Collecting payment for construction work can sometimes feel like a chicken-and-egg situation. Contractors want to be paid for their work on a timely schedule, but owners aren’t keen to pay until the work has been fully completed. So what comes first – payment or construction?
While GCs should insist on partial prepayment and a payment schedule along the way, there will always remain an outstanding balance when the day is done. To ensure timely payment, it’s essential to have a clear contract in place that dictates payment deadlines, but what happens when the weeks go by and payment is still not received for the outstanding balance? What steps can you take to collect on an overdue invoice in Florida?
Steps to Collect Payment on an Overdue Construction Invoice
1. First, do everything you can to reduce late payments – Prevention is the best medicine, and while it’s not always possible to collect payments before they become past due, you should be clear in your contract about deadlines and maintain frequent communication with the client about invoice due dates. The more days that elapse on an overdue invoice, the harder it becomes to collect payment.
2. Follow up on a regular schedule – Clients should never be able to claim ignorance about an open invoice. Follow up before and after the due date has passed and pick up the phone when necessary.
3. Send a demand letter – If friendlier approaches don’t work, you may need to send a formal request drafted by a Miami construction attorney. A written demand letter should get their attention and signal to them that your next step will be to file a mechanic’s lien.
4. File a mechanic’s lien - A mechanic’s lien is a legal claim on a property, and filing one can be a very effective way to secure payment for your construction services. Laws vary by state and they carry a filing deadline. In Miami, Fla. Stat. § 713.001 et. seq. governs construction liens. Contractors must file a Florida mechanic’s lien no later than 90 days from the earlier of either (1) the last date the claimant furnished labor or materials to the project; or (2) the termination of the original (prime) contract.
As you attempt to track down payment for an overdue invoice, we recommend consulting with a local construction attorney who is an expert in Florida construction law. Our team at Quintana Law, PA can ensure your construction contracts are strong and effective in protecting your interests as well as take steps to collect the money you deserve on overdue payments. To learn more about how we can help, contact us today to schedule a free consultation.