Construction Payment and Cash Flow
Cash flow failures sink otherwise profitable contractors. This guide covers how construction payment actually works and how to defend it: the interim payment certificate cycle, what to do when a certificate is short, how retention is released, the truth about pay-when-paid clauses, the escalation ladder when a main contractor does not pay, and how to respond when an employer calls your performance bond.
Each insight is written to help a commercial team turn contractual payment rights into money in the bank rather than entitlements left on the table.
In this guide
Ready to act on this?
Talk to CALIM about protecting your payment position
Free tools for this topic
Frequently asked questions
What should I do when an interim payment certificate is short?
Treat it as a valuation dispute, not a payment default, until proven otherwise. Respond promptly and in writing, set out the basis of your application against the certified amount, preserve the entitlement, and escalate through the contract's mechanisms. The goal is to correct the under-certification while keeping the commercial relationship intact, because most under-certification is a difference of valuation rather than a refusal to pay.
Are pay-when-paid clauses enforceable?
It depends on the jurisdiction. Some legal systems restrict or prohibit pay-when-paid and pay-if-paid clauses because they push the employer's insolvency risk onto a subcontractor with no relationship to the employer; others enforce them. Because enforceability varies, a subcontractor should negotiate a fixed payment period or at least a longstop date rather than relying on such a clause being struck down.
What can a contractor do about non-payment?
There is an escalation ladder: a payment notice, a notice of intention to suspend, and then the contractual right to suspend or reduce the rate of work (under FIDIC, the contractor's remedies sit in Clause 16), with termination as a last resort. Each step has notice requirements that must be followed precisely, because suspending or terminating without a valid contractual basis can turn the non-paying party's breach into the contractor's own.
Get Started
Facing a payment issue right now?
The fastest answer is usually a 15-minute call with one of our senior specialists.
Which topic matters most to your business right now?
Select one to help us match you with the right specialist.