How to review a subcontractor pay application: a checklist for GCs
Eight checks, in the order that finds problems fastest: complete and signed, contract sum, every G703 line (G = D + E + F), column totals to G702 Lines 3 and 4, retainage at the contract rate, Column D against last month’s D + E, stored-material backup, and lien waivers. Checks 2 to 6 are arithmetic, so they can be verified, not eyeballed.
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1. Is the application complete and signed?
Both forms present (the G702 certificate and its G703 continuation sheet), the right project and period, the contractor’s signature, and notarization where the contract requires it. Incomplete packets waste a review cycle. Bounce them immediately.
2. Does the contract sum match your records?
Line 1 must be the executed contract value, Line 2 only approved change orders, and Line 3 their exact sum. Unapproved change-order money in Line 2 is one of the oldest tricks in the book, and Line 3 exposes it.
3. Does every G703 line compute?
On each row: G = D + E + F, H = C − G (balance to finish), and percent complete = G ÷ C. Anything over 100% complete is over-billing on that line. Nobody does this step by hand on a 120-row schedule, which is precisely where errors hide. If the application arrived as a PDF, recomputing every row starts with getting it into a workable spreadsheet first. A sub billing from a formula-linked G702/G703 Excel template sends rows that compute, because G and H are formulas rather than typed figures.
4. Do the G703 totals carry to the G702?
Σ Column C = Line 3 and Σ Column G = Line 4, to the dollar. When these don’t tie, either a line item is wrong or the certificate is, and the size of the dollar gap points at which cell to open.
5. Is retainage per the contract?
Lines 5a/5b at the contract rate on the right bases, Line 5 their sum, Line 6 = Line 4 − Line 5. Variable or reducing retainage (e.g. dropping at 50% completion) needs the contract terms next to you. If the rate or the bases are in question, how retainage is calculated walks through 5a, 5b, and Line 5 with worked numbers, and the free retainage calculator recomputes them from the rate and the column totals.
6. Does it carry forward from last month?
Each line’s Column D must equal the prior application’s D + E for that item, and Line 7 must equal the prior application’s Line 6. Drift here is how double-billing and front-loading get through. It stays invisible unless last month’s application is open next to this one.
7. Are stored materials real and documented?
Column F needs backup: invoices, bills of sale, insurance, and an agreed storage arrangement. Materials billed under F move out of F and into D/E when they’re installed. They must not be counted twice.
8. Do the lien waivers match?
The conditional waiver amount should match the payment you’re about to make, and prior-period unconditional waivers should match what you already paid. Waiver rules are state-specific. Check your statute.
Doing the arithmetic without re-adding every column
Checks 2 through 6 are pure arithmetic. The pay application carries enough redundancy to verify itself, and that is what PayAppCheck automates. Upload the PDF or Excel and every line is extracted, every identity recomputed. Each figure that doesn’t tie is flagged, including against the prior month’s application. You review the flags, not the whole document. To run checks 2, 4 and 5 on typed numbers first, without an account, open the free G702/G703 calculator, which also takes the two figures off last month’s certificate that check 6 starts with. Where a typed-in check stops, and what the document being read adds, is in what a G702 checker cannot check. If you’re weighing up tools for this rather than doing it by hand, the comparison of pay-application software for general contractors covers what each category does.
Questions people ask
What is a pay application review?
A pay application review is the receiver’s verification of an inbound G702/G703 billing package before payment: eight checks covering completeness, contract sum, per-line math, cross-form totals, retainage, carry-forward from the prior month, stored materials, and lien waivers. Most of it is arithmetic the forms define: on every G703 line G = D + E + F, the percent is G / C, and H = C - G, and the column totals must equal Lines 3 and 4 on the G702. The rest is documentation: signatures, stored-material backup, and waivers that match the payment.
How long should reviewing a pay application take?
By hand the arithmetic sets the pace: every line’s G = D + E + F and H = C - G has to be recomputed and each of the seven columns re-added, so a multi-page continuation sheet costs far more than a short schedule. Automate the arithmetic and the remaining time goes to the judgment items: stored-material backup, waiver amounts, and whether billed progress matches the site. The one step you cannot skip either way is pulling last month’s application to verify carry-forward, so keep prior applications filed where you can reach them.
What is the single most important check?
That the sum of G703 Column G equals G702 Line 4, Total Completed and Stored to Date. It is the handshake between the detail and the certificate: one wrong digit anywhere in the schedule breaks it, and every figure after Line 4 (retainage, payment due, balance to finish) is computed from it, so an error there flows straight into the check amount. If you verify nothing else by hand, add up Column G.
What do I do when a check fails?
Localize it before you bounce the packet: the dollar size of the gap points at the cell, and the form’s redundancy (G = D + E + F on each line, column sums carrying to Lines 3 and 4, Line 8 = Line 6 - Line 7) narrows a single bad digit to one location. Then send the sub one correction request naming the exact line, the stated figure, and the expected figure, instead of a vague rejection that costs a payment cycle. Never pay against a document that does not tie.
Can pay application review be automated?
The arithmetic can be automated completely: checks 2 through 6 (contract sum, per-line math, cross-form totals, retainage, carry-forward) are identities the document itself defines, so software recomputes each one and flags every mismatch down to the cell. The judgment items stay human: whether stored materials have real backup, whether progress matches the site, and whether lien waivers satisfy your state’s rules, which you must verify against the statute itself since software is not legal advice. PayAppCheck automates the math and hands you the flags.
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