BUSINESS SUPPORT LATE PAYMENTS
GET PAID
C
Late payments are one of the most persistent challenges in construction, which is why you need a plan to ensure you’re paid on time
ash flow is the lifeblood of your business. Get paid late and feel the effects tear through your
operations, impacting upon everything from subcontractor wages to new project opportunities. In worst cases, it could result in you having to shut up shop. The answer, then, is not to let late payments happen. But how? Lorna Carter, Head of Construction and Partner at Chattertons Legal Services Ltd, says: “Many builders fail to put a contract in place. The FMB has contracts that members can use, but it’s surprising how often on the helpline we manage that members report not using those contracts. “And they stick to their own standard quotation, quite often without any terms and conditions on the back at all. So they
rely on a very small amount of paperwork to set out what the agreement is between them and the client – and that’s the first obvious error we see.” Having a contract in place is the foundation for a successful project. Without it, you are vulnerable to disputes over payment, scope, and quality of work. Carter says that while defective work or incomplete projects can trigger non-payment, a far more common cause is variations that have not been properly documented. “Typically, clients will refuse to pay where variations haven’t been recorded
properly. Once the builder is on site, clients decide they want other things added, and there isn’t communication between the client and the builder about what those variations are, how much they will cost, and the impact they’ll have. “Communication has improved over the years, but people still aren’t the best at recording things. Often the value of variations is a significant proportion of the overall work, and clients have lost sight of it. When they’re presented with the bill, they don’t want to pay because they can’t, and they invent defects to get out of making payment.”
24 Master Builder
www.fmb.org.uk
Made with FlippingBook - PDF hosting