Accounts payable (AP) is the liability for bills you’ve received but not yet paid, and the process of approving and paying them. In construction, AP covers supplier invoices, subcontractor pay applications, equipment rentals and job-related services. It also carries retainage payable: the portion of each subcontractor payment you hold back until their work is accepted.
Why it matters
Construction AP is not simple bill pay. Every subcontractor payment should be checked against the subcontract’s schedule of values, backed by the right lien waivers and coded to the right job and cost code. Mistakes create real exposure: paying a sub without a waiver can leave the owner facing a lien from that sub’s suppliers, and your company paying twice.
Worked example
On Riverside Medical Center, Apex Steel and CoreDry both have pay apps ready, but their lien waivers are missing. AP holds both payments until a conditional waiver for this period and an unconditional waiver for the last payment are received from each. Meanwhile, INV-4471 is held for exceeding PO-118 by $6,150. (Illustrative sample data.)
Common mistakes
- Releasing payment before waivers are collected.
- Releasing retainage to subs before the owner has released yours, without meaning to.
- Entering invoices weeks after receipt, so job cost and cash forecasts run behind.
How os.construction handles it
We’re building AP on the same record as commitments, waivers and job cost, so the checks happen before payment and the job budget updates immediately. Approval stays with your team.