Progress claims are one of the most important documents that a trade contractor should master in order to get paid.
The problem
Most trade contractors have made the jump to using accounting packages in order to keep track of their business and are issuing invoices out of those systems.
There is almost universal recognition of the security of payment legislation in each state and some belief to the effect that security of payment results in positive things happening if the invoice issued by the accounting software has the magic words on the bottom.
However, despite all of the hoopla about accounting packages and security of payment, trade contractors are still experiencing endless problems getting paid what they consider to be their full entitlement on each claim and many builders are complaining that they would pay a trade contractor more if they knew what was being claimed for.
Techno babble
One of the key factors in this article is the differences between the terms used. It is important to realise that there is a difference between and invoice, a progress claim and a payment claim.
An invoice is a document that comes out of an accounting package and is more suited to a retail business in that it contains a brief description of the goods bought and sold. They invariably do not meet the criteria for a progress claim or a payment claim.
A progress claim is a claim for payment under the contract that contains a detailed claim for work performed and materials supplied that complies with the requirements of a progress claim under the contract.
A payment claim is a progress claim that also complies with the provisions of the security of payment legislation.
What is the core of the problem?
The reality is that most invoices do not conform in any way to a format or provide sufficient information that will enable a claim to be processed in a way that results in a payment to the trade contractor that is close to the amount claimed.
Project managers and contract administrators often have a lot of paperwork to process at the same time in order to process progress claims and comply with the builder’s internal accounting system in order to get the money out the door and keep the project running.
They are not in a position to rummage through the file to try and work out what you are claiming for, what poorly expressed variations are all about and what the full scope of works are. Project managers and contract administrators also suffer from a major disadvantage in that they are not mind readers.
Essentially, the short brief invoices coming out of accounting systems are not adequate to be called payment claims for the purposes of a construction contract or the security of payment legislation.
Trade contractors must be aware that while the various accounting packages readily available are extremely good tools when it comes to assessing the health of the business and paying taxes, they are not geared to the particular issues in the building and construction industry. As a consequence – while they produce invoices, they do not produce progress claim or payment claims.
The solution
There are some very good project management packages that produce progress and payment claims. However they are expensive.
There is an online option that follows the old traditional format. However, it suffers from the issue that the builder can access the system and make changes to your documents.
The best alternative is to become adept at the use of spreadsheets. They are the most cost effective means of preparing progress claims and payment claims.
Once you have become an expert at the use of spreadsheet there are templates available to assist you to prepare progress claims.