Cash Flow Issues with Subs: PLAs are the Answer

A recent report by financial solutions company, Billd, highlights the big financial problems faced by construction subcontractors. It points out issues with cash flow and a lack of money for emergencies. These findings highlight why project labor agreements (PLAs) and working with signatory contractors are important for better financial stability.

The 2025 National Subcontractor Market Report asked over 800 construction professionals about their financial practices. It found that 40% of subcontractors have to hold back half or more of their profits just to cover everyday costs. This leaves little money to grow their businesses. A big reason for this is slow and unpredictable payments. General contractors think payments happen within 30 days, but subcontractors actually wait around 56 days.

The report also talked about a "funding gap." This means 43% of subcontractors don't have enough money set aside for unexpected costs or project delays, putting their projects and businesses at risk. Even bigger subcontractors making over $15 million a year often struggle because most don't plan ahead for extra working capital.

These money issues can cause serious problems for the whole construction industry, delaying projects and forcing builders to pick and choose which bills to pay on time.

Nearly one-third of builders said unpaid invoices slow down or stop their work.

Project labor agreements and working with signatory contractors offer important solutions. PLAs set clear rules for payments, often requiring payments to subcontractors within a specific number of days after work is completed and approved, which reduces surprises and delays. They also improve transparency by requiring detailed reporting and clear communication between all parties. This ensures subcontractors are paid predictably and on time, avoiding the 56-day wait many face otherwise. Signatory contractors who follow PLAs usually have stronger financial practices, including better access to construction-specific financing and higher compliance with labor laws, helping subcontractors stay stable and invest back into their businesses. 

The data from Billd clearly shows why the construction industry needs stable financial practices through PLAs. Subcontractors who partner with signatories and use PLAs can manage their cash flow better, operate more efficiently, and grow their businesses steadily.

Read article on Construction Dive