Nobody on a construction project gets paid in one lump sum. Payment comes in monthly installments tied to how much work is actually finished. On most commercial projects, and on many larger residential ones, those installments are requested through an AIA pay application.
Most guides stop at “it's a form you fill out.” That is the smallest part of it. Getting paid on time depends on the whole cycle around the form:
- The contract terms behind it
- The subcontractor billing that feeds it
- The architect's review
- The lien waivers attached to it
- The deadlines that control when money actually moves
This guide explains how the whole AIA pay application process works, who does what, and where contractors most often lose time and money.
What Is an AIA Pay Application?
An AIA pay application is a contractor's formal, periodic request for payment. It is based on the standard forms published by the American Institute of Architects. Its job is to show:
- The total contract value
- How much work is complete
- How much is being held as retainage
- How much is due for the current period
A common misconception is that AIA documents exist mainly to protect architects. In reality, the pay application forms are a shared standard for owners, contractors, architects and lenders. Everyone reads the same numbers in the same format, so reviews go faster and disputes are easier to settle.
The pay application is built on two forms:
- G702 (Application and Certificate for Payment): the one-page summary
- G703 (Continuation Sheet): the line-item detail behind the summary
For a line-by-line walkthrough of both forms with a worked dollar example, see our AIA pay app guide to filling out G702 and G703.
The Documents Behind an AIA Pay Application
A pay app doesn't stand on its own. It carries out the payment terms of your contract, and it's supported by other forms before, during and after the project.
The AIA Document Families
AIA organizes its documents into series:
| Series | What it covers |
|---|---|
| A | Owner–contractor and contractor–subcontractor agreements |
| B | Owner–architect agreements |
| C | Other agreements (e.g., architect–consultant) |
| D | Miscellaneous documents |
| E | Exhibits, including digital data and BIM protocols |
| G | Contract administration and project management forms |
Contractors mostly deal with the A-series (the contract) and the G-series (the forms used to run it).
The Contracts That Set the Payment Rules
- A101: Owner–contractor agreement where the basis of payment is a stipulated sum (fixed price)
- A102: Owner–contractor agreement where the basis is cost of the work plus a fee (often with a guaranteed maximum price)
- A201: General conditions. These set the procedures for payment applications, certification, withholding and final payment.
- A401: Contractor–subcontractor agreement. It passes payment terms down to your subs.
These documents decide your retainage percentage, your submission deadline, what backup the architect can request, and whether notarization is required.
The Forms Used to Get Paid
| Form | Purpose | When it's used |
|---|---|---|
| G702 | Application and Certificate for Payment | Every billing period |
| G703 | Continuation Sheet (schedule of values detail) | Every billing period |
| G701 | Change Order | When scope, price or time changes |
| G706 | Contractor's Affidavit of Payment of Debts and Claims | Final payment |
| G706A | Contractor's Affidavit of Release of Liens | Final payment |
| G707 | Consent of Surety to Final Payment | Final payment on bonded projects |
Most contractors focus only on G702/G703. The closeout forms (G706, G706A, G707) are where final payment and retainage release often get stuck, so learn them before the job ends.
How the AIA Pay Application Process Works: Step by Step
Here's the full cycle, from contract signing to final payment.
Step 1: Get the Schedule of Values Approved
Before the first billing, break the contract sum into line items called the schedule of values (SOV), and get the architect or owner to approve it. Every pay app for the rest of the project measures progress against these lines. Building the SOV from your project estimate keeps it aligned with how you actually priced the work.
Step 2: Collect Subcontractor Pay Apps
Your subs submit their own pay apps to you before your deadline to the owner. Check each one:
- Is their percent complete accurate?
- Are their change orders approved?
- Have they included their waivers?
Record each one against the right contract using subcontractor billing.
Step 3: Walk the Job and Agree on a “Pencil Draft”
On many projects, the contractor and architect review a draft of the pay app before the formal submission. This is often called a pencil draft or pencil copy. Settling percent-complete disagreements at this stage prevents a formal rejection later.
Step 4: Prepare the G703, Then the G702
Fill in the continuation sheet first:
- Previous work
- Work this period
- Stored materials
- Balance to finish
Then carry the totals to the G702 summary. Add only approved change orders.
Step 5: Attach Backup and Conditional Lien Waivers
A typical package includes:
- G702/G703
- A matching invoice
- Conditional lien waivers (yours, and often your subs' and suppliers')
- Signed change orders
- Stored-material documentation
- Any backup the contract requires
An auto-generated payment application package puts all of this into one submission.
Step 6: Submit by the Contract Deadline
Your contract sets the submission date. Missing it can push your payment into the next cycle, which can mean a delay of a full month.
