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Construction Payment Applications | FAQs, Guide, and Forms

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Construction Payment Applications

What is a Construction Pay Application?

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  • Types of Billing
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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 may also be called payment applications, applications for payment, or pay apps.

Difference between invoices & 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.

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 pay application typically requires the following items to be included:

  1. Schedule of values or continuation sheets identifying all the work completed and materials delivered during the pay period.
  2. Daily reports that explain the details of the site and the job while providing a record to help keep subs and stakeholders informed.
  3. Photo documentation for backup evidence of the work done / materials delivered.
  4. Vendor invoices that organize and determine how much you owe to suppliers.
  5. 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.
  6. Certified payroll reports on a prevailing wage job.

Pay application mistakes

Pay application timing

Since the payment application process can be complicated, 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.

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.

For GCs: Collecting & tracking payment applications

On large construction projects, collecting payment applications from all of the subs on the job – and tracking them – can be a complicated task for general contractors. Subcontractors will provide varying levels of detail, and follow-up will often be necessary. It’s important to make sure that subs understand their responsibilities when submitting a payment application, and that you have a process in place for organizing them as they are submitted.

Watch: How Payment Applications Work in Construction

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 its 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.

Learn more about how pay applications work in construction, and how they differ from construction invoices.

How do I know which pay application form to use?

The first thing you'll want to do is refer to your construction contract. It's very common that the pay application form is actually provided as an exhibit or attachment with the contract between contractors.

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.

Learn more in our Checklist for Preparing and Submitting Pay Applications.

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 frustrating to actually use.

You typically don't have to use these actual documents. Unless the contract explicitly requires it, you can generally, and just as easily, use a document that is 'styled' like these documents, and that contain all the information required to make your pay application.

Download a pay application form template modeled after standardized construction pay apps.

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. Learn how construction payment software applications can present difficulties to set accounting procedures.

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.

Not sending timely, regular submittals is one of the common pay application mistakes contractors should avoid.

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.

See Why Does it Take So Long to Get Paid in Construction? And What Can I Do About It?

Should retainage be included in the pay application?

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

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.

Everything you need to know is in our article on How to Include Retainage in a Construction Pay App.

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 these offers can be expensive.

Invoice factoring is a way to get cash for your pay applications or invoices after you submit them, but before they are approved. Learn more about invoice factoring in construction.

Levelset also offers cash up front for your outstanding or overdue pay applications.

Does my pay application need to be notarized?

It is not unheard of for general contractors, owners, lenders, and others to request notarization in a pay app.

Some parties adopt this practice because the AIA pay application form has a place for notarizing the pay app.

Notarizing payment applications is generally 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.

Read more about when to notarize construction documents - and when you can avoid 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.


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