Course outline

Module 1 · The money: what you're getting into 5 minUpdated September 13, 2026

How money moves on a commercial job

On commercial work you pay for labor and material first and get paid later. You bill the GC monthly for work completed, the GC bills the owner, the owner pays the GC, and the GC pays you — commonly 60 to 90 days after the work was done, minus retainage. You finance that gap with your own cash or credit, so a profitable job can still drain your bank account.

By Michael Reddy, IntelBid

After this lesson you can

Walk through the monthly billing cycle from cut-off date to check
Estimate how much cash a job ties up before it pays
Compare residential and commercial payment realities honestly

How does the billing cycle work?

Do the work
You install flooring and pay for it — crew payroll weekly, material on your supplier's terms.
Hit the cut-off
Each project has a monthly billing cut-off, commonly around the 25th. You bill for work completed through that date; anything after waits a month.
Submit a pay application
Your pay application shows percent complete on each schedule of values line, subtracts retainage and previous billing, and arrives at the amount due. Lien waivers and other documents usually go with it.
The GC bills the owner
The GC combines every trade's application into its own and sends it to the owner, usually after the architect reviews it.
The owner pays the GC
Commonly 30 days or more after the GC's application is approved.
The GC pays you
Often within a set number of days after the GC is paid — and under some contracts only if it's paid, which is a lesson of its own.

Through the month
Do the work
Crew payroll weekly, material on your supplier's terms. Money goes out first.
Commonly around the 25th
Billing cut-off
Work completed through this date goes on this month's bill.
Right after the cut-off
Submit your pay application
Percent complete by line, less retainage and previous billing, with lien waivers.
Next
The GC bills the owner
Every trade's application combined, usually after the architect reviews it.
Commonly 30 days or more
The owner pays the GC
After the GC's application is approved.
A set number of days later
The GC pays you
Minus retainage — and under pay-if-paid terms, only if the GC was paid.

Commonly 60–90 days from doing the work to your check.

Retainage, commonly 5–10% of each bill, stays held until closeout.

One billing cycle, from the work to your check. Timing is set by each contract — these are common patterns, not rules.

What does the gap look like in dollars?

Cash tied up on a $240,000 flooring jobWorked example · illustrative numbers

Contract value: $240,000
Install duration: 3 months, spread evenly
Your costs (labor + material): 75% of contract
Retainage: 10% of each billing
Payment timing: 60 days after each cut-off

Each month you bill a third of the contract, $80,000, and spend $60,000 on labor and material to earn it.
Retainage holds back 10%, so each payment is $72,000 — and it arrives about 60 days after that month's cut-off.
By the end of month 3 you've spent $180,000 and received nothing. Month 1's payment is only just arriving.
Months 4 and 5 bring the other two payments. Only after the last one are you back above zero, at +$36,000.
The remaining $24,000 is retainage — 40% of the job's $60,000 profit — held until the project closes out.

Peak cash out of pocket: about $180,000 on a $240,000 job. The profit arrives last, and a big piece of it arrives months after you've left the site.

Run your own job

Cash flow calculator

Change the numbers to match a job you're bidding. It assumes even monthly progress and billing at each month-end cut-off.

Contract value

Install duration

months

Your costs (labor + material)

% of contract

Retainage

Days from cut-off to payment

days

Peak cash out of pocket: $180,000; end of month 3
Back above zero: end of month 5; $36,000 after the last progress payment
Retainage held until closeout: $24,000
Retainage as a share of profit: 40%; of $60,000 profit

IntelBid tracks this on every won job: pay applications, retainage held and what's still owed. Start your free trial

Growth makes the gap bigger, not smaller

Every new job opens its own gap. Three jobs like this one running at the same time could tie up over half a million dollars before the first checks land. A flooring sub can be profitable on paper and still run out of cash — plan working capital before you chase volume.

How is commercial money different from residential?

	Residential	Commercial
When you're paid	Deposit up front, balance on completion	Monthly progress payments, often 60–90 days after the work
Deposit	Common	Uncommon — but worth asking for (here's how)
Held back	Rarely anything	Retainage, commonly 5–10% of each payment
Who pays you	The owner	The GC, usually after the owner pays the GC
Paperwork to get paid	An invoice	Pay application, lien waivers, sometimes certified payroll and updated insurance certificates
Collection leverage	Lien rights against the owner's property	Lien or payment bond rights — plus your supplier's

How do subcontractors fund the gap?

Cash reserves. The cheapest money there is. Build them deliberately before scaling up commercial work.
A business line of credit. Set it up before you need it — banks lend readily to healthy businesses and reluctantly to ones in a cash crunch.
Supplier terms. Net 30 or longer from your distributor shifts part of the gap onto the supplier. Paying reliably is what earns longer terms.
Better terms on the job. Deposits, stored-material billing and early-pay discounts, covered in getting paid faster.
Invoice factoring. Selling receivables for immediate cash. Fast but expensive, and some subcontracts restrict assigning payments, so read the terms first.

What shortens the gap on your side?

You can't control when an owner pays, but you control everything on your side of the cycle:

Bill every month on the cut-off, even for a small amount of work.
Get your schedule of values approved early so the first pay application isn't held up arguing over line items.
Send every required document with the application. A missing lien waiver or certificate holds the entire payment — and nobody calls to tell you.
Record when each application was submitted and follow up the day a payment is late.

How long does it take subcontractors to get paid on commercial jobs?

Commonly 60 to 90 days from the end of the billing period, sometimes longer. The GC bills the owner, the owner pays the GC, and the GC then pays you under your subcontract's terms.

How much working capital does a subcontractor need?

Enough to carry labor, material and overhead on every active job until its payments arrive. Model each job month by month with your real costs, payment timing and retainage; the peak can be larger than two months of that job's costs.

Can I bill for flooring material before it's installed?

Often, as stored materials, if your contract allows it and you meet its conditions — typically invoices, insurance and approved storage. It's covered in the lesson on getting paid faster.

Key points

You pay for the work first; the check commonly arrives 60–90 days later, minus retainage.
One healthy job can tie up most of its cost in cash before its first payment.
Bill on every cut-off with complete paperwork — the only part of the cycle you fully control.

In IntelBid · Proposal builder → Payment terms

Payment terms on every proposal

Every IntelBid proposal carries the payment terms you choose — net 15, 30, 45 or 60, due upon completion, or Deposit + balance with a deposit percentage. Set your default once in Settings and change it on any single document. Proposal terms won't override a GC's subcontract, but they put your expectations on the record from the first number you send.

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About the author. Michael Reddy builds IntelBid, bid management software for commercial flooring subcontractors. These lessons come from the bid desk: how the work is priced, won and paid for.