Your Subs Are Your Business
As a general contractor, your reputation is only as good as the subcontractors you can attract. And the #1 thing that determines whether the best electricians, plumbers, and framers want to work with you? How fast and reliably you pay them.
Late payments are the single biggest reason quality subs leave one GC for another.
The True Cost of Late Payments
- Lost talent: Top subs have options. They'll stop returning your calls and work with GCs who pay on time.
- Schedule delays: When subs don't prioritize your jobs because of payment history, your projects slip.
- Legal risk: Unpaid subs can file mechanics' liens against your client's property — which comes back on you.
- Reputation damage: The trades community is small. Word travels fast about GCs who don't pay.
6 Payment Best Practices for GCs
1. Set Clear Payment Terms Upfront
Before work begins, both parties should agree in writing on:
- Payment schedule (milestone-based or periodic)
- Invoice submission process and format
- Net terms (Net-15, Net-30, etc.)
- Retainage percentage, if any
Ambiguity creates disputes. Clarity creates trust.
2. Pay Within 7 Days of Invoice Approval
The industry standard is Net-30, but the GCs who attract the best subs pay faster. If you've verified the work and approved the invoice, pay within 7 days. Your subs have bills too.
3. Track Every Invoice in One System
Juggling invoices across email, text messages, and paper will guarantee something gets missed. Use a centralized system to track:
- Invoice received date
- Approval status
- Payment date and method
- Outstanding balance per sub
4. Separate Client Payments From Sub Payments
Don't wait for the homeowner to pay you before you pay your subs. Your cash flow management is your problem, not theirs. Use a project ledger to track what's coming in from clients and what's going out to subs independently.
5. Issue Lien Waivers With Every Payment
Protect yourself and your client. Issue conditional lien waivers with payment, and collect unconditional waivers once the check clears. This is non-negotiable best practice.
6. Communicate Proactively About Delays
If a payment will be late, tell your sub before the due date — not after. Explain why, when they can expect it, and stick to that commitment. Subs can handle a delay. They can't handle silence.
The Bottom Line
Paying your subs well and on time isn't charity — it's business strategy. The GCs who retain the best trades win the best projects, finish on time, and build the strongest reputations.
Automate Your Sub Payments
BuildLedger gives general contractors a real-time ledger of every subcontractor invoice and payment across all active projects. See who's been paid, who's outstanding, and what's due — all in one dashboard.