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How much can I charge clients specifically for requiring pay applications?

ArizonaPay Applications
Anonymous Contractor

There is a lot of work associated with pay applications and it is becoming more cumbersome as more systems are developed. I would like to have a supplemental charge for any client that requires us to use their specific pay application (system). Is this legally appropriate and is there a best practice on how much to charge?

1 reply

Matt Viator
Construction Lawyer
Levelset Admin at Levelset
| 1,003 reviews
Dec 13, 2019
Pay applications are a creature of contract and agreements between different construction businesses. So, there isn't really statute that determines how pay apps should be exchanged and whether a company might be able to charge for the administrative burden created by them. However, the cost of back-office work should generally be baked into bid prices. Charging a customer specifically for assembling a pay app might not be the best optics. So, instead, charging a marginally higher bid price in order to account for higher overhead might be a better method than charging, specifically, for assembling a pay app. Ultimately, though - it's all up to what the customer is willing to pay. If a customer is a-ok with you charging for pay app preparation, then there'd be no issue for billing for it.

Additional payment application resources

For more background on pay apps: -  How To Use Construction Pay Apps, Invoices & Lien Waivers Together To Get Paid Faster - Pay Apps: A Simple Overview – Common Forms and Parts - Construction Payment Applications | Pay Apps 101
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