How to Get Paid as Construction Business Owner?

If you run a construction business in New Zealand, you’ll already know that getting paid is not always as simple as just sending out the invoice. You can finish the job, meet the deadline, and still find yourself waiting weeks, or even months, or some extreme cases of my clients, years, for money that should already be in your account. In the current economy landscape, your next payment could directly contribute to whether there is a future for your business.

Here’s what you should keep in mind if you want to run your business with confidence and keep the money flowing.

Know Your Rights

In New Zealand, you’re not powerless when it comes to chasing payment. The Construction Contracts Act 2002 (CCA)gives you the right to issue formal payment claims. If you do it correctly, the law requires your client to respond with a payment schedule. If they don’t, your claim becomes due in full.

But, there's a catch. The key is making sure you do it correctly, and strictly follows the CCA requirements, such as always include the phrase: “This is a payment claim made under the Construction Contracts Act 2002.” and remember to include that Form 1.

Put It in Writing

You may not want to admit, but there are still a large amount of people still do business in construction with nothing more than a handshake. It might feel simple and right at the moment, but when things go wrong, it leaves you nothing but exposed to every single risk that you could imagine. If you want to make sure you get paid, you need something in writing.

Having it in writing doesn't mean you need a complex contract of 200 pages. It just needs to cover the essentials: what is being done, the cost, payment schedules, and how changes will be managed. You might consider using contracts like NZS 3910 or NZS 3915, but even a brief subcontract agreement is better than nothing. A written contract simplifies resolving disputes and provides a solid basis if payments are delayed.

Keep an Eye on Retentions

Retentions are a common feature in many contracts, but they can lead to significant cash flow issues if not properly managed. According to the CCA, if retentions are being withheld from you, the funds must be kept in a trust account and must adhere strictly to the retention section's requirements, including the provision of regular reports for the trust account holding the retention funds. Failure to comply with these requirements is considered an offense and will be resulted in a big fine.

Make sure you know where your retentions are being held and when they’re due back. Retentions might look small on a single job, but across multiple projects they can add up to a significant amount of money. And remember, that is your money.

Document Everything

When payment disputes arise, the contractor with the best records usually comes out on top. That means keeping things simple but consistent:

• Maintain a site diary or brief daily notes detailing the activities carried out, including time stamps and names of individuals involved. If multiple roles are present, ensure their roles are documented in the record as well.

• Photograph progress and completed work, as well as site and surrounding conditions, and include weather forecasts for weather-related claims.

• Document variations, send them out, and obtain written approval promptly.

• Retain copies of delivery dockets, packing slips, test results, and inspection notes, and convert all verbal conversations into emails for follow-up and clarification of next steps.

It only takes a few minutes a day, but having proof on hand can save you weeks of chasing later.

Know What to Do if You’re Not Paid

Sometimes, no matter how careful you are, payments still don’t come through. The worst thing you can do is sit back and hope for the best. In New Zealand, there are many ways to resolve disputes, from informal negotiation, mediation, to adjudication under the CCA, which is a fast and effective way to resolve payment dispute, it’s designed for the construction industry and can get you a binding decision within weeks.

Other options like arbitration, or litigation are available, but adjudication is often the quickest way to force payment. The key is not waiting too long, not waiting to the end of the project, take action as soon as it’s clear payment won’t arrive, or any dispute arises.

Invoice Properly and On Time

Numerous payment delays result from issues like unclear or late payment claims, or even worse, the absence of payment claims. Ensure that your claim aligns with your contract, whether it involves progress payments, lump sums, or cost-plus arrangements. Clearly state the due date, include supporting documents, and send them promptly.

A professional, consistent claim process tells clients you take payment seriously, and it makes it harder for them to drag their feet.

Make Cashflow a Priority

As a business owner, your job isn’t just to win work, it’s to keep the business financially healthy. That means thinking about cashflow every day. Negotiate fair payment terms, follow up quickly on overdue accounts, and avoid relying too heavily on one client or project.

Good cashflow management keeps your business stable and gives you room to grow without constant stress about whether the next payment is coming.