Unpaid Work in Construction can be very troublesome. The flow of cash is very important for any kind of business. And it is true even for construction works as well.
Having a steady flow of cash can make the difference between an efficient project, and facing problems during construction work.
Going after unpaid bills can be time-consuming and even give one awkward feeling. Some construction contractors might think they are pressurizing others to get paid for the bills and invoices.
Whatever might be the feeling, Unpaid Work in Construction works is a big problem. The following 7 ways in which a construction company can avoid unpaid bills when working on a project.
7 ways to Unpaid Work in Construction Projects
The following 7 ways in which a construction company can avoid unpaid bills when working on a project.
1- Knowledge about interim rights
A construction company must have sound knowledge about the interim payment system. After amendments were made to the Housing Grants, Construction and Regeneration Act in 2011, the construction contractors have now a safety process to ensure that their payments are made timely.
If a contractor’s team had been working on a Unpaid Work in Construction project for 45 days or even more, one has the right to ask for payment for the work done in that time. The contractor should know the provisions of the act as often many points are overlooked.
For example, if the client does not give you a payment notice, then the contractor has the right to send a default payment notice to them. If the client cannot agree with the contractor, then they have to pay the full amount on the default payment notice.
2- Breaking down of the invoice
Though it might look tedious and complicated, segmentation of the invoices for payment in intervals can help in lightening the amount of Unpaid Work in Construction.
Setting up an invoice policy can help one in getting paid. They can break down the workload into important stages and events.
These events must be acknowledged by both the contractors and the other party. It helps in keeping the cash flow steady for a construction job.
3- Becoming proactive about Unpaid Work in Construction
The dominant reason why a contractor must chase the bills is that the concerned party forgot about it. If asking for Unpaid Work in Construction makes you feel that you are nagging for money, then you can send the clients a preliminary reminder / notice.
This will throw light on the project’s status who is working on the project and when to expect the complete payment for the various works.
There will be clients who might think that it is very early to ask them for the money for the works. However, sending them a reminder helps the constructors to get the payment on time.
There is construction management software like Ezelogs that can help in minimizing such critical monetary problems. Ezelogs has been working for a long time to help the construction companies to get out of such problems.
With the help of such construction management software’s, notices can be sent to the clients directly. Create Smart contracts with Blockchain technology will almost eliminate payment issue.
4- Non-completion conundrum
Completing construction work is amazing unless other factors create a non-completion. The falling apart of a project can lead to a huge burden.
Hence the construction contract must have a non-completion clause. Apart from the clause, there must be a verbal agreement so that the construction team can get a payment.
The contractor must make all the concerned parties aware of the clause. This will prevent both the contractor and the client to stay in the loop and be aware of the clauses.
5- Getting interest from the clients
As per the Late Payment of Commercial Debts (Interest) Act 1998, the construction companies in usa are entitled to get some amount of interest from clients if payment is not done on time.
This is especially true for those projects where the contract states payments on completion of the construction.
6- Suspending work due to non-payment
The contractor must be aware that they have the right to suspend work if they feel that the client is avoiding the payment. There might be chances that the payment is being dragged out.
One can give seven days prior notice to the clients stating that you might suspend work if payment is not done timely. It will help in better management of money. But always verify with your contract clauses.
7- Following due processes
Chances are due to non-payment issues, the contractor and the client might end up in court. Though it is a rare scenario, it shows that one needs to complete the payment process completely.
To avoid hearing statements like the clients were not aware of the default payment notices. You must ensure that all the correspondences are sent via recorded delivery.
Keeping records ensures that the client cannot give excuses about lack of communication and avoid making the payment.
Unpaid Work in Construction causes disturbances in the normal flow of work at construction sites. To avoid such issues, using Construction Management Services like Ezelogs helps in keeping track of the finances and dealing with the clients better.
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