SPOTLIGHT MARUN CONSTRUCTION
Client financial status – Pennell finds out from clients what their financial readiness is, so if he is successful with a tender or a contract, he knows
the client has the money available to pay on time.
What to do when payments are late
to communicate clearly with clients from the outset. “It's about being transparent with clients; how you expect to be paid, when you expect to be paid and giving the client a clear view of what you want to happen. This clarity sets the stage for a mutual understanding and a smoother invoicing process,” he says. Pennell’s key learnings Document everything – be meticulous with keeping records and be sure to get your client’s signature before you start any work, agreeing to clear terms and conditions and variation orders in case of a dispute. Don’t shy away from legal recourse – using the FMB’s dispute resolution service and threatening clients with the small claims court can often be enough to get them to pay without actually having to go to court. Refine payment terms – making sure that payments are spread throughout the contract means the final payment isn’t too big, which makes late payment less of an issue. Additionally, invoicing for variation orders separately minimises the risk of delayed payments and ensures a smoother financial transaction process.
Pennell has been reflective and proactive in his approach to managing clients so that they pay on time. But when the situation arises, he has a strategy to resolve it. He recommends that fellow FMB members take the following steps: 1. Send payment reminders within the agreed payment timeframe, allowing a grace period for clients to settle. 2. Follow up communications after the initial reminder for payment, mentioning that failure to pay on time could lead to you engaging the FMB’s dispute resolution service. This sets the agenda for further potential action. 3. Engage the FMB’s dispute
Shaun Pennell
Not getting paid on time can be frustrating, emotionally draining and detrimental to your business sustainability – so you need to have a plan CHASING PAYMENTS
resolution service – as an independent dispute resolution service, if the client does not agree to
T here was a time when chasing late payments was a regular challenge for Marun Construction Ltd in Thornfield. But through a series of processes and planning, this is no longer the case. “We've been going a long time now, so we’ve implemented different things and learned from mistakes over the years to keep clients paying on time,” Director Shaun Pennell says.
Solving the problem of late payments is not easy. Business leaders need to remain calm, act professionally and ensure they have an effective combination of record-keeping, client communication and access to available resources should action against clients need to be taken. Pennell says the most important lesson he has learnt when it comes to reducing the risk of late payments is
a review, it will reflect badly on them in future proceedings. This shows that as a builder, you are trying to find a mutually agreeable solution. 4. Take legal action as a last resort. Ideally, it won’t reach this stage but if you have completed steps 1-3 then you’re in a good position when it comes to engaging solicitors or the Small Claims Court.
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Master Builder
www.fmb.org.uk
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