Many subcontractors are facing financial difficulties lately due to builders going broke or just flat out refusing to pay.
In the last 5 years, 20 builders have gone bust. This has affected hundreds of subbies and left them tens of millions of dollars out of pocket.
Subcontractors are the most vulnerable party when it comes to the contractual chain but a lot of them do not take the upfront steps to avoid being put in situations like this.
So here are some steps you should consider to ensure you get paid on time for the work you do.
Before You Pick Up The Tools
It is always smart to do a bit of research on the company you will be offering your services to. You want to make sure they are trustworthy and haven’t messed around with other subbies in the past.
A good way to see how trustworthy a company is, is to do a trade credit check. Credit reporting agencies, such as Equifax, can provide you with a credit history report on the company.
These reports include details of past corporate failures and any currently known credit defaults they have.
Once The Job Is Complete
Here are a few tips that will make sure the money ends up in your account once the job is complete.
- Invoice your client as soon as you have finished your job. Various studies have shown that the longer you wait to invoice a client, the longer they will take to pay you back.
- Send payment reminders before the due date. By keeping this fresh in your client’s minds, they won’t have any excuses when it comes to payday.
- Follow up on the due date of payment. When the payment is due, give your client a call, text, and/or email to let them know. Everyone gets busy and sometimes it’s just a simple case of forgetfulness.
How Pencil Can Help Subcontractors That Are Not Getting Paid.
Pencil is a platform that is built to help small business owners and subbies get paid on time for the work they provide for there customers.
We have found that our users on average see 80% of their invoices paid within the first 5 days. This is a massive improvement when you compare it to the average invoice being paid 26.4 days late!
We automate the process of sending reminders, collecting payment and also allow you to auto-charge customers so you can recover debt FAST.
If you’re interested in getting your invoices paid on time book in a demo with the PencilPay team here.