on $500,000 is $3,333. That's one job and one month, and nobody bills it to anybody.
On a year of work, a contractor doing $4M in subcontracts under pay-when-paid net 60 terms might take on $40,000 to $80,000 in annual financing cost that's never recouped from the GC. That range is the whole argument for the markup. It's real money leaving the business every year with no line item attached to it.
THE TABLE IS AT RUN ON CFOS.
With 45 day payment terms, an overbilling of 6, 8 or 10 percent of contract value leaves any job shorter than 15 months behind the work done in cash.
Source: Run On CFOS, Overbilling against payment terms, updated October 17, 2026. The full table and the data are published there. Cite as: Run On CFOS. Overbilling against payment terms. 2026. Sulphur Prairie Operations, LLC. https://runoncfos.com/overbilling-and-45-day-terms. CC BY 4.0.
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 National Subcontractor Market Reports put the average subcontractor payment wait at 57 days in 2024, 56 days in 2025 and 51 days in 2026.
Source: Billd, 2024 National Subcontractor Market Report, page 4 (survey of 696 respondents, published April 22, 2024); Billd, 2025 National Subcontractor Market Report, page 3 (survey of over 800 construction professionals, published April 15, 2025); Billd, 2026 National Subcontractor Market Report, page 4 (survey of 623 respondents, published May 13, 2026).
The 2024 and 2025 reports measured the wait from the pay application. The 2026 report doesn't state a starting point, so read the three figures as a direction and not as a like for like trend.
Billd's 2026 National Subcontractor Market Report found 64 percent of subcontractors reported being paid slowly by general contractors.
Source: Billd, 2026 National Subcontractor Market Report, page 5 (survey of 623 respondents, published May 13, 2026).
FOUR MOVES THAT CHANGE THE MATH.
Take total annual billings under pay-when-paid subcontracts, multiply by the average payment delay beyond 30 days, and multiply by your cost of capital. At $4M in billings, a 30 day average delay beyond net 30, and 8 percent cost of capital, that's $26,300 a year on that delay alone. Until the number exists, there's nothing to price into a bid.
The markup converts your average payment terms and your cost of capital into a percentage that goes on top of the bid. A GC whose owner typically pays in 75 days on net 30 subcontracts earns a 1.5 to 2 percent markup on your bid, invisible to them as a line item and visible to you as the margin that covers your financing cost. Use it on every bid under pay-when-paid terms, not just the long ones.
Preserving lien rights is the strongest protection against pay-when-paid risk turning into outright non-payment. A preliminary notice, or a notice to owner depending on your state, filed early in the project puts the owner on notice of your lien rights and tells the GC you're paying attention. It doesn't mean you'll file a lien, it means you can, and that distinction changes how promptly payment comes in when it is slow.
Before signing, ask for a provision that caps the pay-when-paid delay: the GC pays within 30 days of receiving payment from the owner, but in no event later than a set number of days from the date of your invoice. That converts pay-when-paid from an unlimited delay risk into a bounded one. Many GCs will accept it, because they want their subs funded well enough to finish the job.
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 | $2,500 |
| $1M to $3.5M | $2,600 | $4,100 | $5,300 | $4,500 |
| $3.5M to $6.5M | $3,800 | $5,900 | $8,300 | $6,000 |
| $6.5M to $9.5M | $5,100 | $7,600 | $11,800 | $7,500 |
| $9.5M to $12.5M | $6,100 | $8,900 | $14,900 | $9,000 |
| 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.
Just want the setup? Onboarding only is the same onboarding work with no monthly service after it, one time, at the onboarding fee plus $2,000. Start a monthly engagement later and $2,000 counts toward it. It starts at $4,500, and the price for every band is on the pricing page.
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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