Float Analysis: From Pay App Submission to Owner Payment to Sub Payment

Where Your Cash Actually Goes Between Billing and Paying

Every GC owner has felt it: you submit a pay application on the first of the month, the owner pays on the thirtieth, and your subs want their checks on the fifth. That gap is float, and if you are not measuring it deliberately, it is measuring you.

Float analysis is the process of mapping the exact number of days between three specific events: when you submit your pay app, when the owner funds it, and when you turn around and pay your subcontractors and suppliers. The spread between those three points determines how much working capital you need on any given job at any given time.

This checklist walks through how to run that analysis on an active project.

Step 1: Establish Your Baseline Float Numbers

Before you can manage float, you need to measure it. Pull the last six months of billing history for a representative project and record three dates for each pay application:

• Submission date: The day you delivered the pay app package to the owner or architect for review.
• Payment receipt date: The day funds actually hit your account, not the date on the owner's check.
• Sub/supplier payment date: The day you released checks or ACH payments to your subcontractors and material vendors.

Calculate two numbers: Owner Float (submission date to receipt date) and Sub Float (receipt date to sub payment date). On a typical commercial project, owner float runs 30 to 45 days. Sub float should run close to zero if your subcontracts contain pay-when-paid language tied to your actual receipt of funds.

If your owner float is 38 days and you are paying subs in 14 days regardless of when you get paid, you are financing 24 days of their labor out of your own pocket on every billing cycle.

Step 2: Map the Contract Language Against Reality

Pull your prime contract and every subcontract. Look for three things:

• The owner's contractual payment window (typically 30 days after architect certification under standard AIA A201 general conditions).
• The architect's review period before certification (commonly 7 to 10 days, meaning the real clock starts there).
• Your subcontract payment terms, specifically whether they are pay-when-paid or pay-if-paid, and whether they reference your actual receipt of funds or a fixed day count.

The gap between what the contract says and what is actually happening is your first problem to fix. If the contract gives the owner 30 days but they routinely pay on day 42, that is a pattern you need to address in writing before the next application cycle, not after.

Step 3: Build a Float Schedule for the Full Project

Take your project schedule and overlay your billing schedule. For each upcoming billing period, calculate the projected cash-out date for subcontractors and the projected cash-in date from the owner. A simple spreadsheet with five columns handles this:

• Pay app number
• Scheduled submission date
• Projected owner payment date (submission date plus your measured owner float)
• Sub payment due date (based on your subcontract terms)
• Net float gap (column 4 minus column 3)

A positive number in the gap column means you pay subs before the owner pays you. That is a cash deficit you need to cover. A negative number means you receive owner funds before sub payments come due. That is manageable float working in your favor.

On a $2.4 million contract with $1.6 million in subcontracted work, a 20-day gap where you pay subs before the owner pays you represents roughly $106,000 in average monthly float exposure, depending on where you are in the project curve.

Step 4: Identify the Compression Points

Float compression happens in predictable places. Watch for these on every project:

• Incomplete pay app submissions: Missing lien waivers, unsigned change orders, or a G703-style continuation sheet that does not match the schedule of values delay architect certification and extend owner float immediately.
• Month-end billing deadlines: Owners with internal approval cycles often require receipt of pay apps by a cutoff date, sometimes the 25th of the prior month. Missing that window by even one day can push payment an entire month.
• Retainage buildup: As the project passes 50% complete and retainage accumulates, your float exposure grows in dollar terms even if the day count stays flat. A 10% retainage holdback on $1.2 million of completed work is $120,000 sitting outside your account.
• Change order disputes: Disputed change orders held outside the schedule of values create informal retainage. Owners withhold funds on line items under discussion while you continue funding that work.

Step 5: Negotiate Levers That Close the Gap

Once you have the numbers, you have negotiating standing. Several contract terms directly affect your float position:

• Push for twice-monthly billing instead of monthly. Cutting the billing cycle in half cuts your average float exposure by roughly 30 to 40 percent on most projects.
• Negotiate a 21-day payment window instead of 30 in your prime contract. Owners with strong cash positions often accept this on smaller contracts without pushback.
• Tie sub payment terms explicitly to your receipt of funds, with a hard backstop, so you are not funding their work ahead of the owner's payment. Check your state's prompt payment statute before drafting this language; several states limit how pay-when-paid clauses can be structured.
• Request a mobilization payment equal to one month's projected billing at contract execution. This prefunds your float exposure before the project starts generating regular billings.

Step 6: Monitor Float Monthly, Not Just at Job End

Float analysis is not a one-time calculation. Owner behavior changes as projects move into closeout, punch lists drag, and final pay apps get held up over certificate of substantial completion disputes. Revisit your float schedule at every pay app cycle. If your measured owner float starts drifting from 35 days to 48 days over consecutive billings, that is an early warning sign of a payment problem developing, not a one-time delay.

Keep a running log of submission dates, receipt dates, and sub payment dates for every project, every month. Over time that data gives you the historical averages you need to set realistic cash flow forecasts when you are estimating working capital requirements on new work.

Cash flow visibility starts with clean billing and cost data. EZBilling gives you both in one system built for construction.