What Is an Application for Payment?

An application for payment is a type of document that provides detailed information regarding work done for the benefit of a client. Often used in construction situations in which a contractor handles all the details for either a new building project or the renovation of an existing structure, this document goes far beyond the detail found on an invoice. Sometimes known as a request for compensation, the detail on the payment application will address the cost of all work performed, the charges for the goods delivered and used at the work site, and any other miscellaneous services rendered during the course of the construction.

The purpose of the application is to provide the client with a detailed breakdown of all the associated charges, ranging from the purchase of materials to complete the project to labor costs and to any other miscellaneous costs incurred on behalf of the customer. Depending on the scope of the project, the document can be quite lengthy and contain significant detail about each line item included, including delivery dates, how materials were used, quantities ordered and used, quantities returned for credit, and any other information that is relevant to the associated charges. By doing so, the client is able to go over each and every expense carefully, make sure he or she is in agreement, and approve the line items for payment.

While the application for payment is helpful in terms of providing clients with details about each expense, contractors often find this document helpful as well. The information contained therein can come in handy when bidding on similar jobs, since the detail can provide relevant pricing and quantity information that aids in creating a viable proposal for a new project. In addition, the detail on the application for payment also provides an excellent resource in the event there is a question later about how purchased materials were used.

One aspect of the application for payment that is to the mutual benefit of both parties is the ability to reconcile any differences of opinion that may exist in regard to a particular line item. For example, if the customer disputes the amount charged for a particular line item, the contractor can either re-negotiate that cost with the customer or produce documentation to back up the legitimacy of the cost. The end result is that once all concerns are addressed and resolved, the customer can remit payment based on the detail of the application for payment, in accordance with the terms agreed upon in the construction contract.