What is Time-and-Material Billing?

A general contractor (GC), also commonly referred to as a prime contractor, is the main contractor responsible for managing an entire construction project. They are in direct contact with the build’s owner/developer and hold primary responsibility for the construction, execution, quality, and completion of the project under the agreed terms and schedules. As such, the GC addresses concerns and resolves issues related to the project, contributing to the effective execution and timely delivery. The GC also manages the procurement of materials, labor, and equipment, ensuring compliance with building codes and regulations.

A critical part of the GC’s job is hiring and managing trade contractors, also known as subcontractors, who specialize in specific construction trades like electrical, plumbing, framing, etc. The GC essentially acts as a hub, contracting out portions of the work to skilled trade contractors while retaining overall control of the project operations.

GCs have a vested interest in working with subcontractors who not only are highly skilled in their respective trades but also have efficient, well-defined operational and financial workflows to ensure reliability and consistency in their performance. Streamlined billing processes are crucial in this regard. When subcontractors can quickly and accurately generate pay applications—complete with the necessary compliance documentation and lien waivers—it allows the GC to bill the project’s owner promptly and get paid faster. Delays in subcontractor billing can significantly impede the GC’s ability to get paid in time, thereby causing delays in payments to other contractors, too. 

This is where a solution like Siteline can ultimately benefit GCs by helping their subcontractors streamline billing processes. Siteline accelerates subcontractor billing by automatically generating pay apps per GC specifications, tracking compliance requirements, managing change orders and lien waivers, and providing payment visibility. When subcontractors use Siteline to automate billing, GCs receive accurate, compliant pay applications faster, allowing them to bill project owners promptly and get paid quicker as a result.

See how Siteline can accelerate your construction billing cycle and get you paid faster by scheduling a demo today.

Cash flow, as applied to the construction industry, refers to the net amount of money moving in and out of a construction business within a defined period of time. This includes income from clients, loan repayments, supplier payments, salaries, and overhead costs. Crucially, understanding cash flow is vital for a construction firm as it helps in making strategic decisions for sustainable growth. It can be used to assess the liquidity and overall financial health of a business. With an active construction project, cash flow can be unpredictable due to unexpected expenses, delayed payments, or cost overruns, requiring diligent cash flow management.

Cost accounting in construction is a specialized accounting practice that captures, records, and analyzes all costs incurred during construction projects. This includes direct costs like materials, labor, and equipment, as well as indirect costs such as project management, insurance, and overhead allocation. 

Unlike general accounting, which focuses on overall financial reporting, cost accounting drills down into the specifics of where every dollar goes on each project. It's designed to provide detailed insights into project profitability by tracking costs against budgets in real-time, helping construction teams understand not only how much they're spending, but also whether that spending aligns with projected margins and timelines.

Siteline helps subcontractors maximize the value of their cost accounting by streamlining the entire accounts receivable (A/R) process that turns project costs into collected payments. Our platform generates custom pay applications, manages compliance documentation, tracks change orders, and provides real-time A/R reporting, ensuring that all the financial insights from your cost accounting translate into faster, more predictable cash flow. Request a personalized demo here.