A pay application (or payment application, "pay app") is the document a contractor submits each billing period to request payment for the work completed and materials stored to date, measured against the contract's schedule of values and net of retainage and previous payments.
In the UK this is called an application for payment, and retainage is called retention.
On most US commercial projects, pay apps go out monthly. The most widely used format comes from the American Institute of Architects: the AIA G702 (Application and Certificate for Payment) and its companion AIA G703 (Continuation Sheet). Many owners, general contractors and lenders use these forms or their own versions of them, so even if your project uses a different template, the structure below will look familiar.
The schedule of values
Every pay application starts from the schedule of values (SOV): a breakdown of the contract sum into line items, agreed with the owner or GC before the first billing. A line might be a CSI division, a phase, a floor or a scope package. Each line has a scheduled value, and the lines add up to the contract sum.
The SOV matters more than it looks. It decides how quickly you can bill. A schedule of values with sensible line items lets you bill accurately for what is done; a lumpy one forces you to under bill until a whole package is complete. Owners also watch for front-loading, where early items are overvalued to pull cash forward, so a credible SOV is part of getting paid without arguments.
What is on the AIA G703 continuation sheet?
The G703 is the line-by-line detail. Each row is an SOV line, with columns that work like this:
- A, Item number and B, Description of work.
- C, Scheduled value: the line's value from the SOV.
- D, Work completed from previous application: what was billed on this line before.
- E, Work completed this period.
- F, Materials presently stored: materials on hand but not yet installed, and not included in D or E.
- G, Total completed and stored to date: D + E + F, with a percentage (G ÷ C).
- H, Balance to finish: C − G.
- I, Retainage: used when the retainage rate varies by line.
Approved change orders are added as their own lines at the bottom, so the owner can see original scope and changed scope separately.
What is on the AIA G702 application and certificate?
The G702 is the summary page. It takes the G703 totals and turns them into the amount due:
- Original contract sum.
- Net change by change orders.
- Contract sum to date (1 + 2).
- Total completed and stored to date (column G total from the G703).
- Retainage, on completed work and on stored materials.
- Total earned less retainage (4 − 5).
- Less previous certificates for payment.
- Current payment due (6 − 7).
- Balance to finish, including retainage (3 − 6).
It also carries a change order summary, the contractor's certification, and a section where the architect certifies the amount. Some owners and lenders require the contractor's signature on the G702 to be notarized.
Pay application example (illustrative)
A contractor has a $600,000 contract with $24,000 of approved change orders. By the end of this period, work completed plus materials stored totals $280,000, including $15,000 of stored material. Retainage is 10%, and $180,000 has been certified on earlier applications. These figures are illustrative only.
| Line | Item | Amount |
|---|---|---|
| 3 | Contract sum to date | $624,000 |
| 4 | Completed and stored | $280,000 |
| 5 | Retainage at 10% | $28,000 |
| 6 | Earned less retainage | $252,000 |
| 7 | Previous certificates | $180,000 |
| 8 | Current payment due | $72,000 |
| 9 | Balance to finish | $372,000 |
Check the arithmetic: $600,000 + $24,000 = $624,000. Ten percent of $280,000 is $28,000. $280,000 − $28,000 = $252,000. $252,000 − $180,000 = $72,000 due this period. And $624,000 − $252,000 = $372,000 left to bill, retainage included.
In practice, contracts often set different retainage on stored materials, or reduce retainage once the job passes a milestone such as 50% complete. Many states also limit retainage rates on certain projects. Follow your contract and local rules rather than this example.
What usually goes with a pay app
The forms are rarely the whole package. Depending on the owner, lender and state, a pay app may need:
- Lien waivers, commonly a conditional waiver for the current payment and an unconditional waiver for the previous one, from you and often from your subcontractors and suppliers. Several states prescribe statutory waiver forms, so check what applies on your project.
- Backup for stored materials, such as invoices, photos, insurance or proof the materials are stored securely.
- Updated schedule and certified payroll on some public or lender-funded projects.
Missing paperwork is one of the most common reasons a pay app gets sent back, and a returned pay app usually means a payment slips a whole cycle.
Why pay applications go wrong
- Late submission. Miss the owner's cut-off date and you wait another month. That is a self-inflicted under billing.
- Unbilled change orders. Work is done on a change that hasn't been added to the SOV, so it can't be billed.
- Marked-down applications nobody argues. The architect or owner reduces a line, and without evidence the contractor accepts it. Over a few periods, that gap grows.
- Retainage nobody tracks. Retainage is often the contractor's profit on the job, and it is easy to forget to bill its release at substantial completion and closeout.
Each of these shows up on your WIP schedule as under billing, which is cash your business is lending to the project.
How Vyntworks handles pay applications
Vyntworks uses UK terms (applications for payment, retention), but the workflow lines up with a US pay app. On the cost control page you can see the four steps: value the period from your measured progress, with previously applied amounts carried forward and retention held at the project's rate; send the application as a branded Excel and PDF pack at the level of detail the owner or GC expects; upload their marked-up response and agree it line by line, over as many rounds as it takes; then raise the invoice net of retention, with a per-project retention ledger tracking what is held and when it is released. Approved variations (change orders) sit on the valuation as their own lines, the same way they sit on a schedule of values.
Vyntworks doesn't produce AIA-branded forms, but the logic of the schedule of values (scheduled value, previous, this period, to date, retention) maps directly onto how it values each period. Applications for payment are included from the Pro plan; see pricing.
If your pay apps are still assembled by hand from three spreadsheets each month, book a walkthrough and we'll run an application on a project shaped like yours.