When a contractor performs work, they expect that they will be paid in full before moving on to the next project. However, there are common reasons a contractor may not be paid as well as options to address it.
Common issues
Contractors may have a dispute with their client about the contract terms, the quality of the work or project delays. Contract disputes can arise where the terms are not clear or are omitted from the agreement. If the client believes that there are quality issues with the project, they may withhold payment until those are corrected.
There are situations where there is a delay in the project that is not the contractor’s fault, like weather or permitting issues. There can be a dispute between the parties if the client does not pay for these reasons.
If there are billing errors, like an incorrect amount billed, missing documentation to support the work, or other administrative mistakes, the contractor may not be paid accurately. Documentation includes timesheets, receipts and progress reports.
Sometimes, contractors aren’t paid because the client has financial difficulties and cannot make a payment immediately. If the client becomes insolvent, the contractor may not be paid at all.
Resolution
It’s important to ensure that both parties have met all the terms and conditions in the contract. The contractor can send a letter to the client, requesting payment as agreed. This letter can include the work performed and the outstanding balance.
The contractor may also have the option to file a lien. The contractor can also file a lawsuit and if the lawsuit is successful, can obtain a judgment that requires the client to pay.
