PROGRESS BILLING IS HOW YOU GET PAID OR GET STUCK
Progress billing on commercial subcontractor work runs through AIA forms G702 (application for payment summary) and G703 (schedule of values detail). You bill monthly, the GC reviews, the owner approves, and 30–45 days later you get paid. The whole system depends on the schedule of values being set up right at contract signing, the billing cycle running on a tight cadence, and the supporting documentation being clean. Most subs lose 10–30 days of cash flow to billing mistakes that have nothing to do with the work being late. They have to do with how the bill was built.
The work is done. The money is sitting in the GC’s account. The thing in the way isn’t performance — it’s your billing structure.
HOW PROGRESS BILLING ACTUALLY WORKS
Progress billing recognizes that on commercial construction, you can’t wait until the job is finished to get paid. You bill against work performed, monthly, throughout the project. The standard process across most commercial subs:
- Around the 20th to 25th of the month: prepare your pay application for work performed that month.
- Submit by month-end (or whatever date the contract specifies — some GCs require the 25th).
- GC reviews, approves, marks up if needed. Their cycle is typically 5–10 business days.
- GC bundles your bill with theirs and bills the owner.
- Owner reviews. Owner cycle is 10–15 business days on most commercial work, longer on public.
- Owner pays GC. GC pays you. Net 30 from approval date is standard; net 30 from receipt is what the contract often actually says.
Best case: 30–35 days from work-performed to cash-in-hand. Realistic case: 45–60 days. Worst case: 75–90 days if anything goes wrong in the chain. The difference between best and worst is almost entirely a function of how clean your billing structure is — not how well you negotiated the contract.
You can’t shorten the GC’s cycle. You can shorten yours. That’s the lever.
G702 AND G703, EXPLAINED
YOUR APPLICATION FOR PAYMENT, ONE PAGE
The G702 is the cover page. Contract sum, change orders to date, total earned to date, less retention, less previous payments, equals current payment due. It’s the dollar figure the GC and owner sign off on. The G702 itself is straightforward — it’s a summary. The math comes from the G703 underneath.
YOUR SCHEDULE OF VALUES, LINE BY LINE
The G703 is where every contract line item lives. Description, scheduled value, work completed this period, total work completed to date, percent complete, balance to finish, retention amount. Every line that’s on the original SOV stays on every G703 you submit, with the work-completed column updating monthly. The G703 is the audit trail — the GC and owner verify your billing against it line by line.
EVERYTHING THAT BACKS UP THE NUMBERS
Lien waivers (conditional for this period, unconditional for prior payments), notarized affidavits for some jurisdictions, certified payroll if it’s prevailing wage work, sworn statements on public jobs, photos and field reports if required by the GC. Missing supporting docs is one of the most common reasons a pay app gets bounced back — even when the work is verified.
SCHEDULE OF VALUES SETUP MAKES OR BREAKS BILLING
The single most important moment in subcontractor progress billing is when the SOV is set up at contract signing. Bad SOV structure means every monthly pay app fights an uphill battle. Good SOV structure means billing flows.
FRONT-LOAD MOBILIZATION AND PRE-CONSTRUCTION
Mobilization, shop drawing prep, submittal preparation, material lead-time deposits — legitimate line items that can be front-loaded in the SOV to recover cash early in the project. GC contracts usually cap mobilization at 3–5% of contract value, but the cap is a negotiation, not a rule. If you have major upfront costs — material orders, mill deposits, custom fabrication — the SOV needs to reflect them as billable.
BREAK COMPLEX SCOPES INTO PHASES
A $300K electrical scope billed as one line item bills slowly because percent-complete is hard to verify. Split into rough-in, trim, finish — or by floor, by phase, by building section — and each phase bills naturally as work progresses. Granular SOVs bill faster because verification is easier and disputes are smaller.
SEPARATE STORED MATERIALS
If your scope includes major material orders that get delivered before installation, the SOV needs a stored-materials line. Without it, you can’t bill the material until it’s installed — which means you finance the mill cycle out of pocket. Stored materials billing requires proper documentation (certified invoices, proof of insurance, photos) but most GCs allow it when the SOV includes the line and the docs are clean.
BACK-LOAD RETENTION-EXPOSED ITEMS LIGHT
Retention typically holds 5–10% of every line item until substantial completion. That means money on the final-finish line items gets held for the entire remaining job duration. Where possible, structure the SOV so the final finishes are smaller line items relative to earlier-billed phases. Doesn’t change total contract value — just changes when the retention starts accumulating against your scope.
INCLUDE PROFIT AND OVERHEAD VISIBLY
Some GCs request that profit and overhead be shown as separate SOV lines. If yours does, structure them so they bill proportionally to work completed — not held back to job close. Profit collected at the same pace as the work is profit you’re using to finance the rest of the project. Profit held back to closeout is profit you’re borrowing against.
THE BILLING ERRORS THAT COST YOU CASH
BILLING ON THE WRONG DAY
Most subs bill on the last day of the month. So does everyone else the GC works with. The GC’s AP team processes the stack in order received. If your bill is buried in a pile of 40, you’re at the back of the line. Bill earlier — the 22nd, the 25th — and your pay app is reviewed in the first wave. Three to five days faster on every cycle, twelve months a year, compounds.
UNSIGNED CHANGE ORDERS BILLED ON THE PAY APP
You did the change work. The GC verbally approved. You added the dollars to this month’s pay app. The pay app comes back rejected because the change order isn’t formally executed. Now the entire pay app is delayed while the CO chase happens. Always pursue formal CO execution before billing. Verbal approval doesn’t bill.
PERCENT COMPLETE OVERSTATED
You billed 50% complete on a line item that’s really at 35%. The GC’s super walks the job, finds the discrepancy, and the pay app sits while it gets reconciled. Worse: aggressive percent-complete billing creates a backbilling problem when you have to revise downward in a future period. Honest percent-complete bills faster because nobody’s fighting it.
MISSING OR LATE LIEN WAIVERS
Conditional lien waivers for the current pay app are required up front in most jurisdictions. Unconditional lien waivers for the prior pay app are required to release this month’s payment. If either is missing, the payment stops. Build lien waiver prep into your pay app workflow as a standing step. It’s administrative work but it’s on the critical path of every cash receipt.
BILLING WITHOUT SUPPORTING DOCUMENTATION
Pay app submitted clean but no photos, no field reports, no supplier invoices for stored materials, no certified payroll on prevailing wage work. The GC requests documentation. You scramble. Three to seven days of cycle time lost to documentation that should have been in the original submission. Build the documentation package into the pay app as a standard deliverable, not an afterthought.
HOW SPM RUNS SUB BILLING
Progress billing isn’t just paperwork — it’s the central operating rhythm of cash flow for any commercial sub. SPM treats it as a financial control function, not an accounting task. The SOV gets set up by the financial team in coordination with the PM at contract signing. The monthly pay app cycle runs on a fixed schedule — same day every month, same workflow every time. Supporting documentation is built into the workflow, not assembled at the end.
The result: pay apps that submit on time, get approved on first pass, and convert to cash on the fastest cycle the contract allows. Same business, same GC relationships, same work. Just billing structure that doesn’t fight itself.
Most cash problems on commercial subs aren’t collection problems. They’re billing problems. Fix billing and most of the rest fixes itself.
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