Step 7: The Architect Reviews and Certifies
The architect checks the application against what's actually built. They may then:
- Certify it in full
- Certify a reduced amount, adjusting line items they disagree with
- Return it for correction
The certified amount, not the amount you requested, becomes the starting point for your next pay app.
Step 8: The Owner (or Lender) Pays
After certification, the owner releases payment within the period set in the contract. On loan-funded jobs, the lender may run its own draw inspection first. See how this works on loan-based construction projects.
Step 9: Pay Subs and Collect Unconditional Waivers
Once the funds arrive, pay your subs and suppliers, then collect unconditional lien waivers for the amounts paid. Track every payment in your subcontractor ledger, so the next cycle starts from clean numbers.
Step 10: Repeat, Then Close Out and Release Retainage
The cycle repeats every period until the work is complete. The final pay app requests the retainage. It's usually supported by the closeout package:
- Punch list completion
- Warranties
- Final unconditional waivers
- G706/G706A affidavits
- On bonded work, the G707 consent of surety
Learn how to prepare the final invoice and retention release.
Who Does What in the AIA Pay Application Process
| Party | Role |
|---|---|
| Subcontractors | Submit their pay apps and conditional waivers to the GC before the GC's deadline |
| General contractor | Compiles the G702/G703, attaches backup and waivers, submits to the owner or architect, and pays subs once funded |
| Architect | Reviews the application against site progress and certifies the amount due |
| Owner | Approves and releases payment within the contract terms |
| Lender (if financed) | Inspects progress and releases draws from the construction loan |
| Surety (if bonded) | Consents to final payment |
A Typical Monthly Pay App Calendar
Every contract sets its own dates. Here's an example of how a monthly cycle is often structured:
| Timing (example) | Activity |
|---|---|
| ~20th of the month | Subcontractor pay apps due to the GC |
| ~22nd–25th | GC reviews sub billing and walks the job with the architect for the pencil draft |
| Last business day | GC submits the formal pay app package |
| Per contract (commonly within a few weeks) | Architect certifies; owner or lender releases payment |
| After funds clear | GC pays subs and collects unconditional waivers |
Build the calendar backwards from your own contract's submission date. The most common delay comes from sub pay apps arriving late. That's why setting their deadline several days ahead of yours matters.
Retainage in AIA Pay Applications
Retainage (also called retention) is a percentage of each payment that the owner holds back until the project is complete. It is commonly between 5% and 10%. It protects the owner if the work isn't finished or has defects.
Here are a few points competitors often get wrong:
- Retainage is legal, but many states regulate it. They may cap the percentage, set release deadlines, or apply different rules to public and private work. Always check your state's rules. This is especially important on public works projects.
- Retainage flows down. If the owner holds 10% from you, your A401 subcontracts usually allow you to hold retainage from subs too, subject to the same state rules.
- Reductions are possible. Some contracts reduce retainage once the project passes a certain percent complete.
Track what's held and what's due on every job with retainage calculation and release.
Lien Waivers and Preliminary Notices in the Pay App Cycle
Lien waivers are how owners make sure they aren't paying twice for the same work. Each pay app cycle typically includes:
- Conditional waivers with the pay app. They take effect only once payment is received.
- Unconditional waivers after payment clears. They release lien rights for the amount paid.
Several states require their own statutory waiver forms. Download the correct version for your state:
In states that use preliminary notices, each notice you receive identifies a party who could file a lien. Before paying a sub, confirm whether their suppliers have served notices, and collect waivers from those suppliers too. Linking preliminary notices to subcontracts makes this check automatic. You can also generate waivers with automated lien waiver forms.
Do You Need Official AIA Forms?
Not always. There are two options.
Official AIA documents are licensed through AIA Contract Documents. You need them when your contract, owner, lender or public agency specifically requires them. Pricing and licensing terms change, so check AIA Contract Documents for current options before you budget for them.
AIA-style pay applications follow the same G702/G703 structure and math. They are not the licensed forms. Many owners and architects accept them, because the format is what they review, not the branding. For contractors, this avoids buying forms for every project and lets billing be generated straight from project data.
Rule of thumb: read your contract's payment section.
- If it names AIA G702/G703 specifically, use the official forms.
- If it asks for a “payment application in AIA format” or doesn't specify, an AIA-style pay app is usually accepted. Confirm with the owner before your first submission.
APARBooks generates AIA-style G702/G703 pay applications from your project's cost breakdown, progress billing, retainage and approved change orders.
Is Notarization Always Required?
No. This is one of the most repeated myths about AIA pay applications.
The G702 includes a notary block, but whether it must be notarized depends on your contract. Many private owners waive it. Some lenders and public agencies still require it. Check your agreement, and where digital signatures are accepted, e-sign your pay applications to avoid printing and scanning every month.
