What Stops Subcontractors From Getting Paid on Time

The payment chain: you’re last

Payment typically flows owner → GC → sub. The GC gets paid on their draw schedule or progress billing, then pays subs. So what stops subcontractors from getting paid on time is partly that you’re last in line. Any delay in what delays contractor payments to the GC becomes a delay to you. You can’t change the chain, but you can fund the wait with subcontractor financing—contractor working capital, accounts receivable financing, or contractor invoice financing—so you get cash on your invoices before the GC pays. For how payment timing works, see contractor draw schedule cash flow and construction payment terms explained.

Draw and approval delays

The GC submits a payment application; the owner or lender reviews it; there may be inspections; then the GC gets paid. Only after that can the GC pay you. So construction invoice payment delays and contractor slow paying at the GC level directly delay when subcontractors get paid. Subcontractor financing and accounts receivable financing let you get paid on your receivable (your invoice to the GC) without waiting for their payment run. For contractor waiting on invoices and what to do, see what contractors do when invoices are delayed.

Retainage and pay-when-paid terms

Retainage often applies to subs: a portion of your payment is held until the project is complete. So part of what you’re owed is delayed by design. Some contracts also have pay-when-paid or pay-if-paid clauses—you get paid when (or if) the GC gets paid. That ties your timing to theirs. Contractor working capital or a contractor line of credit can fund you during the retainage period. Subcontractor financing can cover the gap when the GC is slow. For retainage, see contractor retainage cash flow.

Contract terms and payment runs

Your contract with the GC may specify net-30, net-60, or payment within X days of the GC’s receipt of payment. So even after the GC is paid, they may have 30–60 days to pay you. That’s another reason subcontractors don’t get paid on time. Accounts receivable financing and contractor invoice financing advance against your invoices so you don’t have to wait for the GC’s payment run. For terms in general, see construction payment terms explained.

What subs can do

Negotiate shorter payment terms where you have leverage. Factor the wait into your pricing. Use subcontractor financing so you’re not dependent on the GC’s timing: contractor working capital, contractor line of credit, and accounts receivable financing or contractor invoice financing can turn your receivables into immediate cash for contractor payroll and materials. For a full list of options, see all funding options. If you want to explore, you can see what funding options may be available.

Why subs should line up financing before the job

If you wait until you’re waiting on a slow GC to look for subcontractor financing, you’re already in a pinch. Line up contractor working capital, a contractor line of credit, or a relationship with an accounts receivable financing or contractor invoice financing provider before you need it. Then when the GC’s contractor draw schedule or payment run delays your check, you can draw or factor and keep contractor payroll and materials on track. Subs who fund themselves are less vulnerable to what delays contractor payments and contractor slow paying GCs. For contractor cash flow problems in general, see that guide. Retainage often applies to subs too, so part of your payment is delayed until project completion; contractor working capital or a contractor line of credit can fund you through that period so what stops subcontractors from getting paid on time doesn’t stall your operations. Subcontractor financing and accounts receivable financing let you get paid on your invoices to the GC before they pay; for contractor draw schedule and what delays contractor payments, see those guides to understand the full payment chain. Contractor invoice financing and contractor slow paying clients cover the receivables and client side; the goal is to stop what stops subcontractors from getting paid on time from blocking your contractor payroll and operations. Subcontractor financing is built for electrical, plumbing, HVAC, and other subs—see that guide and accounts receivable financing for options. What stops subcontractors from getting paid on time is the payment chain and terms; financing lets you get paid on your invoice before the GC pays you. Subcontractor financing and accounts receivable financing turn your receivables into immediate cash for contractor payroll and materials. See contractor draw schedule and what delays contractor payments for why the chain is slow. What stops subcontractors from getting paid on time is the payment chain; subcontractor financing and receivables financing let you get paid on your invoice before the GC pays. Line up funding before the job so you’re not dependent on their timing.

Related guides

For sub-specific funding, see subcontractor financing. For receivables, see accounts receivable financing and contractor invoice financing. For payment timing, see what delays contractor payments and contractor draw schedule cash flow. For cash flow, see contractor cash flow problems.

Frequently asked questions

Why do subcontractors get paid late?

Payment flows from owner to GC to sub. The GC often waits for their draw or payment before paying subs. Draw approval, retainage, and payment terms add time. So subs are at the end of the chain and feel delays most.

What financing helps subcontractors get paid faster?

Subcontractor financing includes working capital, invoice factoring, and lines of credit. Factoring and receivables financing let subs get cash on their invoices to the GC before the GC pays. See subcontractor financing and accounts receivable financing.

Does retainage affect subcontractors?

Yes. Retainage is often applied to subs too—a portion of payment is held until project completion. That delays when subs get paid in full. Financing can bridge the gap during the job. See contractor retainage cash flow.

What is subcontractor financing?

Financing designed for electrical, plumbing, HVAC, and other subs who invoice GCs and wait for payment. Working capital, invoice factoring, and lines of credit can fund payroll and materials during the wait. See subcontractor financing.