Construction Payment Applications | FAQs, Guide, and Forms

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Construction Payment Applications

What is a Construction Pay Application?

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Video: Overview of Pay Apps In Construction

This 5-minute video will walk you through everything you need to know about payment applications, and how they work in construction.

AIA Payment Application

The AIA (American Institute of Architects) publishes one of the most popular construction payment application forms, the AIA g702. These are commonly used between general contractors and subcontractors on mid-sized and large jobs, and as part of a larger set of contract documents.

American Institute of Architects logo
Watch: How to fill out AIA Pay Application Documents

Video series explaining how to fill out the three documents that make up the AIA payment application: AIA G702 Application and Certificate for Payment; AIA G703 Continuation Sheet, and AIA G701 Change Order Form

Consensus Docs Pay Application

ConsensusDOCs publishes another popular application of payment form, the ConsensusDoc 292 Pay App. This form is commonly used by GCs and subcontractors to manage construction payment, and like the AIA docs, is used as part of a larger set of contract documents.

Payment Application Template (Excel)

General contractors and subcontractors commonly exchange construction payment applications using Excel templates. This is easy for the parties to use, does calculations well, and is free.

Levelset Pay Application

General contractors and subcontractors can easily exchange pay applications using Levelset, and the Levelset payment application template. This payment application form uses the common style of AIA, ConsensusDOCs, and Excel pay apps.

The Schedule of Values

The "Schedule of Values" refers to a component of most pay applications. Some pay app forms, like the AIA g702, refers to this as the "continuation sheet." It sets forth the actual work done and materials delivered by a contractor during the billing period.

Construction Draw Request Process

The construction payment process is unique and typically follows a monthly "draw request" process.

Progress Payments & Billing

Many general contractors, subcontractors, and vendors will get paid monthly, and more than once, on a construction job. This results in "progress billing" and progress payments.

Regular Invoicing

Sometimes, a construction job is not complex, regulated, or structured enough for formal payment processes. In these cases, the parties will invoice the job in a more regular fashion.

Construction Loan Draw Process

Many commercial construction jobs have a construction lender in place, and these lenders will dictate a formal payment and payment application exchange process.

Running Accounts Billing

It is common, especially on smaller projects, for contractors to work a job on a "running accounts" billing system, whereby the contractor is paid hourly, through T&M, or else wise, while passing along bills as they accrue.

Billing on Prevailing Wage Jobs

The payment process can be complicated when construction jobs are regulated and have prevailing wage requirements. Payment applications must contain certified payroll records in this instance, and this complicates the pay app process.

In construction, a pay application is a group of documents exchanged between contractors during payment. On each project, the pay application process will likely differ, since the application process is governed by the construction contract. The contract should provide detail on the form to use, documents to include, and application timing and deadlines.

Pay applications go by a variety of names, including payment applications, applications for payment, pay apps, invoices, and more.

This page provides you with a guide to everything you need to know about pay applications in construction. You’ll find answers to frequently asked questions, downloadable forms, and common issues and mistakes. We’ll also cover how payment terms and laws affect your payment applications (i.e. retainage, prompt payment, pay when paid clauses, etc.). Ultimately, this page should help you understand the pay application process, to make it as easy as possible.

Invoices vs. pay applications

In most industries, the invoicing and payment process is simple. When owed money, the business owner or person in charge of bookkeeping generates an invoice using their accounting software package (such as Quickbooks for small businesses, or an enterprise ERP for bigger companies), and sends the invoice to their customer. This gets logged into their accounting software as an “accounts receivable.” The party receiving the invoice, on the other hand, inputs this into their own accounting software as an “accounts payable,” and in time, makes a payment to the invoicing party (i.e. the vendor). Almost any accounting product can handle this invoicing and payment process with ease.

On most construction jobs, the payment process and the method of applying for payment are quite unique.

Instead of preparing a simple invoice, construction job participants are required to prepare a full “application for payment.”  These pay applications are much more robust than a simple invoice. In fact, they are more like a full payment “package,” and since it requires many items that do not live within accounting systems, the package is usually assembled by-hand and involves a variety of people across an organization.

