STRUGGLING TO GET PAID
STRUGGLING TO GET PAID
Desperate to get Paid
Leaving money on the table
Not charging interest on late payments
Long periods between billing collection 45, 60, 90 days
Cash is King they say and all of us in the construction industry have expended more energy collecting our entitlements instead of the many other tasks we need to focus our skillsets on.
- To ensure you get paid make sure the contract terms and conditions pertaining to payment are clear and concise from the start of the Project.
- Whenever practical a deposit should be secured upfront to help fund the expenses which are usually front end heavy upon commencement on most projects.
- Make sure all required documentation is in place and lien waivers if required are signed and provided.
- Follow up in advance of the Due date too many companies only chase once payment is already delayed but if you can identify any potential delay in advance there is time for corrective action before the payment is late and Overdue
- Submit Applications on time with all supporting documents
- Prepare a credit policy and ensure it is communicated prior to the bid
- Be prepared and have a policy in place for dealing with late paying accounts
- Early payment discounts can be a way to motivate timely payments
- Late Payment Penalties need to be validated in the contract too many contracts are one sided in this regard but if a Client wants Liquidated damage clauses, he should be willing to accept Late Payment Penalties as a contractual condition
- Understand what slow payment means to your company in terms of cost it is important to decide what faster payment is worth to you.
- Take time to clearly understand your Client accounts Payable Process
- Get to Know the clients’ accounts team they are the direct line to the reality of where your payment is at any time
- Good service providers establish a priority for Payment if you do all that is expected of you and go the extra mile it should go along way to mitigate payment delays
- Ensure your contract is signed before work commences and ensure deposits paid
- Establish contractual compliance from day one and lead by example
- Know the law there is a prompt payment law in most states
- Understand the process of filing a mechanics lien (on a private project) or bond claim (on a public project )
- Do not hesitate to send demand letters referring prompt payment demands and/or a notice of intent to lien
- Accounts receivable is ongoing and should remain a daily focus
- Retention monies should be followed with the same priority as the regular billings and to ensure collections all the project sign offs, punch lists, as built drawings, operation and maintenance manuals need to be in place and progressively followed and issued to the client so there is no opportunity for delaying retention payment releases.
- If your team are overstretched Think Outside the Box and OUTSOURCE specialists who are emotionally detached and can be a great asset in collections.
Know your rights, fulfill your contractual obligations , be aware of your receivables position daily and do not hesitate to demand payment it is your entitlement to be paid as per the contract on time for the correct amount.
We at ADDMORE Services have years of experience following receivables and our Quantity Surveyors are trained to know your rights and to use all the tools at our disposable to get the accounts paid and leaving you to focus on your core business of getting and doing the work.
The information provided above is general in nature, has been prepared for informational purposes only and does not constitute legal advice. All parties need to evaluate their specific project conditions, contract, local codes and ordinances and contact their attorney or consultant to understand and apply these and other general principles for their project. The information is intended but not guaranteed to be correct, complete, and up-to-date. No representations or warranties are made, express or implied, that this information is correct, complete, or up-to-date.
COLIN ANTHONY ADDLEY MCIOB, MAIB, MSAIB
Colin is a highly experienced Professional Quantity Surveyor and Project Manager with over three decades in the International construction and Marine Industry.
He is a specialist in the fit out sector having executed many prestigious, Luxury high quality and Technically Complex Projects.
He is also a creative writer having penned many industry related articles.
By: admin | December 20, 2020