You Don’t Have To Go To Heaven To Get Payment In 30 Days
THERE are three steps to heaven, according to Eddie Cochran. But to get payment there are five steps. Who would have thought it takes longer to get paid than to get to heaven. But if you read on, I’ll explain.
There is actually quite a lot of legislation designed to protect SMEs, but applying that legislation is not always easy and comes with the baggage of some tough commercial decisions. How much time can I spend on this? Can I really afford to upset this client?
So whilst we welcome the work from NSCC on the Industrial Strategy for Construction 2025 and the Supply Chain Payment Charter with its move to change the payment culture within construction, we equally recognise the challenges of today and both CFA and NSCC work hard to provide support to members for the here and now to simply get paid.
NSCC best practice suggests the following five steps:
Step 1 – 30 days: Insist on 30 day payment from the start. Ask for 30 days payment or revisit this if that hasn’t been done for some time. If it’s a government contract it’s your legal right. Call us to find out more.
Step 2 – Clear terms: Agree clear payment terms (and dates) in your contract. Ideally most work should be based on a formal contract as provided by JCT.
We appreciate that many smaller contracts are formed through a quotation and acceptance process, but the principles still apply. As a CFA member, visit the member’s area of our website and download the CFA’s terms and conditions template.
Step 3 – No retention: Simply say ‘no’ to retentions. Explain the quality and confidence that being vetted and a part of a trade association brings.
Mention that in the unlikely event of a dispute you have an independent dispute resolution service you can call on and which can act as a further guarantee of quality to your client. If, despite all of this some form of retention is demanded, you could offer a retention bond. CFA can advise.
Step 4 – Effective process: Give yourself the best chance of getting paid on time by making sure your house is in order. Establish an internal mechanism that will enable you to keep on top of the payment process for each contract. Know your client, find out who does what. Establish payment dates and submit your applications on time. Find someone for payment queries (maybe different to site queries?) and suggest they pay by BACS.
Step 5 – Stand firm: Whilst many contractors and clients will be reasonable when it comes to paying you, there will be some that reduce, delay and withhold payments wherever they can. Don’t accept this.
Use the CFA legal helpline to obtain advice.
Did you know, for example, that you have a legal right under the Late Payment of Commercial Debts (Interest) Act to claim interest on the overdue amount if your contract does not provide for it?
Even mentioning this can achieve results and we have a short statement you can use in emails.
As we gently move out of recession, if you don’t always get paid promptly, why not try some of these measures?
What have you got to lose? Work on each section in small bites to improve your business practices and chances of getting paid.
If you are a CFA member use the support detailed above to help you change the way you do business and get paid!
The CFA is a leading trade association representing the Flooring Industry. If you would like an application pack or further information on the benefits of membership, please visit our website:
T: 0115 941 1126
This article has been reproduced from the Contract Flooring Journal. You can find them at www.contractflooringjournal.co.uk.