Late payments hurt small businesses; it’s a fact.

If you own a small construction company, you need to ensure you stay on top of your cashflow so that you can pay for the materials you need to complete your next job.

Too many late payments could mean you’re unable to pay your bills, your suppliers – and your workers – leaving you high and dry.

Unfortunately, taking steps to ensure you always deliver on time, build a relationship with clients, and deal with problems quickly and efficiently will not always mean you’re protected from late payments.

So, how do you ensure your construction company gets paid on time, every time?

1. Set clear payment terms

It’s easy for things to get confused if you rely soley on spoken agreements. Instead, you should issue your clients a contract that outlines not only the services you are providing, but also very clearly defined payment terms – including the amount they should pay and the consequences for late payment.

Your contract should be easy to understand, and use clear terms that cannot be misinterpreted. Finally, it should be signed by both you and the client. You can also include your company’s payment terms on the back of your invoices, as a reminder, as well as clearly stating when payment is due on the front.

Finally, don’t forget your manners – ‘please’ and ‘thank you’ go a long way! Cloud accounting company Freshbooks has even put together the best terms to get you paid faster.

2. Send invoices out promptly

Of course, it should go without saying that invoices should always be sent out on time, however many a competent business has managed to get behind with their invoicing at some point. If you’re not already using software (such as Quickbooks) to make up and send your invoices, I’d recommend you start – it makes things a whole lot easier.

Invoicing software can also allow you to set reminders for when invoices need to go out to clients, helping you to always stay on top of things and ensuring nothing falls down the cracks.

3. Make it easy for them to pay

The more payment options you provide, the better. If you can provide some electronic payment methods for your clients, such as allowing them to pay by credit card, you may even get paid up to eight days faster!

If you make it easy for your clients to pay on time, they’ll have no excuse when they don’t.

4. Provide early payment incentives

Giving them a reason to pay early is also an effective way of doing things. Offer a 5% or even 10% discount for early payments, and you’ve just provided an incentive many can’t afford to ignore.

Just make sure the deal is prominently displayed on your invoice when you send it out – and don’t forget to budget for it on your accounts.

5. Penalise late payments

Payments still late? There is one more thing you can do to ensure you’re going to get paid on time. Did you know it’s actually your legal right to charge interest for late-paying clients? Ideally, you should include on your payment terms and invoice that you will charge a fee or interest on any late payments.

However, it’s also worth noting that not many small businesses actually do this in case they lose out on future or repeat business. You decide if it’s worth the risk.

6. Set up automatic reminders

Too busy taking on new clients and getting jobs completed on time to follow up on your late payments? That’s fine, you can set up automatic late payment reminders so that you don’t have to worry about it anymore.

Late paying clients will automatically be issued reminders if they haven’t paid, so there’s no more chasing up with countless phone calls or awkward emails to find out when you’re going to receive payment.

7. Keep communication open

It’s worth bearing in mind that some clients will have a genuine reason for not paying on time – anything from a family emergency to simply forgetting when payment is due.

Stay courteous and keep your cool when this happens – there’s no reason to jump in at the deep end. Instead, give them a quick call and build on your existing relationship and work out the misunderstanding. You’ll be more likely to benefit from repeat business this way.


So, there you have it; follow my 7 tips above to ensure your construction company gets paid on time, every time, and (hopefully) late payments should be a thing of the past.

In summary:

  1. Set clear payment terms
  2. Send invoices out promptly
  3. Make it easy for them to pay
  4. Provide early payment incentives
  5. Penalise late payments
  6. Use software to stay on top of things
  7. Keep communication open

However, there may still be the odd client who simply refuses (or is unable) to pay – in which case it could be worth referring them to a debt collection agency or taking legal action against repeat offenders.

Does your construction company have a problem with late payments?

Stargazer helps construction companies generate more leads and clients via their website. If you are looking of ways to connect and reach more customers why not talk to us today or read the guide below.

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