How Do You Handle Subcontractor Billing and Payment?

A sub bills for more than their commitment, a backcharge for their damage never gets deducted, and you pay before the lien waiver is in.

Have subs submit billing scoped to their commitment, net any backcharges against that billing, and collect the lien waiver before payment, so you pay the right amount to the right sub with the protection in place.

What this workflow is

Subcontractor billing and payment is the cost-side workflow of a sub submitting a billing package against their committed scope, the GC reviewing it, netting any backcharges, collecting the lien waiver, and paying. Doing it well means scoping the sub's billing to their commitment and gating payment on the protections being in place.

Why it matters

Paying subs is where a GC's cost control and lien exposure meet. A sub who bills against the wrong scope, or whose damage to another trade's work never gets backcharged, erodes the job's margin. And paying a sub before their lien waiver is collected leaves the GC exposed to a lien from that sub or their suppliers. The failure mode is over-paying a sub, missing a backcharge recovery, or paying into open lien exposure, each of which quietly costs money the contractor will not easily get back.

How to do it

1. Issue the commitment to the sub

   The GC issues a commitment for the sub's scope, the cost-side authority their billing is measured against.
2. Have the sub submit billing scoped to the commitment

   The sub submits a billing package against their own commitment, seeing only their own scope, not the company's broader book.
3. Review the billing against the commitment

   The GC reviews the sub's billing against the committed scope, so a claim outside the commitment is caught before payment.
4. Net any backcharges

   Any backcharge for the sub's damage or cost is netted against their billing, so the recovery is captured at payment time.
5. Collect the lien waiver

   The sub's lien waiver is collected and verified as a condition of payment, so the GC is protected from a downstream lien.
6. Pay and record the cost

   Payment is made and the cost is recorded against the budget. The accounting system books the payable; Scaftra is not the accounts-payable ledger.

Common mistakes

How Scaftra runs it

Scaftra gives subs a billing portal scoped to their commitments, so a sub sees only its own committed scope and never the company book, and nets recoveries through a backcharge application against a sub-billing deduction. The actual sub-cost ledger lives on the cost side as commitments and purchase invoices, and the accounting system books accounts payable. A sub assignment is a visibility row, not a contract, so this page does not present Scaftra as cutting sub checks or running AP.

Key capabilities

• Commitment-scoped billing: Subs submit billing against their own commitments and see only their own scope, so a sub cannot bill outside their commitment or see the company book.
• Backcharge netting: Recoveries for a sub's damage or cost net against their billing through a backcharge application, so the recovery is captured at payment time.
• Lien-gated payment: The sub's lien waiver gates payment, so the GC is not paying a sub into open lien exposure.
• Cost-side ledger: Sub cost lives as commitments and purchase invoices on the cost side, with the accounting system booking the payable, so the positioning is honest about the ERP boundary.

Benefits

• Subs bill only against their own commitment, so over-billing is caught before payment.
• Backcharges net against the sub's billing, so recoveries are not given away.
• The lien waiver gates payment, so the GC does not pay into open lien exposure.

Who runs this

• GCs managing many subs.Contractors who need each sub's billing scoped to its commitment and backcharges captured at payment.
• Controllers gating sub payments.Finance staff who need lien waivers verified before a sub is paid and the cost recorded against the budget.

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