When the builder starts deducting costs from your invoice

Why the deduction matters

The invoice lands, then the builder sends back a deduction sheet: labour, delay, rework, supervision. For a subcontractor, that can turn a healthy claim into a cash squeeze overnight. Business.gov.au says contracts should cover how much and when payment happens, and how disputes are handled, because written terms reduce confusion later. ([business.gov.au](https://business.gov.au/people/contractors/prepare-a-contract?utm_source=openai))

The practical risk is simple. If you accept the deductions without checking them, the reduced number can become the new story in the job file. That is why the first response should be calm and written, not a rushed phone call. Keep the invoice, the contract, the emails, and the site notes together. ([business.gov.au](https://business.gov.au/people/disputes/write-a-letter-of-demand?utm_source=openai))

Ask for every dollar's trail

Ask the builder for itemised evidence of each cost it wants to deduct. Request the contract clause relied on, the date of the event, who did the work, and the documents behind the figure. If it is a defect or delay claim, ask for photos, diaries, supplier invoices, or other workings used to reach the amount. ([business.gov.au](https://business.gov.au/people/disputes/write-a-letter-of-demand?utm_source=openai))

Do not let the deduction stay as one lump sum with no explanation. Business.gov.au recommends keeping records and sending accurate written requests, so you can test what is real and what is just pressure. If the builder says part of the claim is still disputed, separate the documents from the argument and keep the numbers visible. ([business.gov.au](https://business.gov.au/finance/financial-trouble/what-to-do-when-you-havent-been-paid?utm_source=openai))

Source: Official guidance

Read the contract before you argue

Next, read the set-off or deduction clause line by line. Check whether it actually allows back-charges, and whether the builder had to give written notice or a chance to respond first. Business.gov.au suggests a dispute clause can require written notice and a discussion within five days, if the parties choose to include that process. ([business.gov.au](https://business.gov.au/people/contractors/prepare-a-contract?utm_source=openai))

If the contract is unclear, do not guess. Write down the clause number, the wording you think matters, and the point you say it fails to cover. That creates a clean record for the next exchange, whether the issue is defective work, delay, or something else the builder is trying to fold into the invoice. ([business.gov.au](https://business.gov.au/people/contractors/prepare-a-contract?utm_source=openai))

Answer point by point

Reply line by line. For each deduction, say whether you accept it, reject it, or need more evidence, and briefly why. A short table works well. Business.gov.au’s contract guidance encourages clear written notice and dispute handling in the contract, so your reply should stay organised enough to read as a formal position, not a venting email. ([business.gov.au](https://business.gov.au/people/contractors/prepare-a-contract?utm_source=openai))

In that same reply, ask the builder to pay the part it is not actually contesting, if the paperwork supports that figure. Do not blur the accepted amount with the disputed amount. If you need to use a letter of demand later, make sure it is accurate, polite, dated, and backed by the contract, invoice, and emails. ([business.gov.au](https://business.gov.au/people/disputes/write-a-letter-of-demand?utm_source=openai))

Turn the