Wise Up Wednesday: Why Some Subcontractors Get Paid And Some Don’t!
Life would be much simpler if you did the work, sent in your application and received your payment in full and on time!
But in reality, as a Specialist Contractor or Trade Contractor you will often find that your works are not being valued properly by the Contractor’s QS and you are not getting paid.
You can’t physically make the Contractor pay you, but you can take positive steps to make it more likely that you will be paid the right amount of money at the right time.
As a Sub-Contractor getting paid on time could mean the difference between survival and insolvency!
So Why Do Some Get Paid and Some Don’t?
Here are a few thoughts based on 28 years of resolving payment problems exclusively for you guys;
- Know the dates your payments are due and make the Contractor aware that you know.
- Ensure the terms are clearly set out and understood
- Make sure that all applications are in on time and comply with the contract
- Contact the Contractor before the payment is due to make certain they know when you are expecting payment
- Make sure the Contractor knows that;
- if payment is late, you will suspend your works in accordance with your contract, or
- if he pays less than he should you will take prompt action
- #Check out our Free “How To Get Paid” Report – Here It Is
Can Subcontractors Suspend Performance?
Suspending performance of the works is a powerful incentive to make the Contractor put you at the top of the list when it comes to making payment.
But you MUST follow the contract!
Used properly, suspension is your best solution to prevent late payment.
You need to be careful and we would always recommend that you take our specific advice before suspending performance.
Remember our team includes Specialist Quantity Surveyors and Construction Contracts Consultants, so we have the capability to resolve your problem fast.
Set Off and Contra Charges
If the Contractor is making a set off from your account or is deducting contra charges, there are steps you can take to resolve the situation.
First and foremost, you need to take action and fast, because the situation is not going to get better of its own accord.
There is a significant difference between them saying it has cost £”x”, for whatever reason and them being able to prove that;
- a) it is your responsibility and
- b) they have actually incurred those costs
In both cases their claims, are exactly that “claims”, and the burden of proof falls on them.In other words; they have to prove that these matters are your responsibility and that any costs they say they have incurred have actually been incurred, and that they are reasonable costs reasonably incurred.
Think of it this way. How much trouble do they put you to when you claim for variations?
Pay When Paid
These clauses are intended to avoid payment to the subcontractor entirely if the money isn’t received from the Employer. Since the Construction Act came into force such clauses are made “ineffective” unless non-payment is due to the insolvency of the Employer.
Either make sure you don’t accept such clauses, or you need to know about the financial stability of the Employer!
If payment is made late, interest becomes due on the outstanding money in accordance with Late Payment of Commercial Debts (Interest) Act 1998 which applies to all contracts as from 1st November 2002.
The rate of interest payable is 8% above bank minimum lending rate unless the contract itself provides a substantial remedy for late payment.
WANT TO KNOW MORE?
Please download our Free “How To Get Paid” Report – Here It Is
So, there we have it. Some reasons why some Subcontractors get paid, and some don’t. But, with the right assistance and application of the right principles at the appropriate time, you can make sure you do!
I have been assisting Specialist Contractors just like you, to resolve payment problems for the last 28 years. And, Streetwisesubbie.com has been providing services to our Buddies (members) for the last 10 years.
We are pretty confident that we can help you, so please feel free to call any time on 01773 712116 or email firstname.lastname@example.org. Initial advice is free, subject to you meeting certain criteria.
Thanks and best regards
P.S. Please remember that we are here to provide solutions exclusively for Subcontractors. If you want access to professional solutions that work, then please give us a call on 01773 712116, or email email@example.com today.