A pay application is the periodic request for payment on a contract billed by progress rather than by invoice. On AIA forms, G703 is the continuation sheet holding the schedule of values line by line, and G702 is the summary and certification that reads from it. A billing system keeps the schedule of values as live data, carries prior billings and retainage forward, handles stored materials in the correct column, and produces both forms without rebuilding a spreadsheet every month.
Where a pay application stalls
The schedule of values is a file that gets copied forward
Last month’s spreadsheet becomes this month’s spreadsheet. A formula gets pasted over, a line gets inserted without the sum range extending, and the error surfaces two applications later when column G no longer ties to the contract sum to date.
Executed change orders never reach the billing
A change order raises the contract sum but never becomes a line on the continuation sheet. The change order summary on the G702 and the total scheduled value on the G703 disagree, and the architect returns the application.
Percent complete is decided at a desk
Somebody bills sixty percent on a line because it feels about right. The PM has a different number. The owner’s rep walks the job and has a third. The disagreement surfaces after the application has been signed and notarized.
Stored materials get billed as work in place
Material delivered but not installed goes into column E instead of column F. That inflates the completed work retainage basis, and when the contract requires a bill of sale or off-site storage documentation, none of the backup exists.
Retainage release is nobody's job
Retainage accumulates in column I across ten applications. When the contract allows a rate reduction at a stated completion point, or release at substantial completion, nothing triggers a request. The money sits until somebody remembers it.
Walking one schedule of values line from prior billings to current due
This traces a single line across both forms so the arithmetic is visible. A $180,000 scheduled value, ten percent retainage on completed work and on stored material. Prior applications billed it to $99,000. This period adds $27,000 of work in place and $12,000 of material delivered but not installed.
| Form | Column or line | This example | How it is derived |
|---|---|---|---|
| G703 | C, scheduled value | $180,000 | Line value plus change orders assigned to it |
| G703 | D, work completed from previous application | $99,000 | D plus E from the prior certificate, carried |
| G703 | E, work completed this period | $27,000 | Field percent complete or units installed |
| G703 | F, materials presently stored | $12,000 | Delivered, not installed, not in D or E |
| G703 | G, total completed and stored to date | $138,000 | D plus E plus F |
| G703 | Percent, G divided by C | 76.7% | Progress against the line’s scheduled value |
| G703 | H, balance to finish | $42,000 | C minus G |
| G703 | I, retainage | $13,800 | Ten percent of D plus E, plus ten percent of F |
| G702 | Line 1, original contract sum | Contract value | The executed contract, unchanged |
| G702 | Line 2, net change by change orders | Additions less deductions | Executed changes only |
| G702 | Line 3, contract sum to date | Line 1 plus or minus line 2 | Must equal the total of column C |
| G702 | Line 4, total completed and stored to date | $138,000 | Sum of column G across all lines |
| G702 | Lines 5a and 5b, retainage | $13,800 | 5a on D plus E; 5b on F |
| G702 | Line 6, total earned less retainage | $124,200 | Line 4 minus total retainage |
| G702 | Line 7, less previous certificates | $89,100 | Line 6 from the prior certificate, as certified |
| G702 | Line 8, current payment due | $35,100 | Line 6 minus line 7 |
| G702 | Line 9, balance to finish including retainage | $55,800 | Line 3 minus line 6 |
How the application gets assembled
The schedule of values is a record, not a file
Each line carries an item number, description, scheduled value, cost code, and its assigned change orders. It exists once per job and every application reads from it, so there is no copy-forward step where a sum range breaks.
Prior columns are carried, never typed
Column D generates from last month’s certified D plus E. Line 7 pulls from the prior certificate’s line 6. Neither is an entry field, because both are places where one keystroke becomes a correction letter and a delayed payment.
Percent complete comes from the field
Progress on each line is entered by the PM or superintendent against installed quantities or agreed percentages, with the daily reports and photos behind it. The walkthrough with the owner’s rep checks what the field said rather than negotiating from zero.
Stored materials carry their own backup
A line billed in column F requires the supplier invoice, the delivery ticket, and where the contract calls for it, the bill of sale and off-site storage certificate. When installed, the value moves into column E next application.
The package assembles itself and the response is recorded
G702, G703, the change order summary, conditional lien waivers for the subs billed, and the notarization go out as one set. What comes back, including the certified amount and adjusted figures, is recorded against the application.
Accounting and document systems in the loop
- QuickBooks automation for job billing — The certified amount posts against the job with retainage held in its own account rather than buried in the receivable.
- document workflow automation — The G702, continuation sheet, and backup render as one dated package with every application version retained.
- e-signature and notarization routing — The contractor certification routes for signature and returns into the application record with its timestamp.
Is this a fit for your business?
A good fit when
- You bill on AIA G702 and G703, or an owner’s equivalent form
- Your schedule of values runs past a dozen lines
- Applications come back for correction more than occasionally
- Retainage is tracked in a spreadsheet separate from your accounting
Probably not a fit when
- You bill time and materials with no schedule of values
- You need job costing and work-in-progress reporting rebuilt
- You want software to decide percent complete on your behalf
What to have ready
- A recent schedule of values and the last two applications on that job, including the certified copies
- Your retainage terms, including any reduction at a completion milestone
- The owner or architect’s submission requirements: format, copies, notarization, deadline
Questions we get asked
Do we have to use the official AIA forms?
Not necessarily, and many owners require their own version. The mechanics are what matter: a continuation sheet holding the schedule of values, a summary that certifies against it, and retainage tracked by basis. We build to whatever form the contract names.
What happens when the architect certifies less than we applied for?
The certified amount is stored separately from the applied amount, and next period’s line 7 uses the certified figure as it should. The difference stays visible as an unresolved item against the line it came from, so it is on the table at the next walkthrough.
Can this handle a schedule of values that changes mid-job?
It has to. Change orders either add a new line or increase an existing one, and both need a record of when the scheduled value changed and which change order did it. Column C on any application should reconcile to line 3 on that application, which only works if the history is kept.
How does retainage reduction work?
Entirely according to your contract. Some allow a rate reduction once the work reaches a stated completion. Some hold the full rate until substantial completion. Some release by trade as each finishes. We encode the terms your contract contains and raise the request at the milestone.
Related
- change order approval workflow for contractors
- lien waiver collection and tracking
- QuickBooks automation services
- workflow automation for construction companies
Tell us what the process looks like now and we will map what a system would need to do. No obligation, and you keep the map either way.