WHY DO GCs TAKE SO LONG TO PAY SUBCONTRACTORS?
A GC usually pays a subcontractor slowly because of one or more of four things: a pay-when-paid or pay-if-paid clause that ties your payment to the owner's, the owner's own approval and payment cycle, a pay application rejected for missing paperwork, and a GC managing its own cash at your expense. Days sales outstanding of 45 is the target for a subcontractor, 30 is strong and 90 is weak. The fix is a cash forecast built on the real pay dates of each GC, so slow pay is planned for and payroll never waits on it.
A subcontractor invoices on the 25th and expects money in 30 days. The GC bills the owner on the same date, the owner's representative reviews it for a few weeks, the owner's accounts payable pays on its own cycle, and only then does the clause in your subcontract let the GC pay you. Every one of those steps is a legitimate delay, and together they can turn a 30 day term into 75 or 90. Slow pay is rarely one villain. It is a chain, and each link can be measured.
WHAT IT MEANS.
General contractors pay subcontractors slowly for four reasons: the contract ties payment to the owner paying the GC, the owner's own approval cycle is long, rejected pay applications restart the clock, and the GC is using the delay to fund its own cash.
Most subcontractors treat every late payment as a collections problem, and some are. Many are timing problems that were visible on the day the contract was signed. A clause tying payment to the owner's payment is a promise that you will wait as long as the owner does. Retainage held past substantial completion is a second promise. Neither is a surprise if someone has read the contract and put the dates in a forecast.
The distinction changes what you do. A collections problem is answered with a follow-up cadence and, if needed, lien and notice rights. A timing problem is answered with pricing, a cash forecast and a line of credit sized to the delay. Treating one as the other wastes effort and sours a relationship with a GC you may want to keep.
WHAT IS BEHIND THE DELAY.
The clause ties your payment to the owner's
Under a pay-when-paid clause the GC's duty to pay begins when the owner pays the GC, and pay-if-paid goes further. In most states these clauses are enforceable, so a 30 day term can legally stretch to whatever the owner takes. The cost is real, and it belongs in the bid.
The owner's approval and payment cycle is long
Public owners and large private owners review pay applications, schedule approvals and pay on a fixed calendar. Miss the cutoff by a day and the payment moves to the next cycle. The GC has no control over that, and you have no control over the GC's timing.
A pay application is rejected and the clock restarts
Missing lien waivers, insurance certificates, certified payroll or an unapproved change order can send an invoice back, and the payment date restarts from the corrected submission. Cleaning up your own paper first removes a large share of what looks like slow pay.
The GC is managing its own cash
Some GCs hold payables to their limit because subcontractors are cheaper credit than a bank. It is not personal, and it is predictable, which means it can be measured GC by GC and priced or avoided accordingly.
PLAN FOR THE DELAY, THEN SHORTEN IT.
Track days from invoice to cash for every GC over the last twelve months. A GC that averages 68 days is a different customer from one that averages 34, and your bid, your credit terms and your forecast should treat them differently.
A 13 week cash forecast that uses each GC's actual pay history, retainage release dates and payroll and vendor dates shows the weeks when cash goes short before they come. That is the difference between arranging a line of credit and scrambling for one.
Submit complete pay applications on the first try, follow the same collections cadence on every invoice, and build the cost of slow pay into new bids. A GC who pays late can still be profitable if the price reflects the wait.
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. 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 and never in a report.
Your bookkeeper still does the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Your office stops answering coding questions and stops chasing a reconciliation on the last day of the month.
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 books, the job costing, and the software. No payroll.
FREQUENTLY ASKED.
