Billing as a Subcontractor: Pay When Paid and Other Traps

Subcontracting changes who you bill, when you get paid, and which lines of small print can quietly cost you an entire check. You do the work for a property owner, but your money comes from the general contractor, on the GC's schedule, under the GC's contract terms. One note before we start: this is practical guidance, not legal advice, and contract enforcement varies by state, so a construction attorney is worth the hour when real money rides on a clause.

You Bill the GC, on the GC's Cycle

Your invoice goes to the general contractor, not the homeowner or the developer, and it has to fit the GC's billing rhythm. Most GCs bill the owner once a month with a hard cutoff date, often around the 25th. Miss that cutoff and your invoice waits a full extra cycle, which on a net 30 project means seeing money sixty days after the work instead of thirty. Ask three questions when you sign on: when is the billing cutoff, what paperwork has to ride along with my invoice, and who exactly receives it. Then put the cutoff on your calendar and bill two days early, every single month.

Pay When Paid vs Pay if Paid

These sound identical and are not. A pay-when-paid clause says the GC pays you after the owner pays them; courts in many states read that as a timing rule, meaning the GC still owes you within a reasonable period even if the owner drags. A pay-if-paid clause makes owner payment a condition of your payment: no money from the owner, no money for you, possibly ever. That clause shifts the owner's credit risk onto the sub with the least information and the least leverage. Some states refuse to enforce pay-if-paid at all; others enforce it exactly as written. Watch for the phrase “condition precedent.” If you see them, ask for the clause to be softened, price the risk into your bid, or at minimum walk in with open eyes.

Retainage: The Slice That Waits

Many contracts hold back 5-10% of every payment until the whole project completes, sometimes months after your trade is finished. Bill it correctly: show the full earned amount, then the retainage deduction as its own line, so the held money stays visible in your books instead of silently vanishing. Track total retainage per project and set a reminder for when your scope wraps, because subs who never ask for retainage release are the ones who wait longest. If retainage would genuinely strain you, negotiate before signing: a lower percentage, or retainage that drops once your portion passes inspection.

Lien Waivers: Read Before You Sign

GCs commonly require a lien waiver with every payment, and that part is normal. The trap is the type. A conditional waiver releases your lien rights only once the payment actually clears, so it's safe to exchange for a check. An unconditional waiver releases your rights the moment you sign, whether or not the money ever arrives or the check bounces. Sign conditional waivers for money you haven't received, unconditional ones only for money already sitting in your account. And check the amount every time: a waiver covering “all work through June 30” when you've only been paid through May quietly signs away a month of leverage.

Protect Your Lien Rights Early

Mechanics lien rights are a sub's real leverage, and in many states they depend on a preliminary notice sent near the start of the job, sometimes within 20 days of first work, with strict deadlines after that. The notice isn't hostile; on commercial work it's routine paperwork that professional owners fully expect. Learn your state's deadlines before the first invoice, not after the last unpaid one. If a GC goes quiet on payment, the escalation sequence in the contractor guide to getting paid applies, with your lien deadline as the hard backstop on how long you can afford to stay polite.

Paperwork That Rides With the Invoice

A subcontractor invoice rarely travels alone. Missing attachments are the most common honest reason payments stall, so build the packet once and repeat it.

• A W-9 before the first payment, so tax paperwork never becomes the excuse; see W-9 and 1099 basics
• Current certificates of insurance, with the GC named exactly as the contract requires
• Lien waivers in the type and amount that match this payment, not the whole job
• Certified payroll or compliance forms on public jobs, because missing forms stop payment cold
• Whatever backup the contract demands: signed timesheets, delivery tickets, photos of completed work