Construction Invoicing: Applications for Payment Explained
Getting paid in construction is never as simple as sending an invoice. If you're working under a contract, you need to understand applications for payment — the formal process for claiming money for work done.
What is an Application for Payment?
An application for payment (also called an interim valuation or payment application) is a formal document submitted by a contractor to claim payment for work completed during a specific period. It's not an invoice — it's a request that gets assessed and certified before payment is made.
How the Process Works
- Submit application — contractor submits with a breakdown of work completed (usually as a percentage of each contract line item)
- Assessment — the client's QS or contract administrator reviews and may adjust figures
- Payment certificate — the certified amount is issued (may differ from the application)
- Payment — the client pays the certified amount within the agreed payment terms
Key Financial Terms
- Gross valuation — total value of work claimed to date
- Retention — a percentage held back (typically 3-5%) as security for defects. Half released at practical completion, half at end of defects liability period.
- Contra charges / MCD — deductions for damages, use of facilities, etc.
- Previous payments — what's already been paid in earlier applications
- Net amount due — what's actually owed this period
- CIS deductions — Construction Industry Scheme tax deductions (20% or 30% of the labour element)
CIS — Construction Industry Scheme
If you're a subcontractor in the UK, CIS affects every payment you receive. The contractor must deduct CIS tax from your payment and pass it to HMRC. The deduction rate depends on your registration status:
- 0% — gross payment status (registered and approved)
- 20% — standard deduction (registered)
- 30% — higher deduction (not registered)
CIS is calculated on the labour element only, not materials.
Getting Paid Faster
The key to getting paid on time in construction: submit accurate applications, on time, with supporting documentation. A well-presented application with clear line-by-line breakdowns gets certified faster than a vague lump sum claim.
SiteLynx Invoicing handles the full application for payment workflow — line item claiming by percentage, automatic retention and CIS calculations, professional PDF output matching industry standards, and recurring invoice support.