Common Construction Payment Issues + Tips to Combat Them

4 min read

Are you considering renovations for your home? Many homeowners opt for a bit of remodeling or a whole renovation for their house to boost its appearance and increase its value. If this is the case for you, you need to contact a remodeling contractor to help you make this plan come true.

However, like any project, there are some payment issues you should be aware of before you get started. They can be a hassle, especially when you're eager to get this project done and over with. Here are some suggestions to help you combat them:

Billing Ahead

Some subcontractors send payment applications worth more than the work they have completed, which puts the general contractor in a tight spot. After all, contractors usually only want to pay out what they have to, and they can only sometimes predict the amount of work they will complete on a project.

If you're experiencing this issue with your remodeling contractor, you must improve communication between the general contractor and subcontractor. Ensure the subcontractor is billing you for the work they have completed, not the work they plan to do. Also, consider billing the subcontractors for the work they've completed up front rather than waiting for them to submit an invoice. This will help to avoid any payment disputes down the road.

Timely Document Collection

Most construction projects indicate a timeline of project start date to project completion date. However, what sometimes needs to be clarified is the sequence of events that should happen during that time. This can lead to some confusion and frustration on the part of the subcontractors, who may need to know when to start or finish their work.

When this occurs, you must let your remodeling contractor know they have missed out on their payment window: this way, the project start date to the project completion date.

Lien Waivers

A lien waiver form is a document signed by a contractor, subcontractor, or supplier that indicates they are releasing any claim of lien they may have regarding the project. This document is important because it helps to protect the property owner from any potential legal action that may arise if you don't pay the contractor or subcontractor for their work.

There are some cases wherein the lien waiver contractor, subcontractor, or supplier cannot get paid, but they may still be able to file a claim of lien. However, this will be more difficult if the property owner has a properly executed lien waiver form.

To avoid any legal disputes and confusion, it's important for the contractor, subcontractor, and supplier to understand the payment sequence and timeline for the project. This will help to ensure that everyone is on the same page and that everyone gets paid for the work that they've done.

Compliance Documents

Most contractors want to ensure that all subcontractors follow the same safety and compliance procedures. To do this, they will often require their subcontractors to provide compliance documents. This includes safety plans, insurance certificates, and workers' compensation forms.

If you are a subcontractor, it's important to understand what compliance documents the contractor requires from you. You may also need to provide some of your own compliance documents to the contractor. This helps ensure that everyone works safely and complies with the law.

These compliance documents always include the following:

  • insurance policy audits
  • safety plans
  • workers' compensation forms

Additionally, many contractors will also require the following:

  • OSHA 300 logs
  • certificates of insurance
  • contractor safety manuals
  • subcontractor safety manuals

If you are a subcontractor, ask the contractor for a list of the required compliance documents. This will help you be prepared and avoid delays in getting the job done.

Money Moving Logistics

When it comes to accounts payable, there are times when you may need to transfer cash from one account to another to cover the costs of work completed. For example, suppose your company has completed a project for a client but needs more funds to cover the project's cost.

In that case, you may need to move money from your general ledger (GL) account to your accounts payable (AP) account to pay for the work done. Money-moving logistics sheets can help make this process easier to follow. This sheet should include the following information:

  1. Date
  2. Project name
  3. Invoice number
  4. Vendor name
  5. Amount
  6. Payment terms
  7. Payment method

By tracking the movement of money in this way, you can help to ensure that everyone engaged in the project is paid on time and that everything is clear about who owes what to whom.

Final Thoughts

A few key payment issues can cause trouble during a construction project. That's why it's important to remember that communication is key when avoiding payment disputes with your remodeling contractor. By being proactive and addressing any issues as they arise, you can help ensure a smooth and successful project.


Cost Certified provides a reliable, high-quality software solution that helps remodeling contractors send accurate and timely estimates. This way, contractors can focus on their work while our software takes care of the billing and invoicing. Request a demo here to see how our software can help your business.