Keep the Cash Flowing – Tradie Tips to Get Paid – Part 1

Rebecca Richter, Lawyer, Ford Sumner Lawyers

Cashflow is king for any contractor — yet late payments, unclear terms, or clients who don’t pay at all can cripple your business. A good contract is your first line of defence. Here are practical tips to help you lock in better contract terms and get paid on time, every time

1. Always Get It in Writing

It sounds simple, but too many small contractors still rely on verbal agreements or vague emails. Use a written contract for every job — even small ones. It doesn’t have to be fancy, but it should clearly set out:

• The scope of work (what you will do — and what you won’t do);
• The price (fixed fee or time and materials);
• Payment terms (when invoices will be issued and when they must be paid);
• What happens if the customer defaults.

2. Include Timely Payment Provisions

A simple “50% deposit, 50% on completion” may not suit longer jobs. For projects spanning weeks or months, agree to regular monthly progress payments. This will help with your cash flow — particularly if you have supplier or subcontractor invoices to pay within a shorter period.

Use clear payment claim processes that comply with the Construction Contracts Act 2002 (CCA). This gives you the right to suspend work or take fast action if you’re not paid — more details on this coming in Part 2.

3. Specify Variations

Jobs often change — but if you don’t record variations in writing, you risk working for free. Your contract should set out a simple process for dealing with variations. This ties in with ensuring your scope of work is clear, to avoid customers disputing varied work because they assumed something was included in your original price.

4. Include Interest and Recovery Costs

Add a clause that allows you to charge reasonable interest on late payments and recover debt collection costs if you need to chase money. These protections can help make it feel more worthwhile in chasing smaller debts.

5. Keep Good Records

Even the best contract won’t help if you can’t prove what work you did. Keep daily site diaries, variation approvals, email correspondence, signed timesheets, and clear invoices. If anything important is said or done in person with a customer, follow up with an email straight away recording what took place. This strengthens your position if there’s ever a dispute.

6. Do Your Due diligence

If the customer is a company, check its credit history, look it up on the Companies Register, and make sure you have the correct legal entity named in the contract. Consider personal guarantees for bigger jobs.
If the customer is a homeowner, consider including contractual clauses that require proof of finance, or ask for a cash deposit or for funds to be held in trust if you’re concerned about their ability to pay.

7. Get Advice When You Need It

Contract disputes can get expensive fast. Spending money on a lawyer to check your contract before signing could save you thousands later.

Wrap-Up: Get Paid What You’re Owed

Getting good contract terms in place is not just for big companies — it’s essential for any small contractor who wants to protect their business and get paid fairly. A clear, fair contract builds trust, sets expectations, and keeps your cashflow healthy.

If you would like further or more specific advice on construction related issues, or any other legal issue, get in touch with Ford Sumner and its division of Tradie Law for help at 04 910 3200 or email helpdesk@tradielaw.co.nz.