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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 a Receivables Turnover Ratio?
The Receivables Turnover Ratio (RTR) in the construction industry is a critical financial metric that measures the efficiency with which a construction company can collect from its clients. This ratio indicates the number of times a company's accounts receivables are collected, or "turned over," during a specific period. It is calculated by dividing the company's net credit sales by its average accounts receivable. A higher RTR implies that the company collects its receivables more frequently, indicating efficiency in its credit and collection processes. On the other hand, a lower RTR suggests that the firm needs to revisit its credit policy as its customers may be delaying payments, which could impact cash flow - a vital aspect in the construction business.
What is a Request for Information (RFI)?
A Request for Information (RFI) in the construction industry is a formal process through which a party involved in a construction project request details about a document or a process. It acts as a vital communication tool between multiple project parties such as the general contractor, subcontractor, and the design team. This is generally used to resolve information gaps, make decisions or track project changes. The main purpose of an RFI in construction is to eliminate any ambiguity, introduce a control mechanism, avoid unrealistic project expectations and ensure that all participants have a clear understanding of the project. It assists in minimizing project risks and avoids potential disputes related to design issues, cost overruns or schedule delays. It's an essential element in maintaining transparency, effective communication and collaboration within a construction project.
What is an Allowance?
In construction, an allowance is a predetermined dollar amount included in a contract to cover materials, fixtures, or finishes that haven’t yet been selected. Allowances are typically used for flooring, lighting fixtures, plumbing fixtures, appliances, or other finish materials (things that contribute to the project’s aesthetic) where the owner may want flexibility to make selections as the project evolves.
Here’s how allowances work: When contractors bid on a project, they’ll include specific allowance amounts (e.g., $5,000 flooring allowance). Once construction begins and the owner chooses actual materials, the costs are reconciled against the allowance. If the materials cost less, they receive a credit. If more, the owner pays the difference via a change order.
Siteline can help you track and manage those change orders, ensuring you get paid for that difference. Learn more about how Siteline streamlines change order management here.
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