Are you a contractor dealing with retainage issues in New Jersey? You’re not alone. Retainage, or retention, is a common practice in the construction industry that can lead to significant challenges for you and your business. It involves holding back a portion of the payment until the construction crew completes a project.
Withholding money in this fashion often causes cash flow problems. But don’t worry. There are ways to tackle this issue effectively.
Know about New Jersey’s retainage laws
Since the state has specific laws regarding retainage, many contractors have some wiggle room to adjust to these regulations. The New Jersey Prompt Payment Act sets clear guidelines on how much money property owners can hold back and when they have to release payments.
Knowing these laws inside and out can help make sure you’re being treated fairly and that your payments are released promptly.
Negotiate your contracts carefully
There’s no doubt that you have contracts for a specific project. You should pay close attention to these. When you’re drafting this document, negotiate the retainage terms carefully. Consider including specific conditions for the release of retainage to avoid unnecessary delays.
If the terms are unclear, disputes may arise. A well-negotiated contract can prevent these issues and save you from many future headaches.
Effectively manage your cash flows
Properly managing your cash flow is crucial to tackling retainage issues. Forecasting your cash flow allows you to anticipate the release of retainage better and plan your finances accordingly.
This proactive approach can help you stay financially stable, even when a large portion of your payment is on hold.
Turn to other helpful resources
Completing a construction project requires a huge amount of time and effort. If you’re a small construction business experiencing difficulties due to retention, consider alternative options like a performance bond. This can ensure you receive payment even if the project doesn’t proceed as planned.
However, making decisions on impulse can sometimes lead to undesirable outcomes. If you’re uncertain about the best course of action, consider consulting an attorney. An attorney can provide valuable guidance and help you make the most informed decisions possible.
