How much should I add to my bid for pay-when-paid terms?

If a GC is telling you the job is pay-when-paid — or the terms are net 60 or net 90 — your bid has to cover more than cost plus profit. It also has to cover the cost of carrying that job while the GC (or their owner) takes their sweet time cutting checks.

Most subs price in overhead and profit but leave out the single biggest silent cost on a slow-pay job: their own financing. If you're bidding a pay-when-paid contract at the same margin you use for a net-30 job, you're eating the difference every month until final payment.

This free calculator tells you exactly how much to add to your bid to cover the cost of floating that job at your working capital rate, for however many days payment actually takes. Run it once before you hand in your number.

Pay-When-Paid Bid Adder Calculator | SPM – The Construction CFO
Free Tool — SPM The Construction CFO

Know what pay-when-paid
is actually costing you.

You're financing every job you take on net 60, 90, or pay-when-paid terms. This calculator shows you the dollar amount to add to your bid so someone else isn't funding your work for free.

$
%
Daily Financing Cost —
Bid Adder by Payment Terms
Payment Terms Dollar Adder % to Add to Bid
Net 30——
Net 45——
Net 60——
Net 75——
Net 90——

How this works: Your daily financing cost is your working capital rate divided by 365, multiplied by your total project cost. That's what it costs you per day to have money tied up in a job. Multiply that by the number of days until you get paid and you have your bid adder — the dollar amount you should be adding to every bid to stop eating that cost yourself.

Want to see your full cash position?

Get a 13-week cash flow forecast built from your actual numbers — starting at $69.

Get Your Forecast →
SPM — The Construction CFO for Subcontractors  |  constructioncfo.net  |  This calculator is for estimating purposes only and does not constitute financial advice. Actual financing costs will vary based on your specific line of credit, factoring arrangement, or opportunity cost of capital.

What does "pay-when-paid" actually mean for a subcontractor?

Pay-when-paid means the GC pays you after they get paid by the owner. In practice, it's a timing clause — not a condition of payment. You're still owed the money, but you might wait 60, 90, or 120 days to see it. That wait has a real cost, and most subs never price it in.

Is pay-when-paid legal?

Pay-when-paid (a timing clause) is legal in most states. Pay-if-paid (a condition of payment, where the GC owes you nothing if the owner never pays) is more limited — some states void it outright, others enforce it only with specific contract language. Either way, the cash-flow cost of the delay is the same, and your bid needs to cover it.

How much should I bid higher for a pay-when-paid job?

Use the calculator above. Short version: take the average balance you'll have outstanding on the job, multiply by your working capital rate, and divide by 365 to get a daily cost. Multiply that by the average days to payment. That's your minimum markup just to break even on the financing — profit goes on top.

What's the real cost of net 60 or net 90 payment terms?

If you're self-funding at, say, a 9 percent line-of-credit rate and carrying $200K in retention and unpaid billings for 90 days, that's roughly $4,400 in financing cost per quarter — per job. On a stack of 10 active jobs, that's $44K a year coming straight off your bottom line if you didn't price it in.

Do I have to accept pay-when-paid contracts?

No. But in most of our markets, if you don't accept them you don't bid the work. The right move isn't to refuse — it's to price the terms accurately so the job pays for itself. Saying no to slow-pay work without pricing it is a bigger problem than saying yes at the right number.

What's a fair bid markup for a slow-pay GC?

"Fair" depends on your cost of capital and how long payment actually takes. If the GC is consistently pushing 90 to 120 days and you're borrowing at 9 percent, adding 2 to 4 percent to your bid just to cover financing is reasonable and defensible. On top of that, price in the risk of non-payment if it's a GC you don't know.

How is this different from just raising my margin?

Margin covers overhead and profit. Financing cost is a line item all its own. If you bump margin without pricing financing separately, you don't know which one is eating you when the job comes in tight. Keep them separate so you can adjust.

Want this baked into how you bid every job?

We help subcontractors price working capital into their estimates so pay-when-paid jobs stop eating margin.

Schedule a Call →