Managing trade and construction businesses is a difficult enough task before you add the complication of invoice non-payment.
Consider the following scenario: Four weeks after you issue the final claim, your client sends notification late in the week declaring they won’t pay because (choose your option):
• You breached the conditions of the contract (time and/or specifications)
• They’re not happy with the quality of your work
• You haven’t responded to their denial of claim notification within the required timeframe
While the rules are (slightly) different depending on whether you operate in domestic or commercial markets, the process you should adopt is largely the same:
• Don’t be the proverbial ‘bull in a porcelain shop’
• Consolidate/organise the information you control
• Understand your rights in the State you are doing work
Despite these rules being simplistic, every trade/ construction business that we have engaged with (over the last 40+ years) is guilty of breaking at least one of them.
Let’s explore each rule:
Don’t be the bull in a porcelain shop
Yeah, I get it. That’s not the actual expression. But here’s what I know … stuff changes over time. How often is the scope-of-work (SOW) you start with the same as the SOW by the time you finish? Material costs. Unknown geologics. Weather. Budget. Taste. Even government regulations can change between the start and finish of a project/SOW.
It’s important that you help clients understand the implications of their decisions. Don’t get too front-footed. Document all changes to the SOW. Explain to them (in writing) what the consequence of their changes might be. Where possible, explain (and back it up in writing) what the implications are of delayed decision making.
While time and motivation may impact on how well you can communicate, if you don’t, you will have nothing to support your defence.
Consolidate/organise the information you control
In short: get you s**t together. Every email. Every text. Every photo. Every document. Even phone call histories (time, date and length). If it isn’t documented, it didn’t happen.
90 Per cent of the time, your success at receiving payment is dependent on your ability to “show-and-tell”. Most States’ SOPA processes do not make it easy to support show-and-tell. They’re trying to establish whether there is a simpler path to establish your invoice is fair and justified; not what is right. Show-and-tell will support your claim.
Lawyers are good at writing letters to each other. Let’s justify a legitimate claim and then own it.
SOPA
Your local Security of Payments Act will be written slightly differently (Don’t get me started). But here’s the deal: they are written to support smaller contractors getting paid.
SOPAs are not designed to provide head contractors the right to deny payment. You should pay attention to what they communicate but their decision is not absolute. The legislation is designed to make payment quicker. If your head contractor attempts to deny payment based on their “rules”, your claim may still be legitimate.
For nearly 50 years Assure Global Plus have been helping Australian SME businesses get paid. And we’re interested in making sure you can still sell to those same businesses tomorrow. If you’re worried or trying to work out what a viable solution might be to do both, you should be speaking with us.
1300 624 247
