Business

How long does a contractor have to pay subs?

A subcontractor, a calendar with a red square highlighted, and a stack of dollar bills

Construction project management is inherently labor-intensive. Even the best building whiz among us must juggle an endless stream of data, documents, deadlines and deliverables. It’s a lot.

It’s why project management software like Buildertrend is so important. Our platform helps you keep all those items in one seamless solution for the organization and success of your business.

Even with all our helpful features, you still need to know the rules of the road. It’s especially important that builders stay up to date on subcontractor payments to maintain important relationships, abide by prompt payment laws and keep projects on track.

That being said, let’s zoom in on one key question many builders have: How long does a contractor have to pay a subcontractor?

Well, the answer to that question varies. We’ll guide you through timely payments by providing some information about prompt payment laws and construction contracts, what to expect in the event of a late payment and how to keep track of payments with ease.

Know the terms of prompt payment laws and your construction contracts

While we wish there was an easy universal deadline, every project varies. There are two ways to determine how long you have to fulfill a subcontractor payment:

Prompt payment laws depend on how your project is being funded. Is it a federal, state or privately funded endeavor? Compare these laws to the contract you signed to see if they align. This is where things get tricky: Some states’ prompt payment laws override any other agreement, while others apply unless otherwise agreed.

To give you some context, most state laws determine that contractors need to pay subs within 7 to 14 days of receipt of payment from the project owner.

With this information in mind, most construction contracts will have payment terms spelled out. It’s vital to be aware of the language used in these contracts and if they include “pay-when-paid” or “pay-if-paid” clauses.

Being well-versed in prompt payment laws and contract clauses is one of the best skills to have in your business toolbelt, whether you’re a general contractor or subcontractor.

Know what to expect in the event of a late payment

There are several common conflicts that can arise in your construction business. However, one of the more serious issues you want to avoid is financial disputes.

Whether the time got away from you, communication was mismanaged or something was out of your control, not paying a sub on time can lead to some trouble.

A subcontractor might try to collect payment by sending a demand letter, sending a notice of intent to lien letter, filing a lien or filing a lawsuit.

Obviously, you want to avoid anything that might taint the relationship you have with your subs, but sometimes mistakes happen. The best way to move forward is to ensure those payments are sent in a timely manner and be prepared to improve your systems in the future.

Keep track of payments with ease

The best way to avoid payment disputes, however, is to have a dependable and easy-to-use financial and project management platform at the ready.

Not only is Buildertrend the best construction platform in the game with takeoff software, streamlined estimates and project management solutions, but we recently introduced a new way to pay with Buildertrend Payments.

Buildertrend Payments helps builders send sub and vendor payments with ease.

With this improved tool…

  • Builders can keep track of and send their payments without needing to leave Buildertrend
  • Builders can pay their subs through a simple email with just a few clicks
  • Subs and vendors can receive their payments for free – no fees are required
  • E-checks are sent through email, so subs don’t have to have a Buildertrend account to accept payments
  • Subs and vendors can select how to get paid, from ACH to physical checks
  • Builders can save time using this convenient feature instead of writing checks
  • Builders can save money with Buildertrend’s transition to flat payment fees

That’s just the beginning. Check out more of Buildertrend’s financial tools and schedule a demo today.  

About The Author

Kamrin Baker

Kamrin Baker Kamrin Baker is a freelance copywriter for Buildertrend.

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