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How to Quit Being the “Unpaid” Builder and Get Paid Every Time

How to Quit Being the “Unpaid” Builder and Get Paid Every Time

So your building client has quit paying you! And you stand to lose thousands!

And the media says the construction environment is improving! Don’t they know that non-paying clients make the life of small builders exasperating – in any environment?  

I suspect every builder, who has been in business for a while, has a “bad paying client” story to tell.

A dream job to begin with – large, challenging and profitable – turns sour when your client questions every invoice item, quibbles over your margins and refuses to pay some things.  Your overdraft is growing and you fear receivership.

But it need not be like this – when you set-up your building agreements carefully.

In this article I outline three things you need to have in your building agreements and one thing you should exclude, to help make non-paying clients history.

Three Things to Include:

1. State clearly when invoices are to be paid

Check to ensure that your payment terms are clear.  Set out your invoicing arrangements and payment expectations.

If your normal process is weekly invoicing for all costs incurred in the preceding week, then make sure your agreement specifies this. Include how the invoice will be delivered and when payment is due.

For example, “Weekly invoices will be created at the end of each week (normally a Friday) and emailed by close of business. Invoices will include labour, materials and subcontractor costs incurred in the seven days up to and including the invoiced day. Payment is made by direct deposit within 3 calendar days.”

2. State your right to stop work

It is your right to stop work (and remove materials) if a progress payment is not made on time.  While this is a huge interruption to your work schedule, it is much less disruptive that not being paid!

An example, “Should invoices not be paid by the due time, work on your project will halt and materials not yet paid for may be removed.”

3. Include collections costs in outstanding debts

Make sure you state that if debt recovery becomes necessary, any costs incurred will be added to the outstanding payments.

One Thing to Exclude

Don’t add interest payments to outstanding invoices

When you do (e.g. interest of 1.5% per month on any outstanding balance), you are indicating that is is OK for your client to use you as a source of credit, and not pay on time!

It may appear nice to get additional interest, but it will not offset the cash crisis late payment cause.

A Final Word

Be polite

In any conversation with clients it is most important that you stay in control. Do not get allow yourself to get angry. Remain respectful and calm. If you are tempted to lose your cool, email rather than phone – but read your email several times to make sure your tone is friendly.


While most standard building association agreements are excellent, they may need adjustment to suit your particular payment terms. So, having your lawyer check these is a very worthwhile investment and may save you thousands of dollars of lost income.

Your Comments

How have you handled non-paying building clients?  What lessons have you learned from hard experience? Post your comments below.


7 Responses to How to Quit Being the “Unpaid” Builder and Get Paid Every Time

  1. kevin check May 6, 2014 at 11:31 am #

    I haven’t run into this as of yet (knock on wood) but I would follow a set rules to work with a client with these issues. I would file a lien against the client because I would have the same from my supplier – if it occurs. A good businessman would make sure that the client is able to pay the bill. Or you could offer financing from a third party provider.

  2. Graeme Owen May 6, 2014 at 12:38 pm #

    I like that you have focused on “being a good businessman,” because it’s not good business to allow your clients to order a job they can’t afford. So sorting out the finances upfront is the best way to prevent this. It’s a great idea to be able to offer financing. Do you have any arrangements with third party providers?

  3. Charlie K May 7, 2014 at 8:39 am #

    Avoid clients that are lawyers. Their suing you for ridiculous reasons can’t end up right.

    • suzanne h May 9, 2014 at 3:31 am #

      I agree about lawyers. I knew we were in trouble when she told me the bank was charging her too much for interest and she was not going to borrow any more money from them. Left us short 55 thousand and then she sued us for using her money for personal gains even though we left her with a $1/2 M house. Oh yes, cross doctors off the client list also. As for liens – my lawyer said they have more money than you do and they will fight it so just walk away. Make us want to look for some other means of making a living although we love building homes!

      • Graeme Owen May 9, 2014 at 9:40 am #

        Thanks of the story. I’d be interested to know what you have learned from this experience and what you might do differently to ensure it doesn’t happen again. Cheers

  4. R Sklar May 7, 2014 at 10:36 am #

    I’ve never had this problem.

    On one of the rare, rare times a Client was a couple of days late with my money, I simply had my framer “Bandit”, who is on work release from the big state pen here in town and has the requisite Big House tats to prove it, go over and ‘splain to my Client that he was very unhappy to hear that he wasn’t being paid Friday, because the Client was stiffing me. Never had any problems after that.

    • Graeme Owen May 7, 2014 at 11:37 am #

      Great story! Probably not the best way to “win friends and influence people!”

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