Security of Payment for custom integrators
As an installer, you need to protect yourself against struggling business by making sure you are fully paid for the work you’ve done. Lawyer Michael Leahy tells Callum Fitzpatrick how to make your invoice count.
When carrying out an installation for a builder or a developer, it’s not always the work itself that poses the biggest challenge; settling an invoice can be just as difficult.
What’s more, with a lot of builders around Australia hurting financially, you don’t want to find yourself chasing down money from a company that has gone bust.
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Michael Leahy, an accredited specialist in business law with extensive AV industry experience says that this is becoming all too common for installers.
“Credit issues are pretty much the top of the agenda right now for installers – especially in NSW,” he says.
“A lot of builders are going broke. When they do, they can’t afford to pay their contractors. It’s a big problem.”
Fortunately a special law can assist AV installers. The security of payments law provides a fair, quick and inexpensive way of AV installers recovering outstanding accounts from builders.
These new fast track remedies are good news for AV installers installing cabling, speakers, alarms and similar items.
This special law says that if AV installers add just a few special words to their invoices to builders, then the builder must pay within the agreed terms. It also means that the builder can’t keep you waiting just because he hasn’t been paid by the customer.
A builder who fails to pay on time can be taken to court with a simplified quick court judgment process which is in favour of the AV installer. This allows them to recover disputed payments from builders in weeks, instead of months or years.
Will your invoices measure up under this new law?
For AV installers in NSW, your invoice needs to say “This claim is made under the Building and Construction Industry Security of Payment Act 1999”.
For AV installers in Queensland, your invoice needs to say “This payment claim is made under the Building and Construction Industry Payments Act 2004”.
For AV installers in Victoria, your invoice needs to say “This payment claim is made under the Building and Construction Industry Security of Payment Act 2002”.
For AV installers in WA, nothing needs to be added. However, your invoice must include detail about goods supplied, work carried out and money owed for all of those items.
With this in place on your invoice, Michael says that if there is a disagreement, installers can be assured of a quick adjudication of payment disputes at a low cost to the parties.
“This system means that as an installer, you can give the builder an invoice, and if you haven’t received payment, they have to provide a written statement of why the money isn’t due,” he says.
“If that doesn’t happen in 10 business days, the installer can essentially waltz the builder down to the local court and get an immediate judgement. No 18 months of waiting. No high legal fees. No mucking around.
“It’s a fantastic system, especially for the smaller contractors. It enables them to put pressure on big developers and builders, without them being bullied out of the money they’re owed.”
That’s why Michael says awareness of this special law needs to be raised across the industry.
“Everybody should be doing it. You may not necessarily have to use it, but those magic words you put on your invoice let the builders know that you expect to get paid,” he says.
“You can still maintain a good relationship with the builders, but they know that the money has to be paid and you should be taken seriously.”
The law is designed exclusively for the construction industry, so it can’t be used against a residential customer.
The information in this article is general information only and is not legal advice. Michael Leahy’s website has very good legal information on these matters: www.audiovisuallaw.com.au. This website is up-to-date on important legal changes affecting AV installers. You can also email Michael any further queries at [email protected] or call him on 0416 203 205.
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