Report: Australian Construction Companies Regularly Go Unpaid by Their Customers

According to a recent report by Sourceable, small and medium-sized Australian construction companies are drowning in unpaid invoices.  According to the report, Australian construction firms are sitting on $15.4 billion in unpaid debt owed to them by customers.  The average unpaid invoice amounts to an average of $44,182.  30 per cent of the Australian builders surveyed reported that customers owed them over $500,000, while 11 per cent of companies surveyed had more than 20 invoices due and owing. 

This amount of outstanding debt not only wrecks the cash flows and balance sheets of these construction firms, but also has ripple effects as the firms cannot hire workers, take on additional projects or take on additional borrowing in order to finance new projects.  In fact, a 2015 Senate inquiry into the construction industry dubbed the industry as one in which there was a “culture of non-payments”. 

The problem of bad debts is not a problem that is unique to construction firms.  In many industries, customers either have a policy of seeking payment terms that allow them to wait as long as possible before paying invoices or they simply ignore invoices until being hauled into court.  This can create serious difficulties for business owners who are owed monies by their customers.  This is particularly true where a customer is seeking to avoid paying a business’s invoice due to the customer’s ongoing financial difficulties. 

If a customer is delaying paying your business’s invoice and is claiming a lack of cash flow or financial problems, there are most likely multiple creditors that are pursuing that customer, in addition to your business.  Therefore, it's important that you act as quickly as possible once payment of your invoice becomes overdue. Don't be afraid to get a lawyer involved if your customer is refusing to pay without a credible reason. Legal proceedings may be the best way forward. 

Acting quickly is important given that the legal system is inundated with a large number of cases.  The inevitable court delays, as well as the length of time collection proceedings can last before a business owner prevails in obtaining and enforcing a judgment, make it even longer before a business owner may get paid if he or she is forced to institute legal proceedings against a customer.      

If you are a business owner or executive who is owed money and your cash flow is being seriously affected by customers dragging their feet on paying you, you should contact the experienced commercial litigation and insolvency lawyers at PMF Legal.