FEA Randal And Train
Bookkeeping Trial Test Drive
Outsourced Accounting
Contractor Bookkeeping Templates For QuickBooks And Xero

    How To Manage Late Payments For Builders, An Expert Guide

    Posted by John Dela Cruz on Fri, Mar 15, 2019

    Today's Guest Article Is From John Dela Cruz

    One major headache for builders are the late payments of invoices. Builders seldom get the payment for their completed construction work at the right time and date. Professionals have recorded multiple payment cases and the slow paying issues are at the top of it. The unacceptable idea is that contractors seem like the last person to receive the reward for their hard work. Can you imagine finishing a building work without receiving a penny? Disappointing, isn't it?

    Cash flow is king! Numerous startup builder companies are depending on paid invoices of clients. These payments are the bloodline of the entire business. Therefore, unpaid invoices can affect the production of work.

    Guide to Late Payments

    If you feel like your client is giving you a hard time with obtaining the payment, check out the following ways to secure the deal.

    1. Review the signed construction contract

    First, always remember not to settle with a simple handshake. Reviewing your signed construction contracts keeps you on track. With all the construction statements and clauses, you can be aware of where to stand in terms of payment. A contract makes your legal rights secured. It also helps you in various ways especially dealing with slow-paying clients.

    In addition, it is better to discuss your concerns with the client. This is the easiest and effective way to deal with late issues for contractors. Asked the reasons why you are still not receiving the paid invoices in a proper manner. Payment can be an awkward topic but you should speak up.

    2. Put late payment fees in payment terms

    Having a construction contract that sealed the oral agreement is important because this can guarantee efficient payment terms and project management. One way to secure the payment for your work is to add a late payment fee in your contract.

    Stating the fees in payment terms is a must. At your meeting and planning stages, it is better to mention the fee because it can avoid building disputes. Several builders add at least 2% penalty if one fails to pay within 30 calendar days. Some add 3% for 60 days.

    But you can always make your own terms at the special conditions part. All is depending on your negotiation with the client.

    3. Good communication is the answer

    Construction is a temporary endeavor. You will have to work with the people you just have met for days. Having a clear and open communication is always the best way to deal with it since this can lead to a harmonious client-builder relationship. Always be vocal with contractors whenever you see something you don't like or different from the plans.

    4. Settle with a fixed payment schedule

    Construction is a complex process as it demands patience, hard work and investment. The client and builder themselves have other things to be mindful of, hence establishing a fixed payment schedule can lessen the stress. A payment schedule is an actual date for claiming and releasing the payment.

    5. Taking the situation to court

    Taking legal action is your last resort. If you think your client is ripping you off, it is time to take the situation to court. This is not just a waste of money and time. You just need to consider the idea that you could get the payment plus the compensation. The compensation is for all the troubles that have caused you for not paying on time.

    The effects of late payments in construction projects

    The small-scale construction businesses have a huge part in the industry as a whole. They occupy a massive chunk in the field. And if, for instance, most of these businesses have gone bankrupt, then, the construction world will suffer a significant loss. Planning your business growth can be easy if you are on top of your cash flow problems because you can put your attention to expansion and variations in revenues.

    Similarly, issues with payments can affect the work deadline. It can impede the productivity of work and the contractors’ ability to perform and accomplish work on a schedule. The project success can be at risk, too. Therefore, we can all say that payment is a joint responsibility of the client and builder. For instance, if a builder fails to notify the client and gives the billing statement, there is no actual reason to pay up. However, if a client neglects and refuses to pay, he/she is probably not satisfied with the work result.

    Focusing on your cash flow

    Therefore, the main focus of builders should be on establishing a stable cash flow. Late payments are sometimes unpreventable. Make sure that the payments from clients are not the only amount running your business. Learn how to market your building services and implementing good project management. By doing this you can identify the factors affecting your business and prevent possible future failures.

    About The Author:

    John Dela Cruz


    John Dela Cruz is the Principal Construction Lawyer of Contracts Specialist, Founder, and CEO of Small Builders Construction Software based in Sydney, Australia, and an industry influencer. He has been helping multiple homeowners, builders, and other tradesmen across the field for almost 10 years. He holds several industry management roles including Divisional President and Councilor at Master Builders Association NSW.


    Recommended Reading: Like this post? Check our past blog posts related to this topic.


    The Information Shown Below Is From Fast Easy Accounting



                                Bookkeeping Trial Test Drive  Contractor Bookkeeping Templates For QuickBooks And Xero

                                Outsourced Accounting  1-800-361-1770


    Download the Contractors APP today from the App Store or Android Store

    Access Code: FEAHEROS

    Click here to download the App on Android:

    Click here to download the App on iOS:

    Simply scan the QR code or search for ‘MyAccountants’ in the App Store and enter the Access code: FEAHEROS to utilize the powerful App features and capabilities, and benefit from having our Construction Accounting App at your fingertips, 24/7."

    PS: Even if you are not a Construction Contractor you will find a plenty of benefits in the app so we invite you to download it too! It's Free so why not?


    Topics: Payment Collect, Contractor, Contractor Tips, finance, Contractor Operating Tips

    Download Our Free App For Construction Contractors

    click to download the Contractors APP now from the App Storeclick to download the Contractors APP now from the Android store

    Access Code: FEAHEROS

    QuickBooks Setup And Chart of Accounts For DIY Contractors

    accounting articles

    Subscribe by Email

    How Can We Help?

    Contractors Bookkeeping And Accounting Services

    Who We Help

    How We Help

    Next Step


    Contractors Bookkeeping And Accounting Services

    Outsourced Construction Accounting Services For Contractors All Across The U.S.A. By Fast Easy Accounting 206-361-3950

    Serving Construction Contractors
    Across The U.S.A
    Including Alaska
    And Hawaii

    Podcast On iTunes
    Click Here To Listen In iTunes
    Contractor  Success M.A.P.
    Contractors Bookkeeping And Accounting Services

    Remote Access Your QuickBooks  Using Secure Servers

    Outsourced Bookkeeping Services For Contractors At Fast Easy Accounting

    Contractors Bookkeeping And Accounting Services

    T Sheets Pro Advisor Fast Easy Accounting

    Mobile Time Cards 

    Eliminate the job site to office paper shuffle

    Start My Free 14 Day TSheets Trial  

    Connect With Randal DeHart Google+
    Contractors Bookkeeping And Accounting Services

    Fast Easy Accounting Construction Accounting Specialists Member Of National Association Of Home Builders NAHB

    Contractors Bookkeeping And Accounting Services


    Join Our MBA Network

    Most Popular Posts

    Read the Latest:

    Browse by Tag


    Blog Suggestion Box

    We Remove Contractor's Unique Paperwork Frustrations

    Quickbooks certified proadvisor


    Financial-Intelligence-And-Performance-Reporting-Tool-Fast-Easy-Accounting Hubdoc-Document-Collection-and-Management-System MBA Member Fast Easy Accounting 206-361-3950
    Don't forget, you can hire our services at FastEasyAccounting.com
    How To Use Our Services