Understand Construction Customers That Don't Pay - How to Deal With It
Are you tired of chasing down payments and dealing with the headache of late or non-payments in your construction business? You are not alone. It is a common issue that many business owners face, and it can significantly impact your cash flow, not to mention your stress levels.
In this blog, we will explore some of the most common reasons why customers in the construction industry refuse to pay. More importantly, it is how you can get paid on time with the help of a reliable bookkeeping service firm like CCA. Don't let late payments cost you time, money, and valuable resources. Keep reading to learn how you can avoid these issues and keep your business thriving.
Understand Customers That Don’t Pay
The best way to deal with customers that don't pay is to make sure they won’t do it in the first place. To do that, you need to know why clients refuse to pay contractors on time.
1. Billing Surprise:
No one likes surprises, especially when it comes to paying bills. If your customers get invoices that are not what they expected or are not clear, it can cause confusion and slow down payment.
The solution? Establish transparent and professional communication with your clients. By documenting all communication in writing, such as via email, you can avoid misunderstandings and refer back to evidence if needed.
2. Incorrect Invoicing:
Numerous factors, such as inconsistent formatting and unclear line items and categories, can contribute to inaccurate invoicing. No matter what the reason is, it can make your customers confused and unhappy, which can delay payment or even make them refuse to pay.
To avoid this scenario, make sure your invoices are always up-to-date and easy to understand. This means keeping your clients up-to-date on any changes to the scope or amount and giving clear, concise descriptions of your fees. Doing so can improve communication with your clients and ensure timely payment for your services.
>> Learn more: 4 Best Invoicing Software for Contractors and Construction Companies
3. Change Order Disputes:
Changes are an inevitable part of the construction industry, and they can sometimes lead to disputes over completion or change orders.
To avoid such scenarios, it is crucial to get your client's approval for any changes in costs and timeliness, no matter how insignificant they may seem. Failure to do so can result in unpaid work, which can significantly strain your business's finances.
4. The Customers Just Won't Pay
Non-payment is every business owner's worst nightmare. Whether it's because of a lack of funds or slow-paying customers, it can seriously affect your cash flow. In such situations, you might have to consider taking a lien on your customer's property to ensure that you get paid.
However, it's always better to do your due diligence before starting work and ensure that your customer has good credit. Even financially stable clients can run into trouble later on, so it's better to be safe than sorry.
How Much Does A Non Paying Customer Cost You?
Chasing down payments and dealing with financial losses can be frustrating and time-consuming. But if you ignore the issue, the consequences of bad debt can be even more harmful to your business.