This month’s contract clinic question comes from a contractor whose client is refusing to pay for work that’s been invoiced for. Aqeel Haque looks at what recourse is available:
The question:
We’ve not been paid for work we believe was correctly invoiced, on time and in accordance with the contract. The employer isn’t replying to emails and insists it’s not their problem. What can we do?
The answer
Delayed payments are a widespread issue in construction. They are often reluctantly accepted and even tolerated by some contractors. The Housing Grants, Construction and Regeneration Act 1996 introduced a requirement for a paying party to notify the amount due at specific points during most construction projects. However, correct notification of the amount due represents only the first hurdle. The actual receipt of payment can be difficult to obtain. Contractors face a difficult dilemma. Taking a hard line with clients and enforcing contractual rights can seem commercially aggressive. On the other hand, a failure to react can cause operational issues, strain supply chain relationships and even impact team morale.
Common causes
Payment delays in construction are influenced by various factors. These include issues such as a
lack of funds or inflexibility and excessive bureaucracy in employers’ procedures. Despite attempts to reduce it, there is often a dependency on upstream payments – the ‘pay when paid’ effect. Finally, there is a tendency among some employers to delay payments simply to improve cashflow. Delaying payment may seem beneficial to the payer in the short term. However, it is ultimately detrimental, straining relationships, disrupting project flow and leads to increased costs, damaging the industry’s reputation.
Read the full article here
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