Net-60 and Net-90 Payment Terms in Construction: What They Mean and How to Manage Them (2026)

What Do Net-60 and Net-90 Mean in Construction?

“Net-60” and “net-90” are payment terms that specify when a payment is due relative to a triggering event — usually the invoice date, the date a pay application is submitted, or, in construction, sometimes the date the GC receives payment from the owner.

Net-60: Payment is due within 60 calendar days of the stated trigger.

Net-90: Payment is due within 90 calendar days of the stated trigger.

In many industries, these terms are simply a billing convention. In construction, they interact with the industry’s complex multi-party payment chain in ways that extend actual wait times well beyond what the numbers suggest.

The trigger matters enormously. “Net-60 from invoice submission date” means something different from “net-60 from the date GC approves the pay application” or “net-60 from the date the GC receives payment from the owner” — which is a pay-when-paid construct in different language. Always clarify what the clock starts from when you’re reviewing payment terms in a subcontract.

How GC Payment Cycles Actually Work

To understand why net-60 often means 75–90+ days in practice, you need to trace the full payment cycle step by step:

Step 1 — Subcontractor submits pay application: Most commercial contracts require monthly pay application submissions on a specific date (often the 20th–25th of each month). If you miss that date by a day, your application may not be processed until the following cycle.

Step 2 — GC reviews pay application: The GC’s project manager reviews your application, verifies quantities against the schedule of values, checks for compliance with any backup documentation requirements (certified payroll, lien waivers), and approves or modifies. This review takes 5–15 days.

Step 3 — GC submits to owner: After approving your pay app as part of the GC’s overall application, the GC submits to the owner (or owner’s representative, such as the architect or construction manager). Submission may happen on a set schedule — for example, the GC may consolidate all sub approvals and submit to the owner once per month.

Step 4 — Owner reviews and approves: The owner, often through an architect or CM, reviews the GC’s application, inspects work in place, and approves or disputes. This process takes 10–30 days on most commercial projects.

Step 5 — Owner pays GC: After approval, the owner issues payment to the GC. Owner payment terms — often net-30 from approved application — means this step adds another 30 days.

Step 6 — GC pays subcontractor: Under net-60 terms from the date the GC receives owner payment, the GC has up to 60 more days after receiving the owner’s check to pay you. In practice, most GCs pay more quickly, but they have the contractual right to use the full term.

The real timeline: From the date you performed the work to the date you receive payment:

• Work performed: Day 0
• Pay application submitted (end of month): Day 15–25
• GC approves your app: Day 30–40
• GC submits to owner: Day 35–45
• Owner approves: Day 50–65
• Owner pays GC: Day 65–80
• GC pays sub (net-60 from owner payment): Day 125–140

That’s 4–5 months from performing the work to receiving payment — on a “net-60” contract. This is the gap that causes subcontractor cash flow problems. Payroll, meanwhile, ran every Friday from Day 0 through Day 140.

Why the Real Wait Is Often Longer Than Stated Terms

Several factors routinely extend actual wait times beyond the stated payment terms:

Pay application deficiencies: If your pay application is returned for any reason — missing lien waiver, incorrect quantities, non-compliant documentation — the clock may restart. Even a minor deficiency adds 15–30 days to the cycle.

End-of-month bundling: GCs often bundle all sub pay applications and submit once per month to the owner. If your application was approved on the 5th and the GC submits to the owner on the 25th, 20 days have already elapsed before the owner’s clock starts.

Owner disputes: If the owner disputes any portion of the GC’s application — even a portion unrelated to your work — the entire application may be held up while the dispute is resolved.

Understaffed owner accounting: Many owners, particularly smaller developers, have limited accounting infrastructure. Payment processing that should take a week may take three weeks due to staffing, approval chains, or owner cash flow issues of their own.

Holiday periods: The Christmas–New Year period and Thanksgiving week are notorious for slowing payment processing. Applications submitted in mid-November may not be processed until January.

