Top Tips for Making Sure Your Construction Company Gets Paid

Top Tips for Making Sure Your Construction Company Gets Paid

Obviously, steady cash flow is important to your business. It allows you to meet all your financial obligations in a timely manner, pay vendors and subcontractors, buy equipment and supplies, start on new projects, and invest in growth and new opportunities. Making sure your construction company gets paid by clients when payments are due is the only way to keep up the incoming revenue you need.

Unfortunately, not receiving timely payments is an all-too-common problem for construction companies and contractors. Below are some tips for making sure your construction company gets paid the amount it’s owed, when it’s due.

How to Encourage Timely Payments from Clients

  • Draft a solid contract that lays out all the specifics of the project and payments to create clarity and protect yourself in the event of any legal disputes
  • A thorough contract spells out the project’s purpose; the steps needed for completion; the equipment and materials needed, what they cost, and who’s paying for them; a list of possible add-ons and their costs, as well as any exclusions; a detailed, agreed-upon total cost estimate; details about payments and when they’re due (typically by date or project milestone); and details about the warranty
  • Put late payment fees into the contract as a deterrent; agree on them with the client before signing
  • Include information in the contract about when and how invoices will be sent, and the client’s options regarding payment methods
  • For convenience that increases the likelihood of receiving timely payments, give clients as many options as possible as to how they can pay (ideally including at least one digital payment option)
  • Send invoices via mail, email, or courier for every payment due; if you send them in hardcopy form, enclosing a self-addressed stamped envelope can speed up the process of getting paid
  • Review all invoices carefully before sending; invoice errors are one of the most common reasons for delayed payments
  • Keep complete records of all invoices and communications pertaining to payments (even if they’re just one-way communications from you to the client)
  • Give the client the benefit of a few polite reminders via mail and/or email when payments are past due
  • Visit the client in person if written reminders don’t trigger payment; if they’ve withheld payment because of concerns about the work performed or because of financial difficulties, use the meeting to address those concerns or to renegotiate payment terms
  • Send a preliminary notice or pre-lien notice if you aren’t receiving payments and may need to proceed to filing for a mechanic’s lien; this is often compelling enough to get the money you’re owed, and it’s also an important step legally
  • To ensure that you take the appropriate steps if it comes to it, review your state’s rules and regulations for filing a mechanic’s lien, as they differ from state to state; filing a mechanic’s lien is your recourse if you’re unsuccessful in making sure your construction company gets paid

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With over 60 years of history, Trekker Group leverages its management team’s experience, dedicated employees, key partners, top quality brands, and excellent product diversification to provide customers with the highest standards of service in the construction industry.

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