Get paid quicker: 7 tips for construction businesses

Cash flow is critical for small construction businesses. Ensuring that you get paid on time can be challenging, whether you’re providing your services on housing developments as a contractor, undertaking building work for homeowners and businesses directly or you have a relationship with an organisation such as a local council.

Delays in settling invoices potentially stop you from moving on to the next project and, just as importantly, mean you can’t pay the people working for you.

Here are our 7 top tips for construction businesses that want to get paid quicker.

1.    Clearly define the project and payments

One mistake that smaller construction businesses often make is not clearly outlining what the project is likely to involve and how they will be paid for that work. If it’s a long project, then interim payments are generally going to be required, not least for paying workers or purchasing tools and materials.

If you are working for a larger organisation such as a council or new housing development, clarity is even more critical. These outfits may well also have strict payment schedules and rules that you will need to abide by - make sure that you understand these properly and ensure you get invoices out at the right time.

2.  Send your invoices on time

If you don’t invoice your customer then you are not going to get paid. Have a standard process in place that you can easily manage and make sure your invoice is complete and details exactly what they are paying for.

One of the biggest delays for construction companies comes from disputes over the cost and nature of work that has been undertaken. Creating accurate and informative invoices and getting them out quickly, gives you more time to get paid, even if the customer then disputes the bill.

3.  If you haven’t already done so, switch to digital invoicing.

If you are above the VAT threshold the likelihood is that you have already switched to digital invoicing to make it easier to comply with the demands of MTD for VAT. If you haven’t yet made the switch, it is time to ditch the paper. By doing your invoicing digitally from your accounting system you are mostly likely to be compliant with the upcoming changes for MTD for income tax.

The benefit of digital invoicing is that you can link to various payment systems and make it easier and quicker for your customer to complete the transaction. Paper invoices tend to sit around on desks and side tables and often get lost.

4.  Timely change orders

Very few construction projects go without a hitch unless they are relatively simple jobs. There can be weather delays and problems that are uncovered once the work has started that may add to the cost – the customer can even suddenly change their minds about what they want.

A change order is used to inform the customer of how the pricing for the project is likely to change as well as the time that may need to be added on with accompanying costs. Make sure that these are agreed upon and understood at the earliest opportunity.

5.  Easy payments

There are multiple ways for customers to pay nowadays and it makes sense to have these available to increase the speed you get your money. While some of your small customers may still want to pay by cash, also ensure that you include other methods including bank transfer and credit card payments. More options mean you are more likely to get paid on time.

6. Sending reminders

As long as you have set out your project and payment parameters beforehand, sending reminders if a bill hasn’t been paid by the due date is perfectly acceptable. Sometimes, people do just forget to pay and they require a gentle nudge. Your first reminder should be sent as soon as the payment date has passed, it should be polite and offer to help if there is an issue.

7. Early payment discounts

This can be an option for larger projects and means, for example, that you offer a 5% discount if the customer pays before the due date. It can be difficult for small businesses that work to tight margins, however, and you need to ensure you price this discount at the initial agreement stage.

Particularly for larger organisations such as councils and property developers, this can be an attractive proposition even if they have strict payment rules in place.

How can we help?



We can help you set up a fast and efficient accounting system that makes it easy to get invoices out on time to customers and get paid much quicker. We’ll also work with you to chase up outstanding debtors.

Contact us