What to include in a pay application

A construction pay application typically requires the following items to be included:

  1. A “Schedule of Values” or “Continuation Sheet” identifying all the work completed and materials delivered during the pay period;
  2. Backup evidence of the work done / materials delivered. This may include photographs, statements, daily work logs, material delivery confirmations or invoices, etc.;
  3. Lien waivers signed by the party submitting the payment application, and lien waivers collected from subcontractors, suppliers, and other vendors hired by the party submitting the payment application;
  4. If on a prevailing wage job, certified payroll records.

Clearly, these items are not all stored in a Quickbooks account, or in an enterprise ERP.

Instead, they are most likely spread amidst different electronic and physical job folders, different job participants, and must be manually created by the parties depending on the specific requirements of a job.  And since so many layers of job participants are involved, and documentation must be assembled from each of them, it can be painful for those preparing construction pay apps in collecting, tracking, and requesting documentation (like lien waivers) from the right parties.

Pay application timing

Since the payment application process is so convoluted and intricate, it’s no wonder that the parties choose to do it only monthly. The difficulty in preparing pay applications, tracking them, and approving them is exactly why construction jobs have payment draw schedules. And it’s part of the reason why it takes so long for payments to get processed in construction.

The other difficult thing about construction pay applications is that they are unique to each project. What is required in a pay app, including the form that should be used, changes from project-to-project depending on the specific requirements set forth on that job. It’s not uncommon for a subcontractor to be juggling different pay application requirements on every one of their jobs!

AIA & ConsensusDocs

Some organizations, like the American Institute of Architects (AIA) and the ConsensusDOCs group, have tried to standardize the payment process (and all construction contracting) with standard “form documents.”  Both groups have popular payment application forms as part of their form sets. But, unfortunately, even when one of these “form” pay applications are used, the specific requirements can remain unique and time-consuming.

Watch: How Payment Applications Work in Construction

Watch: How to fill out the AIA G702 payment application

Construction Pay Application FAQs

The construction payment application process can be complicated, as can be the pay app document itself. In fact, the pay app is not even a simple, single document. It's commonly an entire assembly of documents and information. To help you get every pay application exactly right, here are some commonly encountered issues and frequently asked questions about preparing pay applications, receiving & collecting pay apps, and more.

Is a payment application the same as an invoice?

No. In construction, a payment application may include your invoices and other invoices, but it is something a bit different.

At it's core, the pay application and the invoice serve very similar functions. They are both a request by one party for payment from another party. However, compared to a pay application, an invoice is incredibly simple and basic.

An application for payment is exactly what it sounds like -- an application by one party to another for payment. And just like an application for employment, an application to attend a school, or something similar, an application to get paid requires that a contractor submits a bunch of materials to show why the contractor is qualified for payment.

The "Payment Application" form itself varies from project to project. There are standard forms that are commonly used published by the AIA, ConsensusDocs, and others. Or, even more frequently, parties will prepare their own custom pay apps.

We wrote about this in more detail in the article Pay Apps: A Simple Overview – Common Forms and Parts.

How do I know which pay application form to use?

The first thing you'll want to do is refer to the Contract Documents. It's very common that the pay application form is actually provided as an exhibit or attachment with the contract between contractors. Or, if the form itself is not provided, for the parties to at least describe what must be included in the pay application.

If the form itself is attached with your contract, you'll want to use that form, or a form that is styled like that form. If the form is not attached with your contract, you'll want to use a clear and simple form that follows all of the pay application form best practices.

Do I need to pay for the AIA or ConsensusDocs pay application forms to get paid?

Usually, you don't. The AIA and ConsensusDocs forms are commonly referred to by the contractors, but because these documents are sold, are expensive, and aren't very user friendly, they can be a real pain in the neck to actually use.

Usually, you don't have to use these actual documents. You can just as easily use a document that is 'styled' like these documents, and that contain all the information required to make your pay application. The Levelset pay application template and electronic sending/requesting process is a great substitute for this.

You can learn more about the AIA, ConsensusDocs, and other common form pay application templates here.

