For decades, the American Institute of Architects (AIA) billing method has provided a framework for standardizing construction payment applications and ensuring fair payment.
If you’re wondering how best to implement AIA invoicing and billing in your construction business, keep reading. In this guide, you’ll learn how AIA pay apps work, the different forms you need, and how to avoid common mistakes impacting even the most experienced contractors. First, let’s explore why AIA billing is so widely adopted.
Why Use AIA Billing
AIA billing provides a universal format for documenting work progress and payments, using two key forms: the G702 and G703. This standardization ensures that all stakeholders, from the architect to the subcontractor, speak the same language. Alongside standardization, AIA billing also helps:
- Simplify Record-Keeping: The forms create a clear record of financials for each billing cycle, making it easy to track progress, audit payments, and resolve disputes.
- Ensure Compliance: AIA invoicing integrates lien waivers and compliance documents, ensuring payments are tied to legal and contractual requirements.
- Prevent Disputes: Clear documentation minimizes misunderstandings, making it easier to verify payments and resolve questions.
- Drive Transparency: The G703’s itemized schedule of values breaks the project into tasks, showing completed work, stored materials, and balances due, enabling owners to verify where money is going. Further improving transparency, the G702 requires an architect, owner, or general contractor to ensure that work progress and payment requests align with contract terms.
Differences Between AIA G702 and G703 Forms
The AIA G702 and G703 forms serve distinct purposes. The G702, or Application and Certificate for Payment, summarizes the contractor’s payment request, detailing the total contract amount, retainage, prior payments, and current amount due.
The G703, or Continuation Sheet, complements the G702 by providing a detailed breakdown of the Schedule of Values (SOV). It itemizes completed work, stored materials, and balances for each task, offering the granularity needed to verify progress and payment accuracy.
How to Ensure Accurate AIA Billing Applications from Subcontractors
Preparing an AIA billing application requires precision. For general contractors, ensuring subcontractors submit accurate AIA billing applications might require guiding them through the steps below. These steps can also be followed by general contractors looking to submit their own AIA forms.
- Require a Detailed G703: Instruct subcontractors to break down the schedule of values into clear line items, showing percentages completed, stored materials, and remaining balances. Confirm that these values match the approved project budget and change orders.
- Ensure Consistency in G702 Summaries: Subcontractors should use the G703 details to complete the G702 accurately, summarizing the total billed, retainage held, prior payments, and current amount due.
- Request All Supporting Documentation: Make lien waivers, compliance documents, and change orders mandatory components of every payment application. This ensures payments are tied to legal and contractual requirements.
- Review Applications Thoroughly: Leverage tools to automate validation of calculations and ensure that G702 and G703 data align. Digital platforms can flag missing or inconsistent information, streamlining the review process.
- Submit for Certification: Once reviewed, submit the subcontractor’s application for certification by the appropriate authority, ensuring all supporting documents are included.
By using tools like GCPay, general contractors can simplify the AIA billing and invoicing process, ensuring subcontractors submit complete, accurate pay applications and reducing time spent on manual reviews.
Common AIA Invoicing Mistakes and How to Overcome Them
Even seasoned general contractors can make AIA billing errors, leading to unnecessary delays or disputes. Here are some common mistakes and how to avoid them:
Inaccurate Progress Percentages
Overestimating or underestimating work completed can disrupt cash flow and erode trust. Use precise tracking tools to ensure accurate percentages.
Mismatched G702 and G703 Data
Subcontractors may submit pay applications with discrepancies between the G702 summary and the G703 breakdown. Carefully review both forms to ensure that totals align and all calculations are accurate before approving the application.
Missing Documentation
Submitting incomplete packages without lien waivers or compliance documents can stall payments. Create a checklist to ensure all required paperwork is included.
Manual Errors in Calculations
Relying on manual processes increases the risk of mistakes. Digital tools can automate calculations, reducing errors and speeding up approvals.
Unapproved Change Orders
Unapproved change orders in pay apps cause delays and disputes. Prevent this by ensuring every change order is signed, approved, and documented before submission.
Should You Embrace AIA Billing?
In construction, more than many other industries, we know that the devil is in the details. Managing construction progress and payments demands absolute clarity. After all, every line item and percentage matters.
The high level of detail required by AIA forms like the G702 and G703 forces all parties — general contractors, subcontractors, owners, and architects — to focus and align on the details, ensuring transparency and accountability at every step. This level of precision is essential for projects with multiple stakeholders and complex schedules.
If you’re seeking a structured, reliable approach to construction payments, AIA invoicing might be the smart choice to keep your projects on track.
Why Contractors Should Consider GCPay’s AIA Billing Tools
Digital tools transform how general contractors manage AIA billing, turning a tedious process into an efficient and error-free workflow.
At GCPay, we’ve partnered with AIA to streamline the submission of G702 and G703 forms, making subcontractor pay apps faster and more accurate.
Our platform automates key tasks, eliminating common errors like mismatched G702 and G703 data or incorrect retainage calculations. With automation handling the details, you save time and avoid the delays caused by manual mistakes.
Our platform also integrates seamlessly with your ERP system, syncing accounting and project management data automatically. This eliminates duplicate entries and ensures your financial records stay perfectly aligned.
Are you looking to bring speed, precision, and simplicity to your AIA billing process? Book a Demo
