For Australian construction contractors, choosing to establish an independent small business is a popular option. While it is often a slightly daunting process giving up a regular, salaried position to become your own boss, it's also exciting and rewarding. The freedom you enjoy in choosing your own projects, setting your own hours and potentially increasing your income dramatically is worth it, even if it means an increase in personal responsibility and paperwork.
Unfortunately, one of the biggest drawbacks to being an independent contractor is that sometimes your clients will refuse to pay some or all of the monies owed to you for work you've completed. Sadly, this isn't rare in the building industry, and while large construction companies can often absorb these lost payments with little impact, when you're working for yourself, non-payment can mean you can't pay your mortgage or bills.
Sometimes, being forewarned is being forearmed, so it's important to understand how and when you may find yourself in the difficult position of payment refusal. Here are two of the most common problems that independent contractors in Australia find themselves being short-changed by clients.
1. Non-payment of variations
Generally, when construction work is contracted by a client, the contractor provides them with a quote for the work they'd like to have completed. However, over the course of a project, the client may request changes or additions to the initial work that result in extra labour and materials needed to bring the job to completion. Unfortunately, despite agreeing on the added expenses for variations, some clients will refuse to pay for them.
2. Refusal to pay the final payment
It's common practice in construction to have the payment for a client's work spread out into instalments. This is particularly true for larger and more costly projects. Generally, there is an initial payment made which is used for materials, followed by instalments at agreed upon stages of construction. The final payment is then made once the project is completed.
Many contractors strike a problem when a client refuses to pay this final payment even though the project is completed. This may be because the client no longer has the motivation to pay you because their project is completed and non-payment won't result in further work ceasing. Sometimes, a client may suggest that there are faults or defects in your work that warrant non-payment.
Encountering a client who refuses to pay you can be extremely stressful and difficult to navigate. Using the services of an experienced construction debt recovery service is often the fastest and most effective way to get your payment from the client.Share