What to do if a GC, lender, or owner is requiring we use their pay application submission system?

It's becoming more and more common for lenders, owners, developers, or general contractors to use technology products to collect payment applications. A few common systems include Oracle's Textura, Procore, and even Levelset's own pay application system.

This creates some accounting and process difficulties for folks. We wrote about this at length in the blog post, Construction payment software applications can present difficulties to set accounting procedures.

As we stated in that article, "Construction payment software applications are a great concept – get paid faster, store documents/information in the cloud – but can be less game-changing in practice, at least until everybody gets on the same page (or close to it). Collaboration is the key to a successful streamlining of the payment process."

When do I need to submit my pay application?

The answer to this question probably depends on the construction job and the construction contract you signed for that job. Most contracts select one day during the month (i.e. the 15th, the 25th, the 10th, etc.), when all payment applications will be due. You'll want to submit your payment application, fully completed, by this date.

How long will it take to get paid after submitting my payment application?

This depends. Every construction contract is different in how long payments should take, and every contractor/owner/lender is different, too. Many contracts also include "pay when paid" or "pay if paid" clauses, which can really complicate and delay a contractor's payment timing.

It could take quite some time to get paid, and this is more the reason to be very, very detailed and on-the-money when it comes to preparing and submitting your payment application.

Should retainage be included in the pay application?

The answer to this question is a "yes" and "no."

Most jobs have "retainage", which is a designated percentage of the contract price held back from a contractor until the final completion of a job.

Pay applications typically require that the retainage amount is identified within it, and so yes, the "retainage" for a pay application period should be included in the pay application itself.

However, this amount will be excluded from the amount being paid to the contractor, and thus it will not be part of the amount applied for.

Can I get my payment from the contractor early once my pay application has been approved?

This depends. There are many contractors that offer early payment on your payment application. But, be careful, these offers can be expensive.

Does my pay application need to be notarized?

The answer here is easy, and tricky.

First, pay applications do not need to be notarized by law. There is never, ever, ever, a legal requirement to have an "application for payment" notarized.

However, it it not unheard of for general contractors, owners, lenders, and others to request notarization in a pay app. And that is what makes this tricky, because if a payment is going to get held up, then you might as well jump through the unnecessary hoop.

But, let's just say this: there is a special place in hell for whoever is responsible for making notarization of pay apps a thing at all. It was probably a lawyer.

This is a common-ish practice because the AIA pay application form has a place for notarizing the pay app. This is actually quite crazy. Wouldn't it be crazy if you asked all of your vendors to notarize all of their invoices? It would not only be uncalled for, but what a ridiculous thing to do to an already manual process!

Notarizing a document does not make it more "official," or "legal," or true, or anything. Ask yourself, do you really need someone to swear to their invoice? For what? When has this ever made a difference? What you going to sue them for perjury?

Notarizing payment applications is a waste of time...but, if not notarizing your pay app is going to make payment take more time, then you probably should bite the bullet and just do it. But please, if you can control the matter, don't ask for it!

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Construction Pay Application Forms & Templates

Construction pay application forms can be complicated, and you’ll want to pay close attention to the requirements of the pay application form on your job. Every contractor, owner, lender, and project may have different requirements. There are a few different “standard” pay application forms, such as the ones published by ConsensusDOCs and the AIA, but even when these are required, it’s common that you can use a form that is styled like these as opposed to needing these exact forms.

The following pay application forms are made available to you for free. There are different pay application forms available here. It’s always a good idea to use a system, like Levelset, to make the creation and assembly of your pay application form and package easier.

Accepted by GCs Everywhere

Levelset's payment application forms are accepted by general contractors, owners, and lenders.

Easy to Use

It's easy to use our system to prepare your pay application form, include all necessary attachments and data, and get payment processed faster.

Send or Receive Payment Docs

Need to send a payment doc? Or receive/request one? It's easy to send or request pay apps, with lien waivers, through Levelset.

Payment Application Form - free from

Payment Application Form

Payment applications can get complicated, fast. This is the Levelset payment application – streamlined for ease of use.

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