Subcontractor Payment Schedule Generator

Managing subcontractor payments on construction projects

A subcontractor payment schedule consolidates contract values, invoiced amounts, payments made, retention held, and outstanding liabilities across all trades on a project. It is a financial control document, not a bookkeeping convenience. Without it, the project manager is estimating cash flow from memory and the AP team is processing invoices without context on what has already been claimed and paid.

Under the Building and Construction Industry Security of Payment Act (which applies in all Australian states and territories with state-specific variations), subcontractors have a statutory right to progress payments within defined timeframes. Failing to pay within the statutory period can trigger adjudication claims, suspension of works, or liens against the property. A payment schedule that tracks due dates across 15-30 subcontractors prevents missed deadlines that create legal exposure.

Worked example: commercial fit-out, 12 subcontractors

A principal contractor in Sydney is managing a AU$3.2 million commercial fit-out with 12 subcontractors. At month 4 of a 7-month project, the payment schedule shows:

The plastering subcontractor has AU$13,200 owing (AU$17,600 invoiced minus AU$4,400 retention, minus paid to date). If that payment is overdue under the Security of Payment Act, the subcontractor can serve a payment claim and the principal contractor has 10-15 business days (depending on the state) to respond with a payment schedule or face adjudication. The consolidated view makes this visible before it escalates.

Security of Payment: statutory payment deadlines by state

Each Australian state has its own version of the Security of Payment legislation, and the payment deadlines differ:

• NSW: Payment due within 15 business days of a payment claim for subcontractors (Building and Construction Industry Security of Payment Act 1999)
• VIC: Payment due within 25 business days (Building and Construction Industry Security of Payment Act 2002)
• QLD: Payment due within 15 business days for subcontractors (Building Industry Fairness Act 2017)
• WA: Payment due within 20 business days (Building and Construction Industry (Security of Payment) Act 2021)

Missing these deadlines is not just a cash flow issue for the subcontractor. In QLD, retention money must be held in a project trust account. In WA, similar trust requirements apply. The principal contractor who commingles retention with operating funds is in breach of the Act.

Common mistakes in subcontractor payment tracking

Tracking retention in the accounting system alone. Xero and MYOB record the payment transaction, but neither platform natively tracks the retention component of each progress claim or calculates when retention is due for release. If retention tracking lives only in a spreadsheet that the project manager updates manually, discrepancies between the spreadsheet and the ledger accumulate. Use the retention schedule calculator to verify your retention position across projects.

Not matching variations to the original contract value. When a variation order changes the contract sum, the payment schedule should reflect the revised total. If variations are tracked separately and not reconciled against the payment schedule, the "% complete" figure becomes unreliable and the retention cap calculation is wrong.

Processing subcontractor invoices without ABN verification. Subcontractor payments require TPAR reporting to the ATO. If a subcontractor's ABN is cancelled or incorrect, the principal contractor may need to withhold 47% under the no-ABN withholding rules. Your AP process should verify the ABN on every subcontractor invoice before payment. For how AP automation handles this, see invoice fraud prevention.

How to use this payment schedule generator

1. Enter project details: project name, number, site address, and the principal contractor's name and ABN.
2. Add each subcontractor with their trade, contract value, and current payment status (invoiced to date, paid to date, retention held, amount owing).
3. Set the next payment due date and status for each subcontractor to flag overdue or disputed items.
4. Download the PDF to share with your project team, accounts payable, or include in monthly project reporting.

Frequently asked questions

Why track subcontractor payments separately from the accounting system?

Your accounting system records transactions, but project managers need a consolidated view across all subcontractors on a single project. A payment schedule shows which trades are on track, which are overdue, what the total outstanding liability is, and when retention is due for release. That project-level view does not exist natively in Xero or MYOB.

What is TPAR and does it apply to subcontractor payments?

Yes. If you pay subcontractors for building and construction services, you must lodge a Taxable Payments Annual Report (TPAR) with the ATO by 28 August each year. The TPAR reports the ABN, name, and total payments to each subcontractor. The ATO uses this data to cross-reference against the subcontractor's income tax return.

How much retention is typically held on construction contracts?

Standard retention is 5% of each progress claim, up to a maximum of 5% of the total contract sum. Once the cap is reached, no further retention is deducted. Half is released at practical completion, and the remaining half at the end of the defects liability period (typically 12 months). Some contracts specify 10% retention on smaller subcontract values.