By Catherine Green.
Do you use Xero to send out your invoices? Make sure they are compliant payment claims under the Construction Contracts Act 2002 (Act).
The default payment regime under the Act is an efficient and effective way of getting your invoices paid. However, we still see contractors coming unstuck when they seek to rely on this regime because their payment claims are not compliant with the requirements of the Act.
Under section 20 of the Act, a payee (the party to a construction contract who is entitled to a progress payment) is entitled to serve payment claims on the payer (the party to a construction contract who is liable for that payment) for payments, including any single or final payment under the contract. To benefit from the default payment entitlements under the Act, a payee must first serve a valid payment claim on the payer. A valid payment claim must comply with the following mandatory requirements:
- be in writing;
- contain sufficient details to identify the construction contract to which the payment relates;
- identify the construction work and the relevant period to which the payment relates;
- state a claimed amount and the due date for payment;
- indicate the manner in which the payee calculated the claimed amount; and
- state that it is made under the Act.
It must also include the ‘Important Notice’ found at Schedule 1 of the Construction Contracts Regulations 2003.
To make sure you’re compliant you are welcome to use the free templates on the Building Disputes Tribunal website. You can find these in the Adjudication Guides and Resources Section. Just have a look at the Forms and Precedents. You can also find template payment schedules, notice of adjudication, a sample adjudication claim, and notices to suspend works. We update these documents regularly so if you want to be sure that you are in compliance with the latest requirements, be sure to check back to see the latest forms.
Lately we have also received a number of enquiries from contractors who are using Xero to issue their invoices and who aren’t sure how they can comply with the requirement to provide the ‘Important Notice’.
The good news is it’s pretty easy. You can add any documents as attachments to your invoice (payment claim) so you can simply include the ‘Important Notice’ as an attachment in Xero. Have a look at this easy to follow video from Xero on including files with online invoices to see how to do it.
Finally, don’t forget the other requirements under section 20 of the Act. To be a valid payment claim you need to tick all the boxes!