What can I do if payment is late?
Check what was actually due and that its final date has passed, then demand it in writing with interest, and escalate only if that fails.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
Start with the paperwork. Check that the final date for payment in your subcontract has passed, and what sum was due after any Payment Notice or Pay Less Notice. Then check whether later payments or agreements changed the balance. That tells you whether the gap is disputed, put off or simply unpaid. Next, send a written demand for the sum, stating the final date and the interest running, and phone the accounts contact the same day. If that does not work, you have options: a commercial meeting, a specialist payment review, suspending work, adjudication or another legal route. Suspension, interest and adjudication each depend on your contract and your evidence. They also depend on whether the Housing Grants, Construction and Regeneration Act 1996 covers your contract. Weigh your main contractor's solvency and the cost of each route too. Where the legal position is unclear, take advice before you act.
Example
Illustrative example. The scenario and figures are invented.
The facts
A subcontractor's application was for £62,000, the final date for payment was 30 June, and £40,000 arrived on 30 June. £22,000 of the application is still unpaid.
What happens
- The application, the notices, the proof of sending and the bank record are kept together.
- The subcontractor asks whether the £22,000 is disputed, put off or simply unpaid.
- The next step is chosen from that answer, not from a missed notice alone.
The cycle in figures
| Item | Amount |
|---|---|
| Application | £62,000 |
| Received on 30 June | £40,000 |
| Remaining | £22,000 |
The outcome
The £22,000 is sorted into disputed, put off or unpaid before anything is done about it. A missed notice is not assumed to decide the whole account.
Late Payment Claim exists for the week it has already gone wrong.