Outlaw Unsecured Subcontractor Credit for Builders

There are a plenty of rat builders busily preparing to desert their sinking ships.

Some of the schemes and antics builders are getting up to now are laughable.

Let me tell you what some builders are doing, these are just a few, there are many more examples.

Builder A

Builder A paid subbies progress payments with his credit card then after the job was finished, he contacted the credit card company and claimed fraud.

After numerous phone calls from the subbie, the builder said the credit card company cancelled all transactions as "someone stole his credit card".

He promised to pay but to date has not. The subbie has lodged a QBCC monies owed complaint. This builder couldn't lie straight in bed.

Builder B

This Cat 4 (60 million) builder still owes subbies for their November 2022 accounts, its now February 2023.

One subbie said he is owed $50,000 in overdue retentions, there would be many more.

They have closed their office, cleaned it out, dismissed all staff and handed back the building sites to the developers. They are uncontactable.

There are monies owed complaints against them but their licence is still intact. The QBCC say "they know nothing" (typical Sergeant Shultz stuff).

Monies owed complaints take time to process, the builder only has to dispute it and the QBCC wash their hands of it, then it goes to adjudication. By the time subbies win the adjudication, the builder strings out payment, then defaults on payment to give themselves even more time to arrange their strategic exit via liquidation.

Meanwhile, the builder is busy moving assets to his phoenix which is in the name of his daughter and continues to increase the families fortune by taking the money owed to subbies and using it through the daughters Phoenix to build his own development consisting of industrial factories.

Even if the QBCC do know anything, they are bound to give the builder 28 days show cause notice buying even more time for the exit strategy.

Builder C

Subbies receive a letter from the new Accounts Manager.

"Good Morning,

My name is "Joe Blow", I am the new Accounts Manager for Builder C.

For an extended period, Builder C was operating without an Accounts Manager. (Do these directors have dual passports, can they leave Australia in a hurry. It's reminiscent of CRCG Rimfire only on smaller scale).

As a result, we are working tirelessly to reconcile all accounts and ensure we have accurate records of invoices that are overdue and owing.

I am requesting a statement of account from all vendors to match against our invoicing system. Once the statement has been matched against our accounts payable ageing report, a proposal for a schedule of payment, to bring the account up to date, will be communicated to you.

We appreciate your patience and understanding whilst we work through this backlog and value our working relationship with you.

Could you kindly forward the statement of account to the following email addresses at your earliest convenience;"

"Appreciate your patience and understanding", what rock is he living under, does he really think subbies believe this rubbish?

What Category 3 builder would operate without an accounts manager?

The above email is designed to be seen to be doing the right thing but in reality, it's about buying time to get everything in order so they can liquidate. This particular builder turned over;

2021 - 13 million

2022 - 10 million

2023 - 1.5 million.

Turnover has fallen off a cliff, there are no deposits coming in to pay subbies as you can see by the 2023 figure, they have packed up and are preparing to do the usual runner.

Subcontractors extend very large amounts of unsecured credit to these cretins and its time that stopped. There can be no dispute that Subbies money is what keeps the industry going.

Without all those subbies unsecured billions swirling around, the industry would fall flat on its face today.

One subbie said they were done over by a recently liquidated builder and are now are victims of the builder who took over the project.

Its like being bashed and robbed and left on the side of the road then a good Samaritan comes along and picks you up but once you're in the car with the doors locked, you find he's really the axe murderer in disguise.

Developers don't fund their own projects, banks don't fund developers projects, the billions of dollars of subbies unsecured credit given to dishonest filth like these builders is what funds the projects.

Part of the funding is retentions. It becomes a component of the builders cash flow which makes it very difficult to get back and is rarely paid without a lot of collection effort from the subbie and even then, it may not be paid at all. Sometimes its huge money.

I wonder how our politicians would feel if they had to wait 2 or 3 months to receive their exorbitant wages only to find at the end of the wait that the paymaster has emptied the accounts and liquidated.

Giving huge sums of unsecured credit to people you have never met is unheard of in financial circles but its the price subbies in Australia have to pay to work in the industry.

Its good business practice to chase up your debtors list but by doing so, subbies are punished by Insolvency Practitioners with claims of unfair preferences when the builder liquidates .

They say that by the act of chasing late payments, it proves the subbie knew the builder was insolvent.

Its a lose lose situation so we all need to stop giving credit to the dishonest and unscrupulous dregs of the industry.

Car yards won't let you take the new ute home without payment, Harvey Norman won't let you take the new lounge home without payment yet here subbies are, giving hundreds of thousands of dollars, in some cases millions in unsecured credit to people they have never laid eyes on.

If that is not playing Russian Roulette, I don't know what is.

Question for the Federal Government:

Why do employees who are priority creditors, many of whom would know what the builder is up to, continue to cajole subbies into supplying product knowing the subbies won't be paid?

In many cases they have helped organise the liquidation, but are treated as "priority" creditors when it comes time for FEG to pay their lost wages, long service and entitlements.

They are often part of the fraud but get special treatment with entitlements while subbies get nothing.

Subbies add a level of protection to your business and join SubbiesUnited and make use of our private members forum for up to date information but a warning, do not join if you are NOT a subcontractor, we will weed you out, you are not welcome.

Note: I am happy to approve any comment providing they are not defamatory.