Unpaid invoices legal action8/9/2023 ![]() ![]() If work is to be completed in phases, require a retainer payment prior to the commencement of each phase.Require a retainer/partial payment prior to commencement of work.If there are any change orders and/or extras, provide them in writing and require they be signed.The contract should allow you to charge interest after the term date to pay the invoice has passed.The contract should allow you to suspend and terminate services for non-payment.Secure a signed contract with clear terms regarding invoicing and payment.If the fee arrangement/budget increases, to provide the client with a written confirmation and/or seek client approval.To provide a clear and concise fee arrangement/budget and payment terms and to ensure the client understands both.When compiling this list, we sought the assistance of several of our clients in the construction industry who have accounts and collections departments dedicated to collecting unpaid accounts. In the following, we have compiled a list of good practices of how to avoid and collect unpaid accounts. The best way to avoid a lawsuit for an unpaid account is to employ good business practices that start before the contract for services has been signed. If you have had any involvement in a lawsuit, you will know that the process can be extremely stressful and expensive. At this point being two years removed from the amendments, your invoicing and billing should follow the rules stated in the Construction Act. ![]() Similar notices can be given to subcontractors as well. If the owner decides not to pay the contractor, it must send a form called a Notice of Non-payment, which must outline the amount in dispute and the reason for non-payment. The contractor must pay its subcontractors within 7 days of the 28-day limit. The Prompt Payment Regime requires that an owner pay its contractor’s invoice within 28 days following receipt of a “proper invoice”, which is defined in the Act. On October 1, 2019, the Prompt Payment Regime and Adjudication process came into force. In 2019, the Construction Lien Act was amended and renamed the Construction Act, and many of the amendments were meant to alleviate certain payment issues that have plagued the industry over the years. The flow of funds has always been an issue for the construction industry. ![]()
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