4 Ways to Speed Up Payment from Contractors15 May 2020, Posted by Tips in
It can be detrimental to your business if your payment is delayed by a general contractor. But did you know there are ways to protect yourself and get paid sooner?
Whether you need plywood for sale for a project or need to pay wages to your employees, it’s important that you protect yourself and build in ways to speed up this process. Here are 4 ways to speed up payment from contractors.
State Law is Your Ally
Many contractors don’t realize that state law is resourceful and is there to protect them. For one, if a client or contractor has received unjust enrichment, that means they have received completed work that wasn’t paid for. You can file claims with your state’s courts to pursue legal action against someone. Typically a contract breach will constitute legal action. But there are other ways contractors can speed up payment.
Another piece of legal advice to use is Prompt Payment Law. These laws clearly define what is allowed in retainage rates, construction contracts, and other related things. Remember that these laws are here to protect you, and they act like your insurance when doing business. Many general contractors will be sure to pay you on time if you express your knowledge in these matters. Just be sure to use it as a last resort. Otherwise you can come across as threatening.
Be Upfront, Friendly, and Transparent
You can avoid having to involve the government entirely by just being transparent and kind. If you’re open and express your deadlines for payment by communicating clearly, you’ll be surprised at how much faster people will pay you. Being kind and respectful is crucial to establishing a healthy relationship with other contractors. They’ll be sure to repay the offer and will notice your kindness.
It is still important, however, to be upfront about your expectations. If you have no wiggle room on your timeline of being paid, express that to the contractor. Better yet, build it into your contract. If you must get involved legally, use a third party who’s disconnected from the situation. This helps you not get emotionally involved and stops you from making stupid decisions that could affect your income. Crass, rude, or threatening emails could hinder you in getting paid quickly.
Build Payments into the Contract
Perhaps the most effective thing you could do in speeding up payment is negotiating the terms of the contract on the front side of business. Your first contract write ups can require payments based on milestone completions in a project. And while retainage is normal in the industry, you can alternatively recoup that money along the life of a project. It’s just important that these details are laid out explicitly in the contract.
Using a Mechanic’s Lien
Though not popular, sometimes it’s necessary to use a mechanic’s lien. This provision allows you to charge fees for past-due work. In some cases it gives you a right to some of the value of a property that you built or renovated. Again, this could be detrimental to your relationship with the property owner and the general contractor. But sometimes these actions are needed.
Pressure from a mechanic’s lien will often incentivize the contractor to prioritize paying you before continuing other parts of the project. Even just the existence of a mechanic’s lien will impact the decision making of the general contractor. It also can inform the property owner that the general contractor is behind or being irresponsible. From here the property owner can pay subcontractors directly or pursue legal action with their general contractor.
Forming America Has Your Back
We hope these tips will serve you in future projects going forward. If you are in need of construction supplies, Forming America has your back. Whether it’s shoring equipment, concrete forms, or other construction equipment give us a call today so we can help your next big job.