Late payments are one of the biggest headaches for plumbers working with builders. Some builders drag out payments for months, making it hard for you to manage cash flow, pay suppliers, and keep your business running smoothly.
So, how do you deal with builders who delay payments without ruining the relationship or losing future work? Let’s go through some effective strategies. 👇
1️⃣ Set Clear Payment Terms Before Starting the Job 📝✅
The best way to avoid late payments is to prevent them from happening in the first place. Before you start any job, make sure your payment terms are:
✔ Written in your contract or invoice
✔ Crystal clear about due dates (e.g., “Payment due within 14 days of invoice”)
✔ Specific about late payment penalties (e.g., “5% interest per month on overdue payments”)
📌 Example: Instead of just saying “payment due on completion,” specify exact timeframes like:
🚫 Bad: “Payment due after job completion.”
✅ Good: “Payment due within 7 days of invoice. Late payments incur a 5% late fee per month.”
2️⃣ Use Progress Payments for Larger Jobs 💳📅
For big jobs, never wait until the end to get paid. Instead, set up a progress payment structure, where you get paid at different stages of the job.
✔ Deposit upfront before work begins
✔ Milestone payments (e.g., 30% at rough-in, 30% at fit-off, 40% on completion)
📌 Example: If a builder owes you $50K for a project and delays payment, you’ll be stuck waiting for the whole amount. But if you’ve already collected $30K in progress payments, you reduce your risk.
3️⃣ Invoice Promptly & Follow Up Regularly 📩⏳
The sooner you send an invoice, the sooner you get paid. Don’t wait days or weeks to send invoices.
✔ Send invoices immediately after work is completed.
✔ Follow up before the due date (e.g., a polite reminder at 7 days).
✔ Use accounting software (like Xero, MYOB, or QuickBooks) to automate reminders.
💡 Pro Tip: Some builders only process invoices on specific days of the month (e.g., the 15th or 30th). Ask them when they process payments so you can invoice at the right time.
4️⃣ Be Persistent But Professional in Your Follow-Ups 📞📅
If a builder is late with payment, don’t wait silently—follow up consistently.
🔹 1-3 days overdue: Send a polite reminder email.
🔹 7 days overdue: Call the builder and ask when payment will be made.
🔹 14+ days overdue: Send a firm email stating the overdue amount and possible late fees.
🔹 30+ days overdue: Consider withholding further work or escalating.
📌 Example Email for a Late Payment:
Subject: Follow-Up: Overdue Invoice #1234
Hi [Builder’s Name],
I hope you’re doing well. Just a quick reminder that Invoice #1234 for [$X] was due on [date]. Can you confirm when we can expect payment? Let us know if there are any issues.Looking forward to your response.
Regards,
[Your Name]
[Your Business Name]
5️⃣ Stop Working for Builders Who Delay Payments 🚫👷♂️
If a builder constantly delays payments, you need to make a tough decision—stop working with them.
✔ Track payment history—if they always pay late, they likely won’t change.
✔ Prioritize reliable builders who respect payment terms.
✔ Don’t let one bad builder ruin your cash flow.
💡 Pro Tip: Work with multiple builders instead of relying too much on just one. This way, one bad payer won’t cripple your business.
6️⃣ Add Late Fees & Interest for Overdue Payments ⚠️💸
Some builders delay payments on purpose because they know subcontractors don’t charge penalties. Make it costly for them to pay late.
✔ Include a late fee policy in your contracts
✔ Charge interest on overdue invoices (e.g., 5% per month)
✔ If they don’t pay, send a formal “Letter of Demand”
📌 Example Clause:
“Invoices are due within 14 days. Overdue payments will incur a 5% monthly interest charge. Any payments not received after 30 days may be sent to a debt collection agency.”
7️⃣ Escalate If Necessary ⚖️🚨
If a builder keeps ignoring you, consider escalating:
🔹 Letter of Demand – A formal letter stating legal action if payment isn’t made.
🔹 Debt Collection Agency – They take a percentage but can recover unpaid invoices.
🔹 Legal Action (Small Claims Court) – For large unpaid amounts, you might need legal help.
📌 Example: If a builder owes you $20,000+ and ignores all reminders, it may be worth going through legal channels to recover the money.
Final Thoughts 🏁
Builders delaying payments can wreck your cash flow, but by setting clear terms, following up persistently, and being firm when needed, you can protect yourself and your business.
👉 Need help estimating plumbing jobs accurately so you don’t underquote? SNZ Plumbing Estimating can help—get in touch today.