It can be hard to get paid on time as a contractor. Within the construction and mining industry it’s almost a given that you’ll be waiting a while for payment. Some workers even wait for up to six to eight months for payment! Meanwhile they have rent to pay, have spent time and money on the already completed job, and workers believe that following up these payments can sometimes only serve to frustrate other parties involved and jeopardize future work opportunities.
A mindset that needs to be taken onboard is that ‘waiting does not get you paid’. This mindset can be applied to all contractor work, be it mining, electrical or plumbing. Many people believe that following up payments will annoy their employers. This is wrong.
It will make you look more professional if you stay on top of payment and what you’re owed for your time. It can have a negative effect if you sit on your payment delivery, in the hopes that the employer will be appreciative of the leeway you’ve giving them. This is also wrong. Most often they’ll see you as too relaxed and an easy target for being taken advantage of.
Tip: If they’re smart, and you are both local – they will know to pay their local contractors first as word gets around fast if nonpayment is an issue.
Unfortunately, many contractors put themselves in the position of being owed many thousands of dollars. From the very beginning puts you at a disadvantage in terms of the bargaining power you have. Your money will often be paid around the time that the employer needs to pay a premium for withholding payment. Examples of these premiums would be fees associated with ‘security of payment, formal complaints, court proceedings and so forth.
If you make the option of withholding payments from a client less attractive than not actually paying, then you’re going to start to see some better results from the people you work for. If you have the skills to back these payment demands up, then you will over time be respected as a no fuss worker that values themselves and the time they spend on jobs.
This isn’t to say that you won’t cause a bit of a stir once you suddenly change your approach. But in the long run, it will pay off as many people who have employed this method will tell you. This practice of working for credit is rampant throughout the building and construction industry, coupled with the trusting Australian laid back nature of ‘she’ll be right mate’, equals a recipe for disaster.
This system relies on subcontractors not speaking up about non-payment. They will always need the work done and like any company, the workers actually hold all of the real power. If you’re good enough and want you to work with them, they will pay you on your terms.
Many construction workers leave it way too late, until they have almost no money left to live on before they take action and try to collect payment for the work they have done. One method you can employ is late fees for nonpayment. Many businesses have had enormous success with even the smallest late fees being applied to late payment. This needs to be agreed upon before work commences, and will not seem like a big deal to the employer at first if the fees are small enough. However, they can be designed in a way that successive late payments do start to become painful for an employer.
Payment shouldn’t be a game of chance or waiting, it’s a game of action. If you need help setting up payment systems, and automatic invoice reminders you can try freshbooks which offers low monthly fees, automatic easy to use invoicing systems and late payment fee integration. You can also add your own custom branding!
Give it a try and see what happens. You might be surprised in the change of attitude from the people you’re owed money to. Working is a relationship and like any relationship – boundaries need to be established from the very beginning.