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Concrete Contractor's Guide to Getting Paid

Not getting paid is every contractor’s worst nightmare. Most will agree there’s nothing more frustrating than not getting paid the amount you duly earned.

There are plenty of reasons why some clients fail to pay. For example, if owners or general contractors are experiencing financial issues, they may not be able to compensate contractors. In addition, clients may also intentionally withhold payment, especially if they think the decorative concrete project wasn’t done according to the standards stated in the contract.

Whatever the reasons may be, it’s important that you take the right steps to exercise your right to get paid. Here are some ways you can ensure that you get paid on time and in full.

A person in a safety vest holding a white hard hat.

Create a solid contract
An ounce of prevention is always worth more than a pound of cure. You need to put preventative measures in place to protect you from nonpayment, the most crucial and basic of which is a solid contract.

Before signing a project contract with customers, meet with them to discuss everything that needs to be included. You need to put in clauses concerning how much and when you’ll get paid. If appropriate, set up payment milestones such as the first payment is due when you finish placing a concrete slab or complete the foundation. Also, add some provisions that impose penalties for late payment and the right to suspend work until payment is received.

When setting the payment terms, consider the client risk. You don’t want to enter into a contract with a client who doesn’t have a stellar financial history. If it’s a new client or the project is speculative, ask for a higher upfront payment. If it’s a trusted repeat client, you have more room for flexibility.

There’s no document that can guarantee you’ll get paid. However, you can use the contract for leverage to demand payment or to sue clients for breach of contract if they refuse to pay.

Be flexible in your payment terms
As you specify the payment terms in your contract, you and your clients should agree on when invoices will be sent and payment methods your clients can use. Invoices can be sent via email, registered mail or private couriers. You may include a self-addressed envelope in your invoice and other necessary details to make payment more convenient for the client.

Consider automating the billing process. Some of the most common reasons for late payments are issues with the invoice itself. Automating the billing process saves you a lot of time and reduces inaccuracies in paperwork.

Send reminders about overdue accounts
When a client doesn’t pay, it’s vital to act fast. The longer an invoice is unpaid, the more difficult it is to pursue a client and exercise your payment rights. There are several state laws that impose a limit on how long you can wait after a construction project is complete before you can apply the legal remedies available to you. It’s always important to send a past-due notice with a copy of the bill, the penalties and the contract itself via registered mail.

If clients still don’t pay, drop by their office to ask why. As previously mentioned, they may withhold payment if they’re not happy with the work you’ve done or they’re having financial issues.

Depending on the situation, you must decide whether to take a hit and structure a lower payment deal or pursue legal action. If it’s the latter, tell the client you intend to file a mechanic’s lien. Some states require you to send preliminary notices before sending a mechanic’s lien. This notice will let clients reconsider if they’d rather pay or be inconvenienced by a lawsuit.

Protect your payment rights
A mechanic’s lien is a remedy that gives you legal claim on a property because of unpaid work you put into it. Lien laws vary across states so do your research to meet your area’s requirements. Failure to comply can make your mechanic’s lien invalid and unenforceable.

In general, the first step you must take is to send a preliminary notice of your intent to file a lien. It’s good practice to send a preliminary notice to all your construction projects so you have the right to file a lien if necessary. Take note of the deadlines required by state laws to ensure you’re covered.

Liens are generally successful when it comes to securing payment. The lien will create a public record of the property, preventing the property owner from selling or getting financing for the property before the lien is paid.

However, if the client still doesn’t pay, it’s time to take legal action to enforce the lien through foreclosure. Foreclosure forces the property to go on sale so that the lien can be satisfied by the proceeds of the sale.

Unfortunately, concrete contractors not getting paid on time is nothing new in the industry. But that doesn’t mean you’re powerless when it comes to collecting receivables. As long as you’re proactive in setting contract terms and you know your payment rights, there are options you can use to get paid.

Patrick Hogan is the CEO of Handle, a company that builds software which helps contractors, subcontractors and material suppliers secure their lien rights and get paid faster by automating the collection process for unpaid invoices. He can be reached at [email protected] or (800) 845-0625.

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