Payments, invoicing, and late payments for Builders and Tradies

How to Handle Payments, Invoicing, and Late Payments: A Guide for Builders and Tradies

In the construction and trades industries, managing payments and invoicing effectively is crucial to maintaining healthy cash flow. At Bottrell Accounting & Financial Planning, we understand that late payments, complex invoicing, and irregular income are common challenges for tradies, builders, and other professionals in the Newcastle and Maitland areas. Late payments can stall projects, cause financial strain, and disrupt business operations if not handled properly. That’s why having clear systems for invoicing and following up on payments is essential for your business success.

In this guide, we’ll provide a detailed overview of how to handle payments, invoicing, and late payments, helping you streamline your financial processes and improve your cash flow management.

The Importance of Effective Payment Management

For tradespeople and builders, payments are often delayed due to the project-based nature of the work, lengthy client approval processes, and occasionally, disputes over work completion. Poor payment management can lead to cash flow problems that make it difficult to cover costs such as:

Materials and supplies
Subcontractor wages
Equipment hire
Overhead expenses like rent, utilities, and insurance

Without a strong system in place for invoicing and payment tracking, you might find yourself waiting weeks or even months to be paid for completed work, which can put significant financial pressure on your business.

At Bottrell Accounting & Financial Planning, we aim to help you avoid these issues by implementing efficient payment processes tailored to the trades and construction sectors.

Our Newcastle & Maitland Offices:-

Newcastle Accountants & Advisors – 45 Hunter Street, Newcastle.
Maitland Accountants & Advisors – 93 Lawes St, East Maitland.

How to contact us

In Person: Visit our conveniently located office at 45 Hunter St, Newcastle, NSW, 2300.
Online: Schedule a virtual appointment via Zoom or Teams for added convenience.
Mobile Tax Services: Benefit from the flexibility of having our expert CPA Newcastle accountants come to you for tax assistance.
Onsite Services: Enjoy personalized services delivered directly at your place of business.

At Bottrell Accounting, we’re more than just consultants and accountants; we’re your strategic financial partners. Contact us today to discover how we can help you achieve your financial goals and secure a prosperous future .

Google Business Pages – Bottrell Accountants & Tax Agents

Bottrell Accountants Main Website – www.bottrellaccounting.com.au

Accountant Newcastle – 45 Hunter St, Newcastle, NSW, 2300

Accountant Maitland – 93 Lawes St, East Maitland, NSW, 2320

Our Accounting Services

Taxation

Our experienced tax professionals at Bottrell Accounting ensure that your tax obligations are met efficiently. We also focus on maximizing your tax savings through strategic planning. Our services include:

-Personal Tax Returns: Accurate preparation and lodgement of personal income tax returns.
- Rental Property Tax Returns: Expert handling of tax matters related to rental properties.
- Business Tax Returns: Comprehensive support for business tax planning and compliance.

Bookkeeping

Maintaining organized financial records is crucial for informed decision-making. Our bookkeeping services cover:
- Bookkeeping Processing: Timely and accurate record-keeping for your business transactions.
- Bookkeeping Data Entry: Efficient data entry to keep your financial records up-to-date.

Cash Flow Management

Optimizing cash flow is essential for financial stability. Our tailored solutions include:
- Cashflow Forecast: Predictive analysis to help you manage cash flow effectively.
- 3Way Cashflow: Comprehensive insights into your inflows and outflows.

Payroll Processing

Let us handle payroll processing for you. Our services ensure accurate and timely payments to your employees while staying compliant with relevant regulations.

Financial Reporting

Financial Reporting Gain valuable insights into your financial performance with our comprehensive reporting services:
- Company Tax Accounting: Accurate preparation of tax-related financial statements.
- Business Tax Accounting: Detailed reporting for business tax purposes.
- SMSF Tax Accounting: Specialized reporting for Self-Managed Superannuation Funds.

Financial Control Services

Our financial control services help businesses establish robust systems and controls, ensuring accuracy, transparency, and compliance.

Invoicing: Best Practices for Tradies and Builders

A clear and timely invoicing process is the foundation of effective cash flow management. Here are some best practices for ensuring your invoices are paid on time:

1. Issue Invoices Promptly

The sooner you send your invoice, the sooner you’ll get paid. Once a project or a milestone is completed, issue your invoice without delay. Waiting to send invoices can result in long payment delays, especially when clients operate on a 30-day or 60-day payment cycle.

Tip: Set a policy in your business to issue invoices within 24 to 48 hours of completing a job or hitting a milestone.

Automated Invoicing Solutions

To streamline this process, consider using accounting software like Xero or MYOB, which can automatically generate and send invoices as soon as a project is completed. These tools allow you to:

Track invoice status (sent, viewed, paid, overdue)
Automate reminders for unpaid invoices
Sync invoices with your bank accounts to update payments in real-time

By automating your invoicing, you’ll save time and ensure that nothing slips through the cracks.

2. Set Clear Payment Terms

Your invoices should always include clear payment terms to avoid any misunderstandings or disputes with clients. Standard payment terms in the Australian construction and trades industry typically range from 7 to 30 days, but you can tailor this based on the size and scope of the project.

Best Practice: For smaller jobs, request payment within 7–14 days. For larger construction projects, 30-day terms may be more reasonable.

Your payment terms should be included in both your quotes and invoices, and should specify:

Payment due date
Accepted payment methods (e.g., bank transfer, credit card, etc.)
Any late payment penalties

Being upfront with your clients about these details will help set expectations and reduce delays in payment.

