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Are you a Builder? Trouble with a customer?

Late payments?

The chances are, most of your customers will pay you within a reasonable amount of time and not cause you any issues.

But at some point in your building career, you surely encounter a customer that will either put off paying time after time or simply refuse to pay at all.

When this happens, you need to know how to deal with the situation, what your options are and, perhaps most importantly, what not to do.

Why the customer is not always right

Most builders get  work  based on their reputation, so dealing with non-paying or late-paying customers can be really tricky.

But by sticking to your guns and following the advice below, you should be able to collect the money owed to you.

There are a range of reasons why customers can’t or won’t pay, and you need to be clear what these are before taking any steps. 

As always, prevention is better than cure but there are options open to you in almost every situation.

Imagine the situation, you’ve spent weeks working on a project, buying materials and carrying out the agreed work. When the job’s done you send an invoice only to be ignored.

You follow up and still no response. The customer isn’t returning your calls and never seems to be in. Then, when you do finally get hold of them, it’s excuses after excuses, or worse, a refusal to pay.

This kind of situation plays out time and again all over the UK, and it’s one that most builders will experience more than once in their career.

Builders have been known to take action in ways such as dismantling their work, brick by brick. This is when the press or social media get involved good builders get a bad reputation

It is a matter of but non-payment result in a builder losing their entire business. Also taking the court route and following up non-paying customers can be prohibitively expensive, not to mention time consuming. It’s simply not seen as an option for many.

Unfortunately, going to court is a last resort for some but here’s what you can do to prevent the situation reaching that conclusion.

Creating a contract for every job you do can be time consuming but in the long term it could save you countless hours of stress, not to mention thousands of pounds.

Agreeing with the customer beforehand what is to be done, for when and how much it will cost in a legally binding document is one sure-fire way of ensuring payment and fewer problems on jobs.

Of course, we realise that you’re not a lawyer and would rather get on with what you do best.

But there are contract templates available for free that do the hard work for you.

When customers choose a builder they usually do their research.

They ask around for references or use online sites like to make sure they are reliable and aren’t cowboys.

Builders understand the importance of reputation and references, and recommend customers always use reputable tradespeople.

But why should this only be a one way process?

If you’re entering into a business relationships with someone, you have every right to know a little bit about their background.

You are as entitled to know if they are in a position to pay as they are to know you’ll do what’s agreed.

There are numerous online credit check companies that  let you check customer’s credit ratings, so you can be sure they are in a position to pay.

What if a client has no way of paying?

Sometimes customers don’t pay because they simply can’t.

This is a more difficult situation because it is not necessarily anyone’s fault, but remains very frustrating.

Once formal insolvency processes are underway, you can’t start any action to reclaim money or debts.

You need to make sure that you’re consistent in everything you do. This could prove to be extremely important further on in the process if things are not resolved. It’s vital that you invoice when you say you would, and that invoices are clear and payment breakdowns are thorough. Never give the customer an excuse not to pay.

If you are inconsistent with your invoicing, your customer may be inconsistent with their payments. Invoice when the details are fresh and there is less room for wriggling out of payment. If a customer doesn’t pay you initially, for which there are many legitimate reasons, follow up regularly and in person. Do this within a set time period of time. Most of the time the matter will be resolved at this stage. But keep accurate records of when you send invoices and try to get confirmation of receipt at every opportunity. If necessary, keep a contact log and record all dates, phone calls and other important information, especially if you get a sense the situation may escalate.

It’s often a good idea to have a colleague or third party contact the customer, acting as an accounts or administration manager, to maintain a professional distance. Offer the customer alternative payment options, such as instalments, and try to get an agreement in place for payment.

Illegal tactics

Non-payment can be incredibly frustrating but it’s imperative that you don’t overstep the mark. This could severely hinder your chances of ever getting paid. There are laws in place to protect you, including the Supply of Goods & Services Act 1982, but once you step outside the law this is more difficult to use in your favour.

You are of course entitled to chase up customers for payment but never stray into harassment. Call at reasonable hours, at regular intervals (not one after another) and don’t make unsustainable claims about what might happen if they don’t pay. Maintain calm and don’t resort to threats or use of third party bailiffs.

You can also involved a mediator. This is the place you can resolve payment matters before they go to court.

It’s also important not to take to social media sites to publicly shame customers or insist they are a credit risk, as things like this can land you in legal trouble. The last thing you need is a defamation suit hanging over you. Make sure you keep things professional and civil even if contracts are broken.

Remember that your customer may well be keeping a record of interactions or contact log too (some customers will go to extreme lengths to avoid payment). You can imagine how this kind of thing can look if the matter does end up in court.

You can, however, present a petition to the court if you are owed more than £750. This may then result in an individual voluntary agreement (IVA) to be paid back part of the sum you are owed over time. A very frustrating situation but totally out of your hands.

When things get tricky your best option is to find a mediator. Mediation is an option for those on either side of a building dispute. It can help the two parties work towards a resolution, with a trained mediator acting as an intermediary and facilitating dialogue between the two sides.

Advantages of mediation

Using mediation as an alternative dispute resolution can save much time and money if it spares from needing to go to court. Discussing the issue in a less formal environment is likely to put the people involved more at ease than they would be in a court room, and may allow a mutually beneficial agreement to be reached than a black-and-white decision by a judge.

Another clear advantage of mediation over court action is the cost – court fees can be high and it is best to avoid them if at all possible. Mediation, compared to using the courts, is quick to arrange and should not take too long.

Role of the mediator

It is the mediator’s role to remain impartial at all times and not to give any confidential information to the other party. It is not the responsibility or right of the mediator to make a decision on the behalf of the opposing sides, nor to advise on the legal rights of either party.

The role of the mediator is to assist them in arriving amicably at their own decision.

In conclusion

Non-payment is never ideal but unless you’re very lucky, it will probably happen at some point. The important thing to remember is not to panic. There are ways and means to get what you are owed and the law is there to protect you. Think smart, document everything and seek help from the relevant places and hopefully the matter will be resolved quickly.

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