Part Payment Problems
Hi, Anthony from Contractors Debt Recovery yet again coming to you not quite live but live enough anyway. Okay. Let’s talk about part payments today. So this is when your client, without any warning or explanation, only gives you part of the money that’s owed to you and it’s usually some kind of weird figure with a weird sense. It looks like it’s been worked out somehow but no one can understand it, not even your client.
Okay. Part payment is our problem. It’s good that you’re getting some money but is a problem because you don’t know to which invoice you’re going to lock this payment so how to reconcile to an invoice. If you’re doing more than one job for the same client how is it reconciling to a job? Which job is this payment for? We don’t understand. Many clients will pay a part payment with the intent that half of it is for one job and half of it is for the other but not say so.
So when there’s a Security of Payment dispute it gets very very messy because how much money has been paid against that job, how much is paid against this job. Was it all for one job? It gets very, very messy and you tend to go around around in circles. So we need to nail that one to part payment needs to be reconciled to an invoice. It needs to be reconciled to a job.
So what happens? The biggest problem is that your client is treating you like a single account. You know you’re doing four-five jobs but I’ll just treat it as a single account and I’ll just make a part payment of some random sum and you work it out. Okay. So it makes life very, very difficult. You don’t want that one to happen. You need to insist that your client nominate or reconcile to which invoice that payment is being made and to which job and they need to specify it.
If you don’t specify it, you are within your rights to do it to allot their payments to the oldest invoice and to say your part payment received on this date has been reconciled in the following manner against this job or against this invoice. And this is how much you still owe us. You must be in a position to know what is owed on each job at any particular point in time. So don’t let part payments go un-discussed or unventilated with your client because it will become a payment dispute down the track.
So just to summarise any payment you receive must reconcile to an invoice either your client will tell you or you will tell your client. They must be reconciled to a particular job. So don’t let your client treat you like a single account, one job, one account. And finally you must be in a position to know what is owed on each job at any point in time. All right. Be across all of that and you’ll avoid a Security of Payment dispute for later to part payments. I’ll see you next time.