Pay-when-paid clause
A contract clause that states payment to a subcontractor is due only after the contractor receives payment.
Pay-when-paid clauses affect cash flow timing, allowing subcontractors to receive payment once the contractor is paid. While they provide more certainty than pay-if-paid clauses, they still require careful cash flow management to ensure that financial obligations can be met promptly.
Used in a sentence
The pay-when-paid clause means we'll pay you as soon as we receive payment from the owner.
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