YOUR PAYMENT TERMS DECIDE YOUR CASH FLOW.
The three most common subcontractor payment clauses, net 30, pay-when-paid, and pay-if-paid, look similar in print but create radically different cash positions. Net 30 means you get paid 30 days after invoice. Pay-when-paid means you get paid after the GC gets paid, so the GC's 60-day collection cycle becomes your 60-day collection cycle. Pay-if-paid means if the GC doesn't get paid, you don't either, and you absorb the owner's credit risk. Most subs sign whatever's in front of them. The ones who negotiate read the clause, push for terms that match the real risk, and walk from contracts that don't.
The payment terms section is short. Three sentences in a 40-page contract, and it decides more about your bank account than the scope pages do. Most subs skip it because it reads like boilerplate and because the leverage feels one-sided. It's not one-sided at signing, which is the only moment it exists. After execution the terms govern, and the only remaining move is pricing the next contract better. Read the clause, ask for the five changes that cost the GC nothing, and price the risk you agree to carry.
WHAT IT MEANS.
Subcontractor payment terms are the contract clauses that set when and whether you get paid, and the three common ones, net 30, pay-when-paid, and pay-if-paid, create completely different cash positions from identical work.
Courts treat the three clauses differently, which is why the wording counts more than the heading. Pay-when-paid is generally read as a timing mechanism rather than a condition, so if the owner never pays, the GC still owes you eventually and you were only sharing the timing risk. Pay-if-paid is read as a condition on payment itself, so if the owner defaults, disputes, or files bankruptcy, you performed the work for free. Some states ban pay-if-paid as unenforceable and most don't.
THREE CLAUSES, THREE OUTCOMES.
Clause 1, net 30: payment due 30 days after approved invoice
This is the simplest one. You bill the GC, the GC approves the bill, and 30 days from approval or from receipt depending on the language, you get paid. Net 30 is independent of the owner's payment to the GC, so the GC is the one carrying the risk that the owner pays. You're on a fixed timer from approval, which is why this is the gold standard for sub-side terms.
Clause 2, pay-when-paid: payment due a reasonable time after the GC receives payment
This pushes the owner's payment cycle onto you. If the owner takes 60 days to pay the GC, the GC takes another reasonable time on top, usually 10 days, so you're effectively at 70+ days from invoice. The good news is that courts generally read pay-when-paid as a timing mechanism rather than a condition, so if the owner ultimately doesn't pay, the GC still owes you eventually. You're sharing the timing risk, not the credit risk.
Clause 3, pay-if-paid: payment to the sub conditioned on the GC receiving payment from the owner
This one is dangerous. Pay-if-paid clauses make the GC's payment to you contingent on the owner's payment to the GC, so if the owner defaults, declares bankruptcy, or disputes payment, you don't get paid at all. You've absorbed the owner's credit risk for work you already performed. The clause language usually contains phrases like condition precedent or sub assumes the credit risk of owner, and if you see those, the clause is pay-if-paid even when the heading says something else.
WHAT IT LOOKS LIKE IN DOLLARS.
Cost of capital for most $1M to $12M subs runs 6 to 12% annualized depending on LOC rates and equity cost. A 30-day extension on a $500K contract at 8% cost of capital costs about $3,300 in financing, which is 0.66% of contract value. A 60-day extension costs about $6,600, or 1.3%. A standard markup of 1.5 to 3% on top of normal pricing covers most slow-pay carry costs, so the number is small and it's knowable before you bid.
A sub with mostly net-30 work runs days in AR around 45 to 55 days. A sub with mostly pay-when-paid work runs 75 to 90 days. Same revenue, same crews, and the same margins produce different bonding capacity, because the working capital tied up in receivables isn't the same. The clause changes the balance sheet, not just the calendar.
WHAT TO PUSH FOR, AND WHAT IT COSTS.
Ask for removal of the condition-precedent wording that transfers the owner's credit risk to you. This is the highest value ask on the list because it changes what you can lose rather than when you get paid. Plenty of GCs will strike it when asked, because most of them aren't trying to pass you the owner's credit risk on purpose.
Push for wording along the lines of paid within 10 days of GC receipt of payment from owner, but no later than 75 days from invoice. The cap is what stops an uncapped reasonable time from turning into a quarter. GCs accept caps more often than they accept striking the clause, because the cap leaves their structure intact.
Make sure the contract doesn't waive your statutory prompt pay rights in your state. Those rights exist whether or not anybody in the room knows about them, and a waiver buried in the general conditions gives away leverage you would otherwise have for free. This ask costs the GC nothing, which is why it usually goes through without a fight.
Include wording that accrues interest on overdue amounts. The dollar value is rarely the point. Interest changes where your invoice sits in the GC's AP priority, because an invoice that gets more expensive every week is the one their accounting department pays first.
If the negotiation fails, add the margin premium, meaning 1.5 to 3%, to cover the financing cost of the extended receivables. This is the fallback that always works, because it requires nobody's agreement but yours. The mistake is signing aggressive terms at standard pricing and absorbing the carry silently.
THE OUTPUTS, NAMED.
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, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
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 rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
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