Have you ever heard of it? Probably not because it is a little known legislative tool you can use to incentivise a builder to pay when payment is due.
Explanation taken with permission from whojungle.com.au.
Section 67P was introduced into the Queensland Building Services Authority Act specifically to remove the financial benefit that non-paying entities gained through the use of money that is owed to other entities. Effectively, the use of your money interest free.
The continuing problem was the process that a claimant had to go through to get paid the original amount claimed and the interest and the fact that next to nobody knew about the intricacies of section 67P.
The Building and Construction Industry Payments Act 2004 (BCIPA) has resolved many issues associated with getting money to flow.
- "67P interest is interest payable pursuant to section 67P of the Queensland Building and Construction Commission Act 1991.
- Section 67P overrides the rate of interest specified in the contract unless the rate in the contract is higher.
- The rate is calculated at 10% plus the 90 day bank bill rate compounded daily which makes it a higher rate of interest than most contracts or other forms of default interest.
- Your trade does not have to be part of the QBCC licensing regime. For example, earthworks contractors are not QBCC licensed but in many circumstances they can claim 67P interest".
67P is a very effective tool to get recalcitrant builders to pay you on time. If they don't, under section 67P of the QBCC Act 1991, they are required to pay you interest at a rate high enough to bring tears to their eyes and a smile to your face.
The calculation can be difficult and the rate for each day changes. That is why you need to use whojungle.com.au.
- You will not be given this interest automatically by an adjudicator or a court.
- You have to specifically ask for it and calculate it.
- whojungle.com.au provides you with the information necessary to claim 67P interest.
Advantage and Disadvantage
By not paying you on time, there are advantages to them and disadvantages to you and that imbalance has to be paid for.
Late or non paying head contractors have the advantage of interest free use of your money without your permission.
The disadvantage of late payment to you is that it hurts your cashflow. Worse still you may have to pay interest on your overdraft or line of credit to keep your business going until they feel like paying you.
I suggest that all our members join whojungle.com.au, this part of the site is free. To join, click on 67P on the home page and follow the prompts.
Get used to 67P and start using it to your advantage. It will send a message to anyone who is consistently late with payments to get their act together.
QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION ACT 1991 - SECT 67P
67P Late progress payments
(1) This section applies if—
(a) the contracting party for a building contract is required to pay an amount (the progress amount) to the contracted party for the building contract; and
(b) the progress amount is payable as the whole or a part of a progress payment; and
(c) the time (the payment time) by which the progress amount is required to be paid has passed, and the progress amount, or a part of the progress amount, has not been paid.
(2) For the period for which the progress amount, or the part of the progress amount, is still unpaid after the payment time, the contracting party is also required to pay the contracted party interest at the penalty rate, as applying from time to time, for each day the amount is unpaid.
(3) In this section—
penalty rate means—
(a) the rate made up of the sum of the following— 10% a year; the rate comprising the annual rate, as published from time to time by the Reserve Bank of Australia, for 90 day bills; or
(b) if the building contract provides for a higher rate of interest than the rate worked out under paragraph (a)—the higher rate.
Interest Presentation to Late Paying Builder
This sends an intimidating and powerful message to pay on time or suffer the financial consequences. This is the interest on just under 4 months on an outstanding late amount of $110,000. It's simple, print it out and send it in with your invoice.