How Subcontractors Get Paid Faster (Without Being The Difficult One)

There are two ways to shorten the time between finishing work and holding the money. One is chasing harder. The other is removing the reasons an invoice sits, and it is the one that compounds, because every reason you remove stays removed for every future invoice.

Remove the reasons first

• The invoice went to the wrong person. In most builders the person who signs off on the work and the person who pays are different people in different systems. Ask for the AP contact at the start of the job and record it against the customer, not in somebody's phone.
• The invoice did not match the paperwork. If your invoice number and your estimate number are different numbers, somebody has to reconcile them by hand, and hand reconciliation is where invoices go to sit. Use one number end to end.
• The change order was never approved. Any invoice containing work nobody signed for is an invoice that will be questioned, and the whole invoice waits while the questioned part is resolved.
• There was no proof the work was done. On disputed or remote work, dated photographs attached to the job end an argument in a way an assertion never does.
• The terms were never agreed. "Net 30" on your invoice and "we pay on the 15th following the month of receipt" in their system are not the same thing, and theirs wins.

Then build the ladder

A reminder ladder is a fixed sequence of contacts at fixed intervals, getting firmer, and (this part matters) ending. A chase that never stops is a chase that gets filtered. Something like:

Two details make the difference between a ladder that works and one that annoys people. First, escalate: sending the polite reminder for the fourth time teaches the reader that nothing follows. Second, one email per builder, not per invoice: a statement covering four invoices gets one decision, while four separate emails get filed and forgotten individually.

Chase by dollars at risk, not by age

The instinct is to work the oldest invoice first. The better ranking is balance multiplied by days late. A $400 invoice ninety days out and a $90,000 invoice forty days out are not the same problem, and a morning spent on the first one collects nothing.

It is also worth knowing which handful of invoices make up eighty percent of what you are owed. It is usually a small number. If you can make four calls today, those are the four.

Record what they say

When a builder tells you they will pay on the fifteenth, that is information with a shelf life. Write it down against the invoice with the date and who said it, and pause the reminders until the date passes. Two things follow: you stop emailing somebody who has already answered, which is what makes people stop reading you, and a promise that passes with no money becomes the single strongest signal in your whole receivables book. That invoice goes to the top of the call list, not back on the email ladder.

A dispute is different again. It stops the ladder entirely and has no automatic release date, because nothing in a system knows when an argument is over. It needs a person.

Two numbers worth watching

• Dollar-weighted average days late. The plain average is dragged around by a tail of small ancient invoices and reads far worse than the book actually is.
• How much you are owed that has never been chased once. In a shop with no worklist this is usually the largest bucket, and it is entirely self-inflicted.

Written by the team at Opulence Built, who also run an insulation and concrete contracting business. We mention our own software where it is relevant and say so when we do.