Getting Paid: Does your Company Need an Invoice Check-up?
You have provided great work and you expect to be paid – so what’s holding you back? Maybe it’s your invoices. If you have not given much thought to your invoices in a while, it might be time for an invoice check-up.
Here are some important things to consider:
1) Are your terms clear?
Clarity in payment terms are of critical importance. If you can’t understand them, how is the person in charge of writing your cheques supposed to understand them? Worse: how would a court understand and interpret them if you became involved in a dispute?
Each project and contract will have its own distinct requirements, but here are some common items to consider:
- Is a deposit required?
- When is payment to be made? For example, on a regular basis, or upon achieving certain milestones?
- Who will determine if a milestone for payment has been achieved?
- Does the owner/ head contractor require any particular steps be taken as a condition precedent of payment (eg. submit invoices by X date; change orders; provide statutory declarations, etc)
- How will items excluded from the scope of services be charged?
2) Are your terms consistent?
We have seen disputes arise when terms for payment are not consistent. There are a few places where consistency should be checked:
- Do the terms in your contract match the terms in your invoice? (A key place where we often see discrepancies is with interest: when does it begin to accrue, and at what rate?)
- Do the terms in your contract appropriately reflect or consolidate with the terms in the head contract (if applicable)?
3) Do your terms create any risks?
- Is the owner or general contractor entitled to deduct amounts (other than statutory holdbacks) from your payment draw? (examples include: a hold-back for deficiencies, lien claims on title, progress re-evaluations/disputes)
- Is there, or should there be, a bond in place?
- Is there a “pay when paid clause”?
- These clauses can be contentious, and there is conflicting case law regarding its application.
- In general terms, such a clause purports to allow a contractor to refuse payment to a subcontractor, if it has not been paid by the Owner.
If you believe it may be time to give your invoices a check-up, or if you have an issue respecting payment clauses, Stephanie Streat would be pleased to hear from you. 604-917-0045.