This article is sponsored by Siteline.
Would you take a 15% margin job if it meant waiting 90 days to get paid? What if that extended payment cycle actually costs you more than the project earned?
Whether you’re working directly for an owner or through a GC, most commercial subcontractors evaluate potential clients on project size, profit margins, and relationship quality. While these factors remain crucial, there’s another metric that deserves equal weight in your client selection process: payment speed.
The difference between working with consistently fast-paying clients vs. chronically slow payers can make or break your cash flow — and ultimately, your business.
The Unseen — But Often Felt — Impact of Payment Timing
When subcontractors talk about profitability, the conversation typically centers around job margins and project efficiency. But payment timing creates a ripple effect that touches every aspect of your operations.
Consider two identical $100,000 projects with 15% margins. Project A pays in 30 days, while Project B takes 90 days (the average time it takes for subcontractors to get paid). On paper, both generate $15,000 in profit. But in reality, the delayed payment on Project B costs you significantly more.
Here’s why — while you wait those extra 60 days to get paid on Project B, your business expenses don’t stop. You still need cash for payroll, materials, and other jobs.
Since your $100,000 is tied up in an unpaid invoice, you’re forced to borrow money to cover these ongoing costs. At an 8% annual interest rate, financing that cash flow gap for 60 days costs you roughly $1,300 — nearly 9% of your profit on that project.
More importantly, that tied-up capital prevents you from taking on additional work or forces you to seek even more expensive financing to maintain operations.
The Compound Benefits of Fast-Paying Clients
Working with reliable, fast-paying GCs creates advantages that extend far beyond improved cash flow. These clients typically run more organized operations, leading to fewer change order disputes, cleaner project documentation, and smoother overall project execution. In other words, when payment processes are efficient, it’s often a sign that other business processes are equally well-managed.
Fast-paying clients also enable better supplier relationships. When you can predict your cash flow accurately, you can better negotiate terms with material suppliers and lower-tier vendors. Some suppliers even offer early payment discounts that can improve your project margins by a couple of percentage points. Over time, this reliability builds trust that can translate into preferred pricing and priority service during busy periods.
Evaluating Your Current Client Mix
When it comes to evaluating your current client mix, don’t rely on contract terms — take a good look at actual payment trends and patterns. You might discover that your most profitable relationships on paper are actually a lot less profitable when you factor in the cost of extended payment cycles.
Regularly Track Payment Speed
Calculate the average time-to-payment for each GC you work with on a regular basis. This will require you to go deeper than just tracking when the payment arrives.
Document the entire payment process — from invoice submission to approval to check issuance to when it actually hits the bank. Some GCs are fast to approve invoices but slow to cut checks. Others have quick payment processing once invoices are approved but take weeks just to review and approve them in the first place.
Understanding these patterns enables more effective cash flow management, identifies areas for improvement in the payment process, and helps prioritize client projects.
Benchmark Against Industry Data
For subcontractors interested in comparing their clients’ payment speeds to industry averages, resources such as the “Top 50 Fastest-Paying General Contractors in Commercial Construction” can offer valuable market data on actual payment performance among major GCs.
This kind of real-world insight can help you quickly identify potential clients with strong track records of reliable and timely payments, allowing you to adjust your risk assessment and bidding strategy accordingly.
Create a Payment-Weighted Scoring System
Create a simple scoring system that weighs payment speed alongside traditional metrics (project margins, volume, etc.). A client that pays in 25 days with 12% margins might be more valuable to your business than one offering 18% margins but takes 75 days to pay — especially when you factor in current market conditions.
The key is understanding the true cost of your money and the opportunity cost of tied-up capital.
Modern construction billing software offers 360-degree visibility into financial performance across your entire project portfolio. Real-time project dashboards that merge billing status, collections data, and change order approvals can help you identify projects at risk for payment delays.
This consolidated view makes it easier to proactively identify and address issues before they escalate into significant cash flow problems. It also serves as an additional reference point to identify which clients in your mix may be consistently contributing to these issues.
Strategically Diversifying Your Client Roster
Every company is unique in its approach to building a client roster, and your strategy should align with your specific business objectives. The goal doesn’t have to be working exclusively with the fastest-paying clients — instead, consider building a balanced portfolio that optimizes both profitability and cash flow stability.
An effective approach is to prioritize clients who demonstrate both speed and reliability — those who not only pay within their stated terms but do so consistently. A client who reliably pays in 50 days is more valuable than one who promises 30 days but averages 75.
Aim for a mix where the majority of your work comes from clients with proven track records of paying within their contracted terms.
Consider also mixing in smaller, quick-turnaround projects that pay faster — even if they carry lower margins. These jobs provide immediate cash flow that can help bridge the gaps while you wait for larger payments. This balanced approach allows you to forecast cash flow accurately, maintain operational flexibility, and reduce your dependence on external financing.
Building Relationships With Quality Payers
Once you’ve identified GCs with strong payment track records, invest in building deeper relationships with these clients. Reliable payers are often looking for dependable subcontractors who can match their operational efficiency, leading to more collaborative partnerships and repeat work.
Consider offering slight pricing advantages to consistently fast-paying clients — a 2-3% discount for a client who pays in 20 days vs. one who takes 80 days can still improve your overall profitability when you factor in reduced financing costs.
Beyond pricing strategies, maintain open communication about project challenges, change order approvals, and payment processes to foster collaboration and avoid misunderstandings that can delay payments. This proactive approach strengthens relationships and keeps projects — and cash flow — moving smoothly.
The Competitive Advantage
Subcontractors who strategically build client portfolios around payment reliability often find themselves in stronger competitive positions during economic downturns. When credit becomes expensive or hard to obtain, having predictable cash flow provides stability that allows you to weather difficult periods while competitors struggle with cash flow constraints.
This strategic approach to client selection fundamentally changes how you evaluate opportunities. Payment speed deserves a seat at the decision-making table alongside other, more traditional factors. In an industry where cash flow challenges are common, working with reliable payers isn't just a nice-to-have — it’s a competitive advantage.