What is the financial difference between a Pay-if-Paid and a Pay-when-Paid clause?

A "Pay-if-Paid" clause makes payment by the project Owner to the General Contractor an absolute condition precedent to the Subcontractor getting paid—shifting 100% of Owner insolvency and dispute credit risk onto the Subcontractor. Converting it to a "Pay-when-Paid" clause with a 45-day outside payment date guarantees the GC must pay undisputed invoices within 45 days regardless of upstream Owner delays.

How does capping retainage at 5% with 50% step-down improve subcontractor cash flow?

Standard 10% retainage withheld until final project closeout often exceeds a subcontractor's entire net profit margin for 12 to 24 months. Redlining retainage to a 5% cap with a step-down to 2.5% at 50% scope completion immediately unlocks half of withheld working capital mid-project.

Subcontractor Pay-if-Paid Redline PlaybookFree Subcontractor & Agency Working-Capital Defense Tool

Subcontractor & Agency “Pay-if-Paid” & Retainage Float Calculator

Signing a “condition precedent Pay-if-Paid” subcontract with 10% retainage turns your company into an involuntary bank for the General Contractor or Prime Agency. Model your working-capital lockup and default risk below—then scan your subcontract PDF free.

Subcontract / Agency SOW Inputs

Total Subcontract / Agency SOW Value ($)$180,000

Retainage Withheld by GC / Prime Agency (%)10% ($18,000 locked)

Owner / GC Payment Delay Window (Days)120 Days Float

Pay-if-Paid Default Loss

$186,510

100% unpaid if Owner defaults + $6,510 float

Working Capital Unlocked

+$15,510

5% retainage cap + 45-day outside payment date

Subcontract Protected

$180,000

Converted from Condition Precedent to Pay-When-Paid

Copy-Paste 45-Day Pay-When-Paid & 5% Retainage Cap Rider

“TIMING OF PAYMENT (PAY-WHEN-PAID OUTSIDE DATE) & 5% RETAINAGE CAP: Receipt of payment by Contractor from Owner shall govern the timing of payment only and shall NOT be a condition precedent to Contractor's obligation to pay Subcontractor. In all events, undisputed progress invoices shall be paid no later than forty-five (45) calendar days after invoice submission. Retainage shall not exceed five percent (5%) and shall be reduced to 2.5% upon 50% completion of Subcontractor's scope of work.”

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Multi-Hop IRC / IICRC Code GraphNative PDF & Word (.docx)Round-2 Desk Adjuster Rebuttal

1. Select Claim Scope Playbook & Protected RoleAuto-Tailored to Your Claim TypeWater Mitigation & Flood • Protecting: Policyholder / Water Mitigation Contractor

2. Input Carrier Estimate (Xactimate PDF, Word .docx, Photo, or Text)

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Drop Carrier PDF / .DOCX anywhere, or press Cmd+V / Ctrl+V to paste estimate text

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CARRIER WATER MITIGATION & INTERIOR RESTORATION SCOPE OF LOSS
CLAIM NO: WTR-2026-44109 | LOSS TYPE: 2ND FLOOR PRESSURIZED SUPPLY LINE BURST

SECTION 1 — PSYCHROMETRIC DRYING EQUIPMENT CAP (WTR DHM / WTR DRY)
Carrier approves one (1) LGR Dehumidifier and three (3) Air Movers for a maximum of two (2.0) drying days across 1,150 SF of affected 1st and 2nd floor living areas. Any equipment charges beyond 48 hours are denied as excessive, regardless of daily psychrometric moisture meter logs showing wood framing and subfloor moisture content above 22% MC on Day 3.

SECTION 2 — ANTIMICROBIAL, HEPA FILTRATION & PPE EXCLUSION
Application of plant-based antimicrobial agent (WTR GRMB), Negative Air Machine / HEPA Air Scrubber filtration (WTR NAFA), Personal Protective Equipment (WTR PPE), and equipment decontamination (WTR EQD) are deleted from the mitigation invoice. Adjuster note: "Water originated from a domestic supply line and is classified strictly as Category 1 clean water even after migrating through ceiling insulation and subfloor cavities for 72 hours."

SECTION 3 — DRYWALL FLOOD CUTS & WET INSULATION REMOVAL
Carrier allows spot-drying of saturated exterior perimeter walls in place without 2-foot drywall flood cuts (WTR DRYWLF) or removal of wet R-19 fiberglass cavity insulation. Baseboard trim shall be detached, wiped clean, and re-installed without replacement.

SECTION 4 — KITCHEN CABINETRY & COUNTERTOP DETACH/RESET
Water-damaged lower kitchen island and sink base cabinets (14 LF) are scoped for in-place drying and toe-kick trim repair only ($340.00). Detach and reset of continuous 3cm granite countertops (CAB CTFL), plumbing disconnect, and full lower cabinet box replacement are denied.

SECTION 5 — AFTER-HOURS EMERGENCY SERVICE CALL & MONITORING
Emergency after-hours water extraction mobilization (WTR EXT) is repriced to regular business hours, and daily psychrometric moisture monitoring & thermal imaging documentation hours (WTR MON) are excluded as "included in equipment rental rates."

Optional — Property State or Claim Context (e.g., "34 SQ Texas hail roof claim" or "Florida Category 3 water loss")

100% Stateless & Private • Saves $1,200 – $3,800 (or 10%–15% PA fee) vs. Public Adjuster fee