Pursuant to section 67P of the Queensland Building and Construction Commission Act 1991 (Qld) (the QBCC Act), a contractor is entitled to be paid interest on unpaid invoices at the penalty rate. Now more than ever, it’s important for contractors to be paid on time in order to maintain cashflow. We have developed a free, online tool that helps you calculate how much interest you’re entitled to charge debtors for late payment.
Section 67P interest refers to penalty interest that a builder or tradesperson can claim, by law, if their invoice is not paid on time. It’s referred to as ‘section 67P Interest’ because it’s claimed pursuant to section 67P of the Queensland Building and Construction Commission Act 1991 (QBCC Act).
By way of example, let’s say you’re a plumber that’s been contracted to carry out work on site by a builder. Or, let’s say you’re a builder who’s been contracted to carry out a commercial construction by a principal. In either scenario, you should have a written agreement in place (i.e. a contract). Now let’s also assume that your contract states that you’re entitled to be paid within 15 business days of issuing a progress claim or invoice. If you are not paid within the agreed time frame, you’re entitled to charge penalty interest on the amount owing for each day that your invoice or claim remains unpaid. It’s that simple.
The penalty rate is 10% plus the rate comprising the annual rate as published from time to time by the Reserve Bank of Australia for 90-day bills. This annual rate can fluctuate daily, so it’s important to check the rate before claiming interest at the penalty rate.
Obviously you can’t claim both lots of interest. However, if your contract entitles you to claim default interest at a lower rate than the section 67P rate, you can choose to claim interest pursuant to section 67P.
If your contract provides for a higher default interest rate than section 67P, you may choose to recover the higher rate.
Well, firstly you should. It is an offence under section 67G of the QBCC Act if the contract is not put in writing.
But in any event, you can still utilise section 67P to charge default interest because section 73 of the Building Industry Fairness (Security of Payment) Act 2017 provides that if the contract does not specify a date for payment, then payment is due 10 business days after the date a payment claim is made.
Section 67P does not apply to domestic building contracts or a contract for construction work that is not building work.
However, the section does apply to a contract between a builder and a subcontractor in relation to the performance of domestic building work.
Calculating the interest can be time consuming and complicated as the 90-day bank bill rate fluctuates daily. That is why Axia has developed a free and easy to use section 67P interest calculator.
Click on the link below, enter the details when prompted to receive your calculations.