You’ve done the hard part. The site work is done, the structure is rising, and your construction project is taking shape. Your team is delivering quality work, but strained cash flow is casting a shadow over your progress. Does this sound familiar?

For many general contractors and specialty contractors, the financial health of their construction business depends heavily on an efficient billing process. With that in mind, the key to maintaining consistent cash flow often lies in what happens well before you send a payment reminder: the construction invoicing process itself.

This guide will demystify the three most common payment request methods in the US construction industry. Understanding how to use them correctly will empower you to take control of your accounts receivable and get paid faster. Let’s dive into the world of AIA G702 and G703, certified payroll, and private invoices.

Progress billing with AIA G702 & G703

If you’re managing commercial construction projects, you’ve likely encountered the AIA payment application forms. These documents are the industry standard for effective progress billing.

What they are

The AIA G702 Application and Certificate for Payment and the G703 Continuation Sheet are standardized forms that create a transparent and uniform payment process. They provide a clear snapshot of project progress, which is why architects, lenders, and experienced owners prefer them.

When to use them

These forms are typically required for formal commercial jobs, where accurately tracking the total project cost against the contract value is paramount.

Breaking them down

G702 is a one-page form that summarizes the project’s financial status. It’s the first thing an owner reviews, and it includes multiple crucial numbers: the original contract sum, the value of any change orders, the total work completed and materials stored to date, retainage, and the current payment due.

Meanwhile, G703 is where you provide supporting documentation for the payment requested. The G703 continuation sheet is a line-by-line breakdown of the completed work, organized by a pre-approved Schedule of Values. Such transparency gives the owner a clear picture of what they are paying for, from site work to materials billing. It’s the backbone of both lump-sum billing and other methods that track projects by milestones.

Pro tip for faster payment: The biggest holdup in the approval process is a disputed Schedule of Values. To avoid this, make sure it’s approved before your first billing cycle. Also, be prepared to submit lien waivers from your subcontractors along with your payment application. This proves you are paying your team and protects the owner, leading to a smoother, faster payment process.

Certified payroll for government work

Working on government-funded projects opens up great opportunities for construction companies, but it comes with a strict set of rules, especially regarding labor costs.

What it is

Certified payroll is a mandatory weekly report that proves you are complying with prevailing wage laws. It’s less of an invoice and more of a detailed compliance document that tracks the actual time spent by every worker on the job.

When to use it

You must use certified payroll for any public works project. This applies to both general contractors and any specialty contractors working under them.

Breaking it down

This report requires meticulous detail to guarantee every worker is paid fairly and that project budgets are transparent. Be prepared to provide:

• Each employee’s full name and personal information
• Their specific work classification
• Their hourly pay rate, including fringe benefits
• A daily and weekly log of all hours worked
• A list of all deductions made
• The final net wages paid to the employee

Pro tip for faster payment: Meticulous recordkeeping is nonnegotiable, with no room for error. Even minor mistakes on a certified payroll report can lead to payment holds and audits. Using accounting tools with a certified payroll feature can help avoid mistakes and streamline this part of your billing process.

Private construction invoices

Not every job has the same project scope or requirements. For many private and smaller-scale jobs, a straightforward, customized construction invoice is often the most efficient billing method.

What it is

A private construction invoice is a nonstandardized payment request you create. It is highly flexible and can be adapted to various billing types, including fixed fee, time and materials, cost-plus billing, or unit price billing.

When to use it

Private construction invoices are ideal for smaller private jobs, such as residential remodels or commercial build-outs, where the formal AIA process isn’t required. They support partial payments tied to project milestones, providing flexibility as the work progresses toward completion.

Breaking it down

For accurate invoicing, every invoice you submit should include:

• Your company name, logo, and contact information
• The client’s name and project address
• A unique invoice number
• The billing period and a clear payment due date
• A detailed description of the work completed and expenses incurred
• A clear breakdown of costs (labor costs, materials, etc.)
• The total amount due
• Clear payment terms and instructions (e.g., checks, ACH payments)

Pro tip for faster payment: Use quality invoicing software or management software to create clean, branded invoices. These platforms facilitate an efficient invoicing process by automating repetitive tasks, tracking payment status, and making it easier for clients to pay you, which is essential when you’re managing multiple projects.

Common construction billing methods at a glance

	AIA G702 & G703	Certified payroll	Private invoice
Best for	Larger commercial and architect-led projects	Government-funded projects	Smaller private and residential projects
Level of detail	High	Extremely high	Varies (but should be detailed for accurate billing)
Standardization	Standardized industry forms	Mandatory government forms	Contractor-created
Key to fast payment	Accurate Schedule of Values and lien waivers	Meticulous recordkeeping and compliance	Clear, professional detail and easy payment terms

Achieve smoother project management with a better billing process

The key takeaway is this: choosing the appropriate billing method for each job is the first step toward smoother project management and stronger financial health. The second is a commitment to accuracy, professionalism, and understanding each payment method’s requirements. By implementing best practices, you’ll not only ensure timely payments but also solidify your reputation as top-tier construction professionals.

Looking for a contractor who handles every aspect of a project with expertise, from groundbreaking to final payment? Contact KosHead, Inc. today to discuss your next construction project.