HOW MUCH TO BILL ON PAY APP 1.
You spend on mobilization, submittals, permits, bond, and first material weeks before Pay App 1 clears the bank, and that clearing takes 30 to 60 days from the day you submit. When the float isn't priced into App 1, you're financing the GC's job on your own credit line. The minimum is the cost deployed plus the cost of holding it: $75K deployed plus ($75K times 9% divided by 365, times 60 days) is $76,110, which against a $625,000 contract is a 12.2% front-load.
The dollar amount on any one job looks small, and the habit is what counts. Two months of startup cost held on the line of credit reads as a rounding error until four jobs are doing it at once and the operating account never recovers between draws. A schedule of values that lists mobilization, first material procurement, and permits and bond as separate itemized lines collects that money in the first cycle instead of the third. General contractors approve line items they can read. They push back on one large front-loaded number with no detail under it.
TWO QUESTIONS, TWO TABS.
What you have to bill on the first application to stop financing the front end of the job yourself. Mobilization, submittals, bonds and first material are all paid for before any money comes in.
What percent complete entitles you to bill this period, and whether that leaves you over or underbilled. This is the one to use every month after the first application.
Enter who you are and an email and both tabs open. The same submission emails you the Schedule of Values and Pay Application Template, which is the workbook that does this for 36applications with 7 tie-out checks, so a rejected application stops costing you a month. Free, and the figures you typed above aren't sent with it.
WHAT IT MEANS.
The Pay App 1 minimum is the cost you deploy on a job before that first application clears the bank, plus the financing cost of holding that money until it does.
Two terms get mixed up in this conversation. Overbilling is billing more than your percent complete supports, and it posts as a liability on the balance sheet, billings in excess of earned revenue. Underbilling is the reverse, revenue you've earned and haven't billed yet, and it posts as an asset, costs in excess of billings. Underbilling is the one that hurts, because the revenue is recognized, the profit is reported, and the cash isn't in the bank. Every day of underbilling is a day the line of credit is drawn.
Front-loading App 1 puts you in an overbilled position on purpose, and that's fine as long as you know it and the rest of the schedule of values earns it back as the job progresses. What isn't fine is an overbilled position nobody tracked, because it reverses in the last two months of the job when the billing is used up and the cost isn't.
WHY MONTH ONE DRAINS THE ACCOUNT.
The spending starts 30 to 60 days before the money comes in
Mobilization, submittals, permits, bond, and first material all get paid before Pay App 1 clears the bank, and that clearing takes 30 to 60 days from submission. Every dollar spent inside that window comes out of working capital rather than out of the project. The job has done nothing wrong yet and the account is already down.
The schedule of values is flat
A schedule of values built as an even spread across the contract bills the same percentage in Month 1 that it bills in Month 6. Month 1 doesn't cost what Month 6 costs. The startup spending is front-end weighted and the billing isn't, so the difference between them gets funded by your line of credit at your rate instead of the GC's.
Going upside down on one job pulls cash off another
You're upside down when your costs to date on a job exceed the cash you've collected on that same job. On one job that's a tight month. Across four, keeping the upside down job alive means pulling cash off the jobs that are collecting, and that's the fast track to cash flow chaos.
WHAT IT LOOKS LIKE IN DOLLARS.
MINIMUM BILLING = COSTS DEPLOYED + (COSTS x LOC RATE / 365 x DAYS TO PAYMENT). Use it on a job with $75K deployed, a 9% line of credit rate, and 60 days to payment, and the minimum is $76,110. Against a $625,000 contract, that's a 12.2% minimum front-load on the schedule of values.
% COMPLETE = COST TO DATE / ESTIMATED TOTAL COST, and RECOGNIZED REVENUE = CONTRACT VALUE x % COMPLETE. With $125K of cost against a $500K estimate you're 25% complete, so recognized revenue on a $625K contract is $156,250. Bill under that figure and you're underbilled. Bill over it and you're overbilled.
A mobilization line item of 3 to 7 percent of contract value is standard and defensible, and it only bills when it's itemized on the schedule of values. When the minimum works out to 12%, spread it across mobilization at 5 to 7 percent, first material procurement, and permits and bond as separate lines rather than asking for 12% in one.
HOW THE FIRST BILLING GETS SET.
The minimum is calculated from your job budget, your line of credit rate, and how that GC paid on the last project, then the schedule of values gets built to reach it. The number goes in before the SOV is submitted, because once the GC approves the SOV you're negotiating against your own document.
One large number at the top of the SOV invites a dispute. Mobilization, first material procurement, permits, and bond as four separate itemized lines invites a review instead. Same total, different conversation, and every line is defensible with a cost behind it.
Billed to date against earned revenue tells you whether each open job is overbilled or underbilled. That's calculated monthly out of the job cost ledger for every client, alongside the cost to complete review and the 13 week cash flow forecast, so an underbilled job gets caught in the month it happens rather than at close-out.
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. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Under $1M | $1,900 to $3,300 | $1,000 |
| $1M to $3.5M | $2,600 to $5,300 | $1,500 |
| $3.5M to $6.5M | $3,800 to $8,300 | $3,000 |
| $6.5M to $9.5M | $5,100 to $11,800 | $4,500 |
| $9.5M to $12.5M | $6,100 to $14,900 | $6,000 |
| $12.5M to $15.5M | $7,400 to $17,650 | $7,500 |
| $15.5M to $18.5M | $9,400 to $22,400 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
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. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
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. The onboarding fee is right here in the table.
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.
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.
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.
FREQUENTLY ASKED.
