Construction Payment Terms

Construction payment terms connect completed work, contract value, billing backup, lien risk, and final payment.

Search intent

Use this page when preparing or reviewing pay applications, subcontractor invoices, progress billing, or closeout payment requirements.

12 linked definitions.

Term	Meaning
Pay Application	A pay application is a contractor's request for payment for completed work and stored materials.
Schedule of Values	A schedule of values is a detailed allocation of the contract sum across work categories or line items.
Retainage	Retainage is a portion of payment withheld until work reaches agreed completion milestones.
Progress Billing	Progress billing is billing for work completed during a defined period rather than waiting until the end of the project.
Progress Payment	A progress payment is a payment made for work completed or materials stored during the project.
Stored Materials	Stored materials are materials purchased for the project but not yet installed.
Lien Waiver	A lien waiver is a document that waives or releases lien rights for payment received or expected.
Mechanic's Lien	A mechanic's lien is a legal claim against property for unpaid labor, materials, or construction services.
Subcontractor Invoice	A subcontractor invoice is a payment request submitted by a subcontractor for work performed or materials supplied.
Overbilling	Overbilling happens when billed amounts exceed the value of work actually completed or earned.
Underbilling	Underbilling happens when completed or earned work is not yet billed.
Job Costing	Job costing is the process of tracking actual and projected costs against a specific construction project.