3. Request Upfront Deposits and Milestone Payments

For larger projects, particularly in construction, requesting an upfront deposit can protect you from cash flow shortages while the project is underway. A typical deposit might range from 10% to 30% of the total project cost, depending on the size and nature of the job.

Similarly, for longer projects, implementing milestone payments ensures that you receive regular income throughout the project’s duration. For example, you might break the project into stages such as:

Deposit: Before work commences
Progress Payment: Upon completion of 50% of the work
Final Payment: After project completion

Milestone payments not only provide a steady stream of income but also keep clients accountable for making timely payments as the project progresses.

Accountants Newcastle – 45 Hunter St, Newcastle, NSW, 2300

Accountants Maitland – 93 Lawes St, East Maitland, NSW, 2320

Why Choose Bottrell Accounting & Financial Planning?

At Bottrell Accounting & Financial Planning, we specialise in helping builders, tradies, and construction professionals streamline their financial processes and handle payments and invoicing effectively. As a locally based firm in Newcastle and Maitland, we understand the specific needs of tradies and construction businesses in the region and are committed to helping you achieve financial success.

When you work with us, you’ll benefit from:

Expert advice on invoicing, payments, and cash flow management
Tailored solutions for reducing late payments and improving cash flow
Support in implementing accounting software to automate your processes
A dedicated team with local industry knowledge and experience

We work closely with each client to design a payment and invoicing system that works for their business, ensuring they get paid on time and can focus on growing their operations.

Contact Bottrell Accounting & Financial Planning

We’re here to help you get your cash flow under control and grow your business. Reach out to our team of experts in Newcastle and Maitland to discuss your financial needs.

Newcastle Office: 45 Hunter St, Newcastle, NSW, 2300
Maitland Office: 93 Lawes St, East Maitland, NSW, 2323
Phone: 1300 788 491
Email: admin@bottrellaccounting.com.au

12+ Years Experience

With over a decade of experience, trust Bottrell Accountants & Financial Advisors for seasoned financial expertise.

Award Winning

Benefit from the knowledge and expertise of our certified accountants, who excel in their respective fields.

Qualified Accountants

Our team of chartered accountants & CPA, with over a decade of experience, brings a deep understanding of East Maitland's business landscape.

Specialist Services

Explore our specialized tax services, covering everything from individual income tax to corporate tax planning.

Handling Late Payments

Late payments are one of the most frustrating aspects of running a trades or construction business. They can disrupt your cash flow, delay projects, and increase financial strain. However, there are strategies you can implement to reduce the likelihood of late payments and handle them effectively when they occur.

1. Send Payment Reminders

Often, late payments result from simple oversight rather than intentional avoidance. A friendly reminder shortly before or after the due date can prompt clients to settle the invoice promptly.

If using accounting software like Xero or MYOB, you can automate these reminders, sending them out on a preset schedule:

Initial Reminder: A few days before the payment is due.
Follow-Up Reminder: The day after the payment is overdue.
Final Reminder: A week after the due date, if payment is still outstanding.

Automated reminders take the hassle out of following up on payments while maintaining professionalism.

2. Charge Late Payment Fees

Including a late payment fee in your payment terms can be a powerful incentive for clients to pay on time. A common late fee might be a fixed amount or a percentage of the overdue amount, applied after a certain grace period.

For example, you could stipulate a 10% late fee for any payment that is more than 14 days overdue. Be sure to include these terms clearly in both your contract and your invoice to avoid any misunderstandings.

Late fees not only help you recoup lost income from delayed payments, but they also encourage clients to pay on time to avoid incurring extra costs.

3. Offer Early Payment Discounts

An alternative to late fees is offering a small discount for clients who pay before the invoice due date. This can serve as an incentive for quicker payments and is especially effective with larger clients who prefer to manage their cash flow strategically.

For instance, you might offer a 2% discount if the client pays within 7 days of the invoice issue date. While this reduces your total income slightly, the benefit of improved cash flow can outweigh the small financial trade-off.

4. Follow a Structured Collection Process

When payments are consistently overdue, it’s important to have a clear and structured process for following up. This might involve:

Sending formal reminders via email and mail
Making phone calls to discuss the overdue payment and negotiate a payment plan if necessary
Issuing a final demand letter stating that further action will be taken if payment isn’t received within a specified time frame (e.g., 7 days)

In many cases, following up regularly and escalating the formality of your communication will prompt the client to pay. However, if this approach fails, you may need to take further steps.

5. Escalate to Debt Collection or Legal Action

If a client continues to withhold payment despite your best efforts, you may need to consider engaging a debt collection agency or pursuing legal action. While this is typically a last resort, it’s important to protect your business from significant financial loss.

At Bottrell Accounting & Financial Planning, we can guide you through the process of managing persistent late payers and recommend appropriate steps to take in serious cases. We’ll help you assess whether legal action or engaging a collection agency is the best route based on the amount owed and the situation’s complexity.

Simplify Payments with Modern Solutions

To make it easier for clients to pay promptly, consider offering multiple payment methods. Gone are the days when cheques were the norm—today, trades and construction businesses benefit from offering modern payment options such as:

Bank transfers: Ensure your bank details are clearly listed on every invoice.
Credit card payments: Many clients prefer the convenience of paying by card, which also offers faster processing times.
Online payment systems: Platforms like PayPal or Stripe can be integrated with your invoicing software, making it simple for clients to pay online with just a few clicks.

By offering flexible payment options, you remove barriers to payment and improve your chances of receiving funds on time.