Koley - Jessen, an Omaha, Nebraska-based law firm, offers clear guidance to construction professionals on getting paid for their work, which, the authors note, can still be a major challenge for many contractors.
The first of five key recommendations sounds simple, but packs a powerful punch:
1. Have a Written Contract
Although hand-shake agreements are still common in the construction industry, these informal agreements routinely cause headaches and present challenges when a payment dispute arises. For that reason, we recommend entering into a written agreement for each project that clearly outlines the specific payment terms and obligations of the parties. In the written agreement, we recommend including the following:
- timing requirements for payments (for example, payment must be received within 30 days of invoicing);
- the right to recover interest in the event of a delayed payment;
- outlining the preferred or required method of payment; and
- building in the right to suspend work in the event of delayed payment or nonpayment.
Entering into a written agreement that clearly outlines the payment obligations of the parties will be beneficial if a payment dispute arises. However, as with anything, just having a contract is not enough ...
For more on writing an effective contract to make it easier to get paid, and to learn about the other four recommendations from Koley - Jessen: Read more.
