No matter you are a builder that is chasing down end users, or a sub-contractor chasing builders, delinquent debts can be easily seen in the building and construction sector, and more often than most other industries. So it is important to use techniques to mitigate your risks – if you don’t want to work for nothing. As a professional debt collection agency for building and construction industry, our recommendations are as follows, which are summarized by our most experienced debt collectors and aim to help you increase the success rate of debt recovery or avoid bad debts.
Written Agreement
If you are a builder that is dealing with customers, have the power to set terms and conditions, then a formal contract is highly recommended. The contract can clearly set out the job engagement, fees and payment, what services are included, equipment and materials, completion time and what to do in the event variations are required et.al., which could avoid a huge percentage of work disputes.
Besides, while a formal contract is first recommended, if it is not feasible under your situation, then a detailed quotation can be your second option. The quotation should be sent to the customer via email and get customer confirmed, you should also get written approval from the customer for any future variations if applicable.
*Highlights: you should address the name on your quotation to the actual customer (who would pay you), not an agent or referral.
If you are a tradie, or sub-contractor that is working with a builder. While a formal sub-contract is preferred, in the event you have no power to request one, a detailed email to the builder is highly recommended, in which you list the work you intend to do, the price that must be paid, and how it is calculated, and then request written confirmation from the builder.
Know Your Customer
While the term Know Your Customer (KYC) is widely used in financial services, it is recommended that builders and contractors spend a bit more time learning about your customers (or the master contractor). Although you don’t need to do the KYC as strict as providing financial services, please ensure you know your customer’s ABN, full legal name, phone number, email and address. Such information may not necessary if your customers are paying good, however they become crucial in the event of payment arrears, and they may save your debt collection budget.
If you are a tradie or sub-contractor, please put extra concern on the master contractor’s company age, and we recommend you work on cash terms (eg get upfront payment) if your master contractor has established a new company for a new project, as your risks of bad debt can be significant under such circumstances.
Xservice Debt Collection, as a professional debt collection agency, has extensive experience recovering overdue debts in the building and construction industry. If you are unsure about your case status, please feel free to give us a call. Our debt collectors work actively with customer enquiries, no matter you are a small business or medium to large enterprises, we CAN help. Get in touch now to book a free consultation session.