Tradies – how to get your invoices paid!
Did you know there is a quick and inexpensive process to help you get paid or recover money owed to you? It’s a part of the Building and Construction Industry Security of Payment Act (SOP) 2002.
Information about the SOP Act:
The Building and Construction Industry Security of Payment Act 2002 establishes a process to provide contractors with a quick and inexpensive way to get paid or recover money owed to them. It applies to construction projects in Victoria, whether private or public sector.
The SOP Act came into effect on 31 January 2003 and was amended in 2006 to make it more effective in recovering payment claims. The amended legislation applies only to contracts entered into or after 30 March 2007.
IMPORTANT:
How can you ensure your invoices are covered? Highview recommends you add the following statement on ALL of your business quotations and invoices:
“Please note that this invoice will be deemed to be accepted if no written response is received within 14 days of the date printed. This invoice has been submitted in accordance with the Building and Construction Industry of Payment Act 2002.”
This simple statement could save you a lot of time and effort when it comes to chasing money owed to you. Highview strongly recommends you make this change immediately, and seek Legal Advice from a professional in a timely manner should you need to execute the SOP.
Further reading about the SOP Act:
The SOP Act applies to most contracts for building work or for the supply of related goods and services in Victoria. The contract may be oral, written or a combination of both.
Domestic building contracts between a builder or supplier and the home owner are not covered. These come under the Domestic Building Contracts Act 1995. However, contracts between a home owner’s building contractor and any sub-contractor or supplier are covered.
The SOP Act applies to the following types of work:
- Residential and non-residential building
- Civil engineering
- Demolition
- Electrical
- Professional services (e.g. architecture, design, surveying)
- Hire of plant and equipment
- Landscaping
- Maintenance
- Mechanical air conditioning
- Plumbing
- Supply of building material
Claims may be made under the SOP Act for ‘progress payments’ for work done or supplies made since a date determined by the contract or under the SOP Act. For contracts entered on or after 30 March 2007, ‘progress payments’ include final, single and milestone payments.
A person who has carried out work or supplied goods or services under a construction contract in Victoria (the claimant) can claim progress payments by giving a ‘payment claim’ to the relevant contractor, purchaser or client (the respondent). A payment claim specifies the work, goods or services supplied and the amount claimed and states that it is made under the Building and Construction Industry Security of Payment Act 2002
The respondent can then pay in full or, if they dispute the amount due, give the claimant a ‘payment schedule’. A payment schedule states how much the respondent is willing to pay and why it is different from the amount claimed. A respondent who fails to provide a payment schedule within 10 business days or as required by the contract – whichever is earlier – is liable to pay the full amount claimed.
If you have further queries about the SOP Act, Highview suggests you speak with a Lawyer. If you would like us to recommend a trusted specialist, please contact your Highview Accountant today.