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Trade Contractor
What is a Trade Contractor?
AA trade contractor, also known as a subcontractor, is a specialized construction professional hired by a general contractor (GC), construction management property, owner, developer, or other entity to complete specific aspects of a construction project. Trade contractors typically specialize in a particular trade or craft, such as electrical work, plumbing, HVAC installation, framing, roofing, glazing, flooring, or drywall installation. They are bound by a contract that outlines the tasks to be performed, deadlines, and terms of payment.
Trade contractors are distinguished from GCs in several ways. GCs oversee the entire construction project, managing all aspects from start to finish, including coordinating trade contractors, obtaining permits, and ensuring compliance with building codes and regulations. Trade contractors, on the other hand, focus solely on their specialized area of work and are responsible for completing their specific tasks according to the project's plans and specifications.
Trade contractors face extensive payment cycles, as they cover all labor and material costs upfront for a project yet receive payment last. Progress billing further complicates the matter, mandating that GCs only reimburse trade contractors based on project completion percentage. This system requires trade contractors to invoice GCs every month for the work completed, which exposes them to various factors that can delay progress billing further. These include:
- using the wrong pay application form,
- missing documentation,
- lien waiver oversights,
- submitting pay apps through the wrong GC portal,
- general project delays and disputes, or
- the GC’s own cash flow issues.
As a result, most trade contractors wait about 90 days to get paid for the work they’ve already done, which can strain their cash flow and hamper their ability to take on new projects or pay their employees and suppliers.
This is where Siteline comes in. Siteline is a construction billing solution built specifically to streamline the subcontractor A/R workflow. With Siteline, trade contractors can easily generate and submit detailed pay apps tailored precisely to each GC's requirements. The platform also:
- tracks all compliance requirements and stores pertinent documents;
- tracks, collects, and submits lien waivers for the sub and their lower tiers;
- ensures approved change orders are incorporated into the schedule of values;
- provides full visibility into billing statuses across projects—including which GCs pay fastest to better anticipate cash flow; and
- creates accurate billing projections to monitor progress and effectively manage backlog.
By eliminating manual spreadsheets and centralizing all billing data, Siteline helps trade contractors accelerate their payment cycle by an average of three weeks. Discover how Siteline can get your subcontracting business paid faster by scheduling a demo today.
Trusted by trade contractors across the country
Other construction terms
What is Progress Billing?
Progress Billing is a method commonly used in the construction industry, where billing for a project is done at different stages as it progresses, rather than asking for full payment upfront or at the completion of the project. This type of billing is beneficial both for constructors and clients. For constructors, it helps maintain the cash flow required for the ongoing expense of materials and labor. For clients, it provides assurance that they are paying for the work only as it is being completed and allows them to budget effectively. Each invoice is usually based on the percentage of work completed, thus it is also known as percentage-of-completion billing method. Proper documentation, like progress reports or photos of the construction site, often accompany these invoices as a proof of progress.
What is Time-and-Material Billing?
Time-and-material billing is a method used in the construction industry where a client is charged based on the actual cost of labor and materials for a project, along with an added markup for the contractor's profit. This approach promotes transparency as customers directly pay for the time spent on the project and materials used. The advantage of this method is the flexibility it provides - if a project scope is unclear or likely to change, it can be more efficient than a fixed-price model. However, it also contains a risk for the client, with a chance that costs could increase if the construction takes longer or requires more resources than estimated. It requires meticulous tracking of working hours, materials, and equipment used. The client also needs to keep an eye on the project to avoid unnecessary costs.
What is an Audit?
An audit, within the construction industry, is a systematic and independent examination of a project, contract, or business unit. It is a thorough and comprehensive assessment of a company's construction processes, internal controls, and business practices. This review is conducted to ascertain compliance with the set industry standards, regulations, as well as to verify the authenticity and legitimacy of financial statements. The audit ensures that every operation within the construction cycle, from procurement of materials to the completion of the building, is carried out accurately and fair. It helps a firm to understand the areas of inefficiency and mitigate any risks. Furthermore, an audit could provide opportunities for improvements, ensuring efficiency, productivity and profitability for construction businesses.
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