Subcontractor AR collection sequence: written follow-up at 30 days past due, formal demand letter at 45 days, preliminary lien notice at 60 days, mechanics lien filing at 75–90 days if unpaid. Lien deadlines vary by state — many as short as 60–90 days from last date of work — so preliminary notices need to go out early. The biggest mistake is waiting too long. Pay-when-paid clauses are enforceable in most states but don't eliminate the GC's payment obligation entirely.

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AR Collections

How to Collect What You're Owed.

GCs pay at their own schedule when subcontractors let them. The collection process that actually moves money is documented, systematic, and uses lien rights at the right time — not as a last resort, but as a standard part of the billing workflow. Here's the sequence.
Published: May 2026Updated: May 2026
The Collection Sequence

Every Invoice. Every Time.

This sequence applies to every invoice, not just the ones that are obviously problematic. Running it systematically means that by the time an invoice reaches 60 days, the documentation is already in place to escalate quickly.
30

Day 30 Past Due — Written Follow-Up

Email the GC's AP contact with the invoice number, original due date, and amount. Attach the original invoice. Keep the tone professional and direct: "Invoice #XXX for $XX,XXX was due [date]. Please confirm status and expected payment date." CC your PM on every collection communication so the GC knows it's documented at multiple levels.

45

Day 45 Past Due — Formal Demand Letter

Escalate to a formal written demand on company letterhead. Reference the contract, invoice number, amount, and due date. State that payment is required within 10 days. Send via email AND certified mail. The certified mail receipt matters — it establishes receipt date for lien notice purposes and signals seriousness. At this point, a call to the GC's project manager (not just AP) is appropriate.

60

Day 60 Past Due — Preliminary Lien Notice

Send a preliminary lien notice (also called a pre-lien or Notice to Owner depending on state). In many states this notice is required before a lien can be filed — and deadlines can be as early as 20 days from first furnishing labor or materials. If your state requires early preliminary notices, these should go out at the start of every project, not when payment problems arise. Consult a construction attorney for your state's specific requirements. The notice signals that you are prepared to lien the property.

75

Day 75–90 Past Due — Mechanics Lien Filing

File a mechanics lien on the property. This clouds the title — the owner cannot sell or refinance until the lien is released. Most lien filings produce payment within 30 days because the owner puts pressure on the GC immediately. Lien deadlines vary significantly by state (typically 60–180 days from last date of work) — don't miss them. A lien filed after the deadline is unenforceable. Use a construction attorney or lien service for accurate deadlines and filing.

The single biggest mistake: Waiting until an invoice is 90+ days past due to send a preliminary lien notice — only to find that the state deadline passed at day 60. Once the lien deadline passes, the most powerful collection tool is gone. Send preliminary notices at the start of every project or at the first sign of payment delay, not as a last resort.

What Actually Moves Money

The Tools That GCs Respond To.

Phone calls without documentation produce promises. Documented, escalating written process with lien rights exposure produces payments. GCs respond to what affects their business — and a lien on a property they're trying to close out or refinance affects their business immediately.
01

Written Documentation at Every Step

Every communication — follow-up, demand, notice — should be in writing and timestamped. Not because you plan to litigate, but because documented escalation is taken more seriously than verbal requests. A GC AP department that knows your company's process sends invoices to the front of the stack.

02

Lien Rights Used Early, Not as Last Resort

Preliminary lien notices are not aggressive — they're standard practice in construction. Sending one early signals professionalism and protects rights you'll need if payment becomes a problem. Most contractors who lose lien rights lose them by default, not by choice, because they didn't send the notice in time.

03

Stopping Work on Unpaid Jobs

For invoices that are significantly past due and unresponsive, stopping work on the job until payment is received is legally permissible in most contracts after proper notice. The threat of work stoppage — and the schedule impact on the GC — is often more effective than a lien notice for jobs still in progress.

Frequently Asked Questions

Common Questions.

The sequence: written follow-up at 30 days, formal demand at 45 days, preliminary lien notice at 60 days, mechanics lien filing at 75–90 days if unpaid. Every state has different lien deadlines — many as short as 60–90 days from last date of work. Send preliminary notices early in every project to protect rights before a problem develops.

Yes. Mechanics lien rights exist in every state and allow subcontractors to place a lien on the property where work was performed, blocking sale or refinancing until the lien is resolved. Lien deadlines and preliminary notice requirements vary by state — consult a construction attorney for your specific state's rules. Missing a deadline means losing the right entirely.

Pay-when-paid clauses condition payment on the GC receiving payment from the owner. Enforceable in most states, but courts generally don't allow it to eliminate the GC's obligation entirely — a reasonable payment timeline is usually implied. Pay-if-paid clauses (which shift owner-nonpayment risk to the subcontractor) are unenforceable in many states. Consult a construction attorney for guidance specific to your contract and state. Schedule a call — SPM builds the AR process that moves money before lien rights are needed.

Josh Luebker — Fractional CFO, The Construction CFO
Josh Luebker
Fractional CFO · The Construction CFO

Former commercial construction project manager and master electrician. Managed 150+ projects totaling $300M+. Now fractional CFO for commercial subcontractors doing $1M–$12M. About Josh →  |  LinkedIn →

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