They pay us late every month
The money always comes in the end, but never on the final date, and every month we fund the gap.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
What's happening?
Your main contractor pays every month, but a week or two after the final date for payment. It is not disputing your account. It is using your money. Because the money always comes in the end, no single month feels worth a fight, so the pattern becomes the job's normal.
It usually rests on two gaps on your side. Nobody knows each month's exact final date, so nothing happens the day after it passes. And the chaser, when it goes, asks politely and names no cost.
Every late month is funded from your overdraft or your suppliers. The interest the subcontract or the law allows is rarely claimed. A main contractor deciding whom to pay last will pick the subcontractor for whom paying late costs nothing.
The solution
Fix each month's final date for payment from the signed subcontract. Chase the day after it passes, and put the interest in the first letter. Late Payment Prevention sets up that diary and chaser, with the interest worked out. It proves them on the next live payment, so the pattern breaks from next month.
For the months already paid late, Late Payment Claim sets each final date against the day the money arrived. It then builds the interest schedule for the demand or the final account. If it is unclear whether your subcontract's interest clause or the law applies, that question goes to your solicitor.
Example
Illustrative example. The scenario and figures are invented.
The facts
A cladding subcontractor on a 12-month job has been paid each of its first six payments between 8 and 15 days after the final date for payment. Each is around £55,000, and the commercial manager has never chased before the second week.
What happens
- The final date for each remaining payment is fixed from the subcontract and put in the diary, with the chaser written for the morning after.
- The six late payments are checked against the bank statements. Interest at the rate the subcontract states comes to £640.
- The seventh final date passes on a Friday. The chaser goes on the Monday morning with the sum, the date it was due and the interest running, and the accounts contact is phoned the same day.
- The seventh payment arrives on the Wednesday, and the £640 goes into the next application as its own line.
The outcome
The last five payments arrive within 2 days of their final dates, and the £640 is paid with the eighth. The pattern stops because paying this subcontractor late now costs something.