Employ thorough planning and aggressive follow-up to avoid cash flow problems and ensure prompt payment.

In numerous discussions on CBO’s LinkedIn group, members and readers have cited receiving timely payment as one of their top challenges. To address this concern, CBO spoke with several industry experts to get their take on a question many contractors are asking:

How do we ensure we get paid on time?

Tyler Paré
FMI Corporation
"Failure to efficiently collect receivables is one of the largest risks for construction firms. There are three fundamental things that must occur in order for a contractor to ensure payment: proper and timely billing, receivable monitoring and aggressive follow-up. Project managers are in the most unique position to champion all three of these efforts and influence cash flow. Billing properly and on time is Project Management 101. It’s the monitoring and follow-up pieces that are often subverted by more ‘urgent’ issues on the jobsite. It should never be a shock to a project manager if and when cash does not roll in after 30 days. Project managers should always be aware of the status of their billings and act proactively when receipt of cash is in doubt."


Chris Larmore, PHR, GBA, CRaM, CIC, CRIS
Red Cedar Insurance Agency
"It is important to separate getting paid (lien law) and getting paid on time. Often, payment delays are preventable by being proactive as you bid and perform work. Make sure you thoroughly read job contracts before signing. The provisions typically prevent payment unless followed to the letter. Make sure your insurance, license, bonding and bid capacity are all in line with the project. Remember, you are prequalifying the project and the general contractor just as much as they are prequalifying you. The contract is only successful if both parties can fulfill their obligations in the allotted time and according to contract provisions. The payable terms within the contract also dictate speed of payment, but the payable terms don’t commence until you have satisfied all contractual requirements. Lastly, keep thorough documentation of all these records and your progress on the job. Following up on accounts receivable should be done at least every 15 days—or more frequently if the amount is already past due. Remember: Whenever you sign a contract, you are also extending credit until you get paid for the work."


Marco Terry
Managing Director
Commercial Capital LLC
"Getting their invoices paid on time consistently is a problem for many construction business owners. Slow-paying invoices can create cash flow problems. Fortunately, this is something that can be corrected with a little bit of effort. Provide net 30 payment terms only to clients who have good commercial credit. Otherwise, you risk bad debt. (Determining client creditworthiness was covered in detail in an article Construction Business Owner magazine published in April 2014.) Then, keep track of your accounts receivable aging. Don’t let invoices go unpaid for too long. Follow up with clients who are late to ensure they pay promptly."


Dann E. Kroeger
The Maxern Group
"[The answer to this question] varies by contract. Your contract with the owner should be very clear on progress payments:

  • Billing formats (i.e. AIA Schedule of Values or other formats)
  • Rules on lien wavers (both unqualified and qualified)
  • Other documents specified in the contract
  • Submission due dates to the owner

"Your processes should allow you to collect this information from your project managers and subcontractors in a time-sensitive manner. Use of email documents and other forms of automation may reduce the time between your cutoff date and actual submission. Being late on submission may slow your progress payment."