Banking delays: Even after the GC issues a check, bank clearance and ACH processing add 2–5 days.

How Net-60/90 Affects Subcontractor Payroll and Material Purchasing

The operational impact of net-60/90 terms is felt in two specific areas: payroll and materials.

Payroll: Most construction crews are paid weekly or bi-weekly. A 20-person crew at $55/hour average fully-loaded cost (wages + taxes + benefits) generates roughly $44,000 in weekly payroll. Over a 60-day payment cycle, that’s approximately $176,000 in payroll costs that have been paid out before the corresponding draw arrives. Over a 90-day cycle, the figure is $264,000.

This is the fundamental cash flow math of construction: you pay your people before you get paid. Net-60/90 terms don’t change this — they just quantify how long the gap is.

Material purchasing: Suppliers typically offer net-30 terms, with early pay discounts for faster payment. If your GC is paying you net-60 but your concrete supplier wants payment net-30, you’re funding 30 days of materials out of pocket. For a project with $150,000/month in material costs, that’s $75,000 in material float you’re carrying at any given time.

Some contractors respond by negotiating extended terms with their suppliers, matching supplier payment to their expected draw receipt. This works but can damage supplier relationships or result in less competitive material pricing. Financing the gap — rather than passing it upstream to suppliers — is often the cleaner solution.

Calculating Your Actual Funding Gap

To determine how much working capital you actually need to bridge a net-60 or net-90 payment cycle, use this calculation:

The basic formula: Weekly cash out (payroll + materials + equipment) × Number of weeks until first draw = Minimum required working capital

Example — Concrete subcontractor on a net-60 payment cycle:

• Weekly payroll: $38,000 (18 workers)
• Weekly material purchases: $22,000 (concrete, rebar, forming supplies)
• Weekly equipment cost: $8,000 (equipment lease + fuel)
• Total weekly cash out: $68,000
• Weeks until first draw payment (net-60 from pay app submission, with 15-day review lag): roughly 11 weeks
• Minimum working capital needed: $68,000 × 11 = $748,000

This is a significant number — and it’s not unusual for a mid-size concrete contractor. Most contractors cover this through a combination of: existing cash reserves, a working capital line, and active management of material purchases.

A second formula — steady-state gap: Once you’re multiple months into a project, the funding gap is not the entire project duration — it’s the rolling 60 or 90 day window. At steady state: (Daily cash out × payment days) = Steady-state funding gap. For our concrete contractor: $9,714/day × 75 days (net-60 plus typical processing lag) = approximately $728,500.

Early Payment Discounts and How to Negotiate Them

One underutilized tool for managing payment timing is the early payment discount — offering your GC a small discount on your invoice in exchange for faster payment.

How it works: You offer to reduce your invoice by a small percentage (typically 0.5–2%) if the GC pays within 10–15 days rather than 60 days. The GC gets a small savings; you get cash 45–50 days earlier.

The math for the GC: A 1% discount for paying 50 days early is equivalent to roughly 7.3% annualized cost of capital for the GC (1% × 365/50). For a GC with access to cheap capital, this may not be attractive. For a GC who is also cash-constrained, a 1% discount for immediate payment may be less interesting than the flexibility of the 60-day term.

When it works best: Early payment discounts are most effective when:

• You have an ongoing relationship with the GC (trust is established)
• The GC has abundant cash or access to a working capital line themselves
• The amounts are large enough that the discount is meaningful to both parties
• You’re working on a specific project where you need faster cash for a specific reason

Asking for it: Raise the conversation during contract negotiations, not after you’ve signed. Include the discount option in your subcontract proposal as an optional term. Frame it as a mutual benefit — you get cash, they save money.

Prompt Payment Statutes and Interest Penalties

Most states have enacted prompt payment statutes that set maximum payment timelines and require interest penalties for late payments. These statutes provide important rights that contractors often don’t know about or don’t invoke.

