Construction cash flow headaches: White Fox & Jones
Is your construction business using the Payment Claim regime to your advantage?
Disputes over invoicing disrupt business cashflow and have the potential to derail building projects. The Construction Contracts Act 2002 Payment Claim regime is designed to streamline payments and reduce disputes by use of a “pay now, argue later” system. In essence, Payment Claims are modified invoices containing key information required by the Act so the recipient can identify what work the invoice relates to.
If a recipient of a Payment Claim disputes the amount claimed, they must respond with a Payment Schedule within a certain timeframe. If they do not, the issuer can recover the claimed amount as a debt due, meaning the recipient cannot argue that the claim is disputed when debt recovery action is taken. The issuer can also suspend work pending payment by issuing notice. If the recipient does respond with a Payment Schedule, the issuer may make an adjudication claim – a fast-tracked alternative to a court proceeding.
These options are typically faster and cheaper than standard enforcement options and can be severe for the recipient. This is why strict compliance by issuers with the requirements for Payment Claims under the Act is essential.
It is worth reviewing your business practices and your invoicing process to ensure you are taking advantage of the Act and complying with it. Often only small adjustments are required to utilise it effectively – and save future headaches.
The White Fox & Jones team are experienced with implementing the Payment Claim process and responding to issues under the Act. Get in contact with us if you would like help navigating your way through the complexities to protect your business.
