While all businesses across all kinds of fields and industries struggle to collect their owed payments on time, this is an especially difficult challenge for the construction industry. So many people just aren’t willing to pay up for the services they’ve received.
Smart construction companies have learned that the key to getting paid is to have strong AR management strategies in place. In fact, this is such a good strategy that, whether you’re in the construction industry or not, you should adopt it. And, if you are in the construction industry and aren’t using this strategy, it’s definitely time to start!
The Mechanics Lien Instrument
The construction industry utilizes a “mechanics lien instrument,” a special tactic that ensures they get paid for work that they’ve done, even if the work is not fully completed for various reasons. This rule, often written into contracts, ensures that work that has been done must be paid for, and that if it is not, this is a breach of contract, which can be handled via a lawsuit if necessary.
You can try writing a similar policy into your business paperwork. Other strategies that may work for you and your business include:
Having multiple people enter into the sales contract; the more people responsible, the greater the chance of getting paid
Having the project or sale broken up into multiple invoices and specifying that subsequent invoices must be paid before more work can be completed
Track invoices and payment or non-payment, as the case may be, using quality accounting software and/or an AR management app
Communicate with clients regularly
Whether you work in the construction industry or not, following these tips can help to ensure that you always get paid and that you get paid on time!