Slow pay, short pay, and no pay issues are notorious in the construction industry. Whether you’re a contractor, subcontractor, or material supplier, the odds are that you’ve experienced this — likely more than once.
Payment delays are frustrating and can lead to serious cash flow issues for your business and other projects where you need to supply materials, invest in equipment, etc.
Sometimes, however, you could be making simple mistakes that are stopping you from getting paid on time.
Below, we’ll explore some mistakes that could be delaying your payment that you might be unaware of.
And remember always to send a preliminary notice for every project. Whether you made a mistake or not, you deserve to be paid for the work you’ve completed. Prelims help protect your payment rights.
Reasons Why You’re Not Getting Paid
Oftentimes, payment issues are due to invoicing mistakes.
Given the busy schedules of contractors, subcontractors, and material suppliers, it is understandable that things can be overlooked or forgotten.
But by being aware of a few common mistakes, you can potentially solve many of your payment issues. Here are some of the most common mistakes that delay payments.
Unapproved Change Orders
Change orders occur often during construction projects. Sometimes a property owner, property manager, or another party may request a change to the scope of the work.
Because of the nature of these changes, work tends to begin almost immediately. Unfortunately, most construction contracts state that change orders will not be paid for until the general contractor approves them.
So even though you might’ve carried out the change and billed for the appropriate materials and manpower, your payment could be delayed by the simple fact that the GC hasn’t reviewed and approved the change.
Another common reason for invoices not being paid is overbilling. Overbilling is when an invoice bills for a larger percentage of the work than what has been completed.
This can happen either as a mistake or because you’re close to finishing, so you bill ahead expecting to finish the remaining work soon after.
While some general contractors are okay with this practice, others will refuse to pay for work that has yet to be completed.
Missing Waivers & Documents
Certain projects will require additional documents with each submitted invoice. These documents are often certified payroll reports, sworn statements, or conditional and unconditional waivers.
Forgetting to submit these attachments will likely delay your payment since the GC will be unable to submit the total draw request to the owner.
Filling out conditional and unconditional waivers and releases can be time-consuming. To make the process easier for you, CNS offers our clients a free construction lien waiver generator when they do a preliminary notice with us.
Our secure database auto-populates each waiver with your project information, so all you have to do is print it, sign it, and send it.
Late or Nonexistent Invoice
One sure way to not receive your due payment on time is by sending your invoice late or forgetting to send it altogether.
With so many responsibilities to juggle, it can be easy to forget about your invoice. However, general contractors have deadlines when they need invoices submitted.
Failure to meet the deadlines will result in your delayed payment and could even delay the payment of everyone else on the project.
When To File A Mechanics Lien
While some of the above mistakes could be the reason why you’re experiencing slow, short, or no pay situations, unfortunately, sometimes it is out of your control.
Payment issues can arise due to cashflow complications within the project or other general contractor or property owner problems.
If the general contractor or property owner refuses to pay you for your work, you can file a lien against the property. At CNS, we can help you prepare and file your mechanics lien to protect your payment rights.
Prefer to call? You can reach us at 800-366-5660.
Disclaimer: CNS is not an attorney, and if you need legal advice, please contact one.