Private projects: State prompt payment laws for private construction projects typically require payment within 30–45 days of a proper invoice, and may require interest (often 1–1.5% per month) on amounts not paid within the required period. However, enforcement requires you to send a written demand and potentially pursue legal action — it’s not automatic.

Public projects: Federal and state public project prompt payment laws are often more stringent and may override contractual net-60/90 provisions. The federal Prompt Payment Act, for example, requires federal agencies to pay prime contractors within 30 days, and requires prime contractors to pay subs within 7 days of receiving payment. Many state equivalents set 30-day limits for public project payments.

Using prompt payment statutes strategically: A well-crafted payment demand letter that cites the applicable prompt payment statute and notes the accruing interest obligation often accelerates payment from GCs who are otherwise in “wait and see” mode. The threat of a statutory interest claim changes the calculus for GCs with slow-paying habits.

Financing Tools That Bridge Net-60/90 Gaps

When you know payment is coming but the wait is too long, financing is the most practical bridge:

Invoice factoring: Convert approved pay applications into immediate cash — typically 80–90% of face value within 24–48 hours. The factor collects from your GC when net-60 or net-90 arrives. You pay a factoring fee (1.5–5% of the invoice, depending on the payment period). This is the most direct solution when you have specific large invoices to address.

Working capital loan: A lump-sum advance based on your overall revenue and bank statement history. Repaid over 6–24 months on a fixed schedule. Best for covering the overall operational gap rather than addressing a specific invoice.

Revolving line of credit: Draw what you need to cover payroll or materials, repay when the GC’s payment arrives, draw again next month. The most efficient tool for managing recurring net-60/90 gaps, because you only pay interest on what’s drawn and only for the time it’s outstanding. See all working capital options.

Material purchase financing: Some specialty lenders offer financing specifically for material purchases, structured to align with project payment timelines. If your largest cash outlay is materials (rather than labor), this targeted product may be more efficient than general working capital.

The gap created by net-60 and net-90 payment terms is not a sign of a problem — it’s a structural feature of commercial construction. Contractors who plan for it and finance it intelligently can bid more work, operate more consistently, and avoid the crises that come from funding gaps that were predictable but not planned for.

See what funding options may be available to bridge your net-60 or net-90 payment gap without disrupting your operations or payroll.

Frequently asked questions

What does net-60 mean in a construction subcontract?

Net-60 means payment is due 60 days from the invoice date — or, depending on the contract, 60 days from the GC's receipt of payment from the owner (which is a pay-when-paid variation). Read your contract carefully. "Net-60 from invoice date" and "net-60 from owner payment" can differ by 30+ days in practice.

Are net-60 and net-90 payment terms standard in construction?

Net-30 to net-45 is the common standard for smaller commercial and residential subcontracts. Net-60 is increasingly common on large commercial and industrial projects. Net-90 appears on some large institutional projects and federal contracts, though prompt payment statutes may override these terms. Many subcontractors are not aware they can negotiate payment terms before signing.

What are prompt payment statutes and do they override net-60/90 terms?

Prompt payment statutes exist in most states and at the federal level. They set maximum payment timelines — often 30 days for public projects — and require interest penalties for late payments. On public projects, prompt payment statutes often override contractual net-60/90 terms. On private projects, the contract terms usually govern.

Can I negotiate shorter payment terms?

Yes, especially before you sign the subcontract. Requesting net-30 instead of net-60 is a reasonable ask — some GCs will agree, particularly for trusted subcontractors or when the GC's contract with the owner has more favorable terms. Early payment discounts (offering a small discount in exchange for faster payment) are another negotiating tool.

How does retainage interact with net-60/90 terms?

Retainage and payment terms are separate issues. Net-60 or net-90 governs when you receive each draw payment. Retainage (5–10% withheld from each draw) is separate — it's held until project completion regardless of payment terms. So you may wait 60 days for each draw and then 90+ days after project completion for retainage. The combined cash flow impact is significant.