Payment Tips, Our Top 5 for Making Sure You Get Paid!
Payment tips is all about ensuring you get paid in full and on time has many benefits to your business including a healthier cash flow and the ability to award prompt payments to your own suppliers, potentially allowing for discounts!
There are some simple steps that you take to improve your chances of getting paid in a timely fashion and save yourself time, stress and money.
Payment Tips 1.
The contract stage is the best time to help ensure that you get paid for the work you have carried out to the expected amount on the expected date.
Ensure that a very clearly defined payment mechanism is included in the contract. This should state the amount to be paid, and provide for regular interim payments either on a monthly basis or by completion of stages of work.
The payment mechanism should also be backed up by 1.) A suspension or termination mechanism if the employer does not pay on time, 2.) Provisions for you to retain title over goods and materials purchasing by you and used in the works until you have been paid, and 3.) Provisions for fast and efficient dispute resolution, preferably via adjudication.
Payment Tips 2.
Ensure that the client or contractor has the funds to pay you for the works required.
This seems like an obvious one, and it is always advisable to do your research on a client or contractor before signing any contracts. Find out how the project is being funded and whether the funding is secure.
Sometimes contractors can get caught out on variations, as sometimes there is only enough funding available for the original agreed works so the client can run out by the time it comes to getting paid for additional works. Ensure that you have a signed agreement from the client for all variations, especially if they are costly.
Payment Tips 3.
Get into the habit of keeping good records.
Keeping good records can help you when recovering retentions that are due. Ensure that you have documented the agreed stages of work, the start and completion dates, and benchmark this against the agreed contract terms. Help by outlining the amount that is due and when. This not only keeps is clear in your own mind, but helps you to argue and demonstrate your case to the employer.
Payment Tips 4.
Ensure that your applications for payments are made on the exact dates specified within the contract. To read more about this see our article “The price of timely applications” here.
Payment Tips 5.
Down tools. If you are having difficulty getting paid for work that you have carried out on a project, and are still working on it, you can take advantage of the suspension mechanism in your contract and simply stop the work. Contractors are often concerned that this will damage the relationship with the client and it is advisable that you discuss this with your legal advisors first, but it is an effective way of ensuring payment provided that your work has been carried out to the required quality, as that is the factor on which you should be judged.