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When a business doesn’t pay your firm for construction work

On Behalf of | Jun 6, 2022 | Construction Litigation

Running a business-to-business company can seem like a better financial decision than marketing your services to individual consumers, even if you work in a high-demand field like construction. For example, homeowners are notoriously flaky when it comes to paying construction professionals, but businesses tend to be much more proactive about fulfilling their financial obligations to others.

Contractors who work on residential properties often find themselves struggling to collect on their invoices, while those who work with other businesses may have an easier time seeking payment. However, you could still wind up dealing with a client who paid a deposit for remodeling work or an office expansion and never paid the balance owed. You may have delivered materials for the work or performed construction services, but collection efforts go nowhere.

How do you push a company to pay for construction work?

You may need to secure a lien

Arkansas state law permits unpaid construction firms, contractors and material providers to bring a civil claim against the client that has failed to pay. You can secure a mechanic’s lien against the property so that the client cannot transfer or refinance the property without paying what they owe your company first.

There could potentially be alternate means of securing compensation for unpaid invoices beyond just the living. Lawsuits can also compel repayment in some situations.

Your contract helps establish your financial protections

Arkansas state law gives service providers and those that deliver materials the right to ask for a lien in civil court, but a lien won’t compensate you for the inconvenience of delayed payment. Including terms in your contract that impose penalties for delayed payments can be another way to get your business clients to treat their construction expenses as a financial priority.

Construction companies can protect themselves from non-paying clients by integrating the right language into their contracts, keeping accurate documentation of the work they do, following up on the payments they do/don’t receive and taking timely steps to secure a mechanic’s lien when a company falls behind on payments.

Realizing that disputes will inevitably arise can help your company have the right protections in place when a construction project results in a disagreement, rather than the prompt payment of the invoice in full. Taking action when a construction dispute leaves your company with unpaid invoices can help your company continue operating in the black.