The Collection Advisor

How to (Always) Get Paid in the Construction Industry

Posted by Brian Summerfelt on Oct 12, 2016 1:50:22 PM

Getting-Paid-in-Construction.jpg

If there is a single industry that creates a disproportionate share of the challenges, claims and disputes we see at my collection agency, it’s construction.

There are a multitude of reasons for this. Few industries face a similar number of variables in terms of weather, labour availability, site conditions and a miscellany of other unforeseen impacts. Often there is a panic to prepare the scope of work and contract, leading to gaps you could drive a backhoe through. 

And let’s face it, construction contractors are not lawyers and few are fantastic administrators. You are in the business because you know how to build stuff. So writing up change requests, record-keeping and presenting detailed progress reports to the Owner are often way outside your wheelhouse. Furthermore, these things are hard to do while performing the work you’re paid for.

A further risk is that project financing is often linked to highly volatile industries. A sudden market slowdown in the midst of a major job can lead to partners, subcontractors, and even the Owner folding up shop.

So when things go south, it can get very messy overnight. Projects halt. Businesses pull midnight moves, or suddenly become unresponsive. Contractors can be tempted to throw the whole mess into lawyer land, resulting in massive fees, long delays and no guarantee of ever being paid – even if they’re granted a court judgment. 

Sure, you can file a lien, but the process, deadline, duration and holdback varies vastly from province to province.

If there is one silver lining, it’s that many factors are in your control when it comes to avoiding disputes and collecting construction industry debt.

In order to vastly increase your likelihood of being paid for your work, you need to:

  1. Insist on a detailed scope of work
  2. Recognize the many factors that lead to disputes
  3. Get sound legal advice on your contract
  4. Keep complete records
  5. Report issues early

It's also vitally important to know how to respond when claims do arise, and how to collect quickly, before money evaporates. 

For a deeper dive on the above points, plus a printable list of the periods for registering and enforcing liens (including holdbacks) for every Canadian province and territory, you’ll want to download my free guide.

And as always, the MetCredit team and I are here to help. Just call toll-free at 1-888-797-7727 or drop us a line.
 Download the Guide to Getting Paid in the Construction Industry

Topics: Debt Collection

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