Today, we will be exploring the concept of advance payment recovery, which is an essential part of the payment recovery process. We will consider its relevance to civil engineers, discuss the steps involved in the process, and consider available methods for implementing it. We hope that by the end of this article, civil engineers will have the knowledge and confidence to navigate the process with efficiency and accuracy.
What is Advance Payment
It is the payment made in advance of the start of the work or before delivering the outcome of the work. In construction, the contractor is paid an advance payment to start the work after the letter of acceptance was issued. Generally, the advance payment is 20% of the contract sum. However, this may vary from contract to contract.
It is kind of a interest-free loan given by the employer to the contractor. The advance payment bond needs to be produced by the contractor to receive this payment.
Advance Payment Recovery Method
- The advance payment is recovered from the contractors’ bills.
- It is recovered before the total amount of payment reaches 90% of the contract sum.
- The percentage of the recovery from each bill is calculated accordingly.
- When the contractor is paid for each interim bill, the deduction for the advance payment is made.
The procedure to be followed in the advance payment recovery is specified in the condition of contracts. The given procedure shall be followed.
When there are disputes, this can be done through several methods, including court action, mediation, or arbitration. In most cases, it is best to attempt to recover the money through negotiation before resorting to more drastic measures.
There are a few things to keep in mind when attempting to recover money through negotiation. First, it is important to be clear about the money that is owed to you. This means having a detailed invoice or contract that outlines the services that were provided and the agreed-upon price.
Second, it is important to be respectful and professional in all communications with the client or customer. It is important to remember that they are not obligated to pay you and threatening or aggressive behavior will only make the situation worse.
Finally, it is important to be reasonable in your demands. If you are owed a large sum of money, it is unlikely that you will be able to recover the full amount immediately. It is important to be realistic in your expectations and to negotiate a payment plan that is acceptable to both parties.