Common Challenges with AIA Pay Applications (and How to Fix Them)
1. Carry-Forward Math Errors
Each pay app builds on the one before it. If the “previous application” figures don't match what was actually certified last time, the whole application falls apart.
Fix: always carry forward from the certified amounts, or let software do it. See math error prevention.
2. Billing Change Orders Too Early
Pending or verbal change orders on a pay app are a leading cause of rejections.
Fix: bill only signed change orders. Track pending ones separately with change order activity tracking.
3. Subcontractor Billing Arrives Late or Wrong
Your pay app can only be as accurate as the sub billing that feeds it.
Fix: set earlier deadlines for subs, and run subcontractor change orders through a single approval process.
4. Duplicate or Missed Billing
Stored materials billed twice, or invoices paid twice, cause disputes that are hard to unwind.
Fix: tie every bill and invoice to the project record. See duplicate invoice prevention.
5. Pass-Through Costs Falling Outside the Pay App
Permit fees, owner-direct payments to vendors and client reimbursements don't fit neatly into the SOV.
Fix: bill them separately with owner reimbursement and record owner-to-vendor payments so the subcontract balances stay correct.
6. Different Rules in Different States
Retainage caps, prompt payment timelines and lien waiver forms all vary by state.
Fix: check your state's rules at the start of each project, not at closeout.
7. Slow Payment After Certification
Even an approved pay app can sit unpaid.
Fix: track every invoice's status with invoice activity tracking, and follow a clear escalation process. Here's how to speed up slow-paying clients.
AIA Pay Applications by Project Type
The pay app process changes depending on the kind of job:
| Project type | How pay apps typically work |
|---|---|
| Commercial tenant improvements | Standard monthly G702/G703 billing with architect certification |
| Ground-up construction | Long SOVs, frequent stored-material billing, lender draws |
| Multi-unit developments | SOVs broken out by building or unit; heavy subcontractor coordination |
| Public works | Official forms often required; certified payroll; state retainage rules |
| Home renovations and kitchen & bath remodels | Often simpler progress or cost-breakdown invoices; AIA-style pay apps when a lender or larger owner requires them |
| Loan-based projects | Lender inspection and draw approval added to the cycle |
Automate AIA-Style Pay Applications with APARBooks
The AIA pay application process involves a lot of moving parts:
- Sub billing
- Change orders
- Retainage
- Waivers
- Carry-forward math
- Closeout
Each of these is a chance for a manual error to delay payment.
APARBooks is construction accounting software built by a contractor, for contractors. It connects the entire cycle in one place:
- AIA-style G702/G703 pay apps, generated from your project data
- Complete payment application packages with the invoice and conditional waiver
- Retainage tracking and release
- Subcontractor ledgers and change orders
- Job costing and WIP reports, so billing and cost always match
Start your free trial · Schedule a demo · See pricing
AIA Pay Application FAQs
What is the difference between an AIA pay application and an invoice?
An invoice bills a set amount. An AIA pay application bills progress against a contract. It tracks every line in the schedule of values, carries forward previous billing, holds retainage, and needs architect or owner certification before payment.
How often are AIA pay applications submitted?
Usually monthly, but the contract sets the billing period and submission date.
Who approves an AIA pay application?
Typically the architect, who certifies the amount due after reviewing progress. On projects without an architect, the owner's representative or the lender's inspector does this.
Do I have to buy official AIA forms for every project?
Only when your contract or owner requires official AIA documents. Otherwise, many owners accept AIA-style pay applications that follow the same G702/G703 format. Confirm before your first submission.
Does an AIA pay application have to be notarized?
Not always. The G702 includes a notary section, but many contracts waive it. Check your agreement's payment provisions.
Is retainage legal on AIA contracts?
Yes, but many states regulate it with percentage caps, release deadlines or special rules for public projects. Check your state's rules for each project.
What documents are needed for final payment?
Typically:
A final pay app requesting retainage
Final unconditional lien waivers
Closeout items like warranties and punch list sign-off
Often G706 and G706A affidavits
On bonded projects, a G707 consent of surety
Can subcontractors use AIA pay applications?
Yes. Many subcontracts, especially under the A401, require subs to bill the GC using the G702/G703 format. The GC rolls those numbers into its own pay app.
AIA, G702, G703 and other AIA document names are trademarks of The American Institute of Architects. APARBooks is not affiliated with or endorsed by the AIA. APARBooks generates AIA-style payment applications.
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APARBooks is purpose-built construction accounting software for general contractors and bookkeepers. Manage job costing, AIA progress billing, subcontractor payments, retainage, change orders, lien compliance, and WIP reporting in one place.