Renovation Contractor: What to do When Not Getting Paid by Clients

If you’re a home renovation contractor, you’ve probably experienced complicated situations with clients. Despite all the precautions taken to avoid any faux pas, no one is fully protected from clients that don’t pay. The following article presents the actions to take on to solve this type of problem and best of all, to avoid it so that you can be paid on time.

So, what should be done to ensure that a client ends up paying? Here are a few ideas that will help you fix or prevent this situation:

Unpaid invoices in home renovation: how to avoid them and how to deal with them

Source: Canva

Start by determining why the client didn’t pay their bill on time. By knowing about the client’s situation, you will be able to figure out the appropriate way to get paid. There are several reasons that can explain the situation. Here are a few:

• Is your client experiencing financial difficulties?

• Is your client disputing the work that has been done?

• Did they forget, or are they disorganized?

• Is it voluntary? Why would that be?

In each case, you will also have to take context into account. For example, the type of work you have carried out, the contract that links you to the client, the business relationship you have built with them and also, to what extent you are ready and willing to undertake the procedures to get your money.

It is always best to contact the client by phone, in person or by email. If your client is having financial difficulties, you could always find common ground. Remind them about the contract and the services you performed. Be firm in your approach. You could also explain the next steps that you will take on if you do not receive payment. This is the first step to pass before anything else. In general, financial problems are not a common reason for unpaid invoices. However, it is entirely possible that this may happen.

In cases where your client is disputing the work that you have completed, make sure that you have respected the contract. If any changes occurred along the way, be sure that you have a written document that testifies that the client agreed to these modifications or add-ons. This will protect you and your client from any misunderstandings. If the contract was fulfilled as planned, you will be able to proceed with legal recourses. Of course, you could always decide to negotiate the total cost of the work to avoid having to go to court.

It is also possible that your client simply did not receive the bill as it was sent to the wrong address, which can happen when a person moves, separates from their spouse or gives out the wrong information. In the said case, you can check with the client before sending them a new copy of the invoice.

When your client doesn’t pay the bill due to negligence or refuses to pay, you will have to launch legal procedures.

Methods to get paid as a home renovation contractor

Sending a letter

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Sending a claim letter to get paid for an invoice is a great way to maintain a positive relationship with your client. Of course, it is recommended that you opt for a conciliatory tone. You could include a deadline and suggest that they contact you to make an arrangement if the invoice is not paid on time. In this way, the whole process opens the door to a discussion and allows you to find an arrangement before you embark on any legal procedures.

Sending a formal notice/demand letter

After several follow-ups and upon having tried more than once to talk to your client who still refuses to make a payment, you can send a formal notice. This often has a larger impact, as it acts as a final warning before any legal procedures. In general, people tend to respond when they get a formal notice and this can help solve the litigation between both parties.

Alternative means for legal services

If you have decided to launch legal proceedings, make sure that you have the necessary proof to support your claims. Of course, you could always use alternative means to reach an agreement. For example, Legalhood allows you to speak to a lawyer or to negotiate your case online. This helps you save on legal fees and keeps you out of court.

If you decide to take things further, you could go to a small claims court or other levels of the court system in order to get your money. Think about the time and money you will need to invest, as alternative actions are favoured to avoid tribunals.

Invoices for renovation projects

Source: Canva

Here are a few tips to ensure efficient management of your billing system. Working proactively will help you establish healthy relationships with the clients you have, and choose those with whom you accept to do business more wisely.

Managing accounts receivable

In order to avoid being faced with bad surprises and forgetting to send invoices to your clients, make sure that you have an efficient system to manage your accounts receivable. During busy periods, oversights may occur.

If you are a contractor and have a small team to respond to all requests, make sure that you take a moment to carry out a follow-up with clients. You could also entrust this job to another person who will know the right approach and methods to collect what you are owed. Above all, don’t wait to do a follow-up once the work is done. This whole process will help you appear more serious in the eyes of the client. There is no typical delay to claim an unpaid invoice. Once you have finished the work as indicated in the contract, you can ask to be paid.

Determining the terms of payment

Inform your clients about the payment methods that are accepted so that they have several ways to cover their bill. For example, Interac payment is an interesting method for those that use new technologies. Do not hesitate to inform the client of the terms and methods of payment during the signature of the contract.

Asking for payments at the end of each step of the work

You could form an agreement with the client stating that they will pay according to the progress of the work. This way, you will be paid at each step. This method is used on big projects when the work is spread out over several weeks and the end date is determined. You could always stop carrying out the work if the client does not pay according to the agreement.

Note: this text presents options in case a client does not fulfil their part of the contract. It does not represent legal advice. For specific advice about your case, talk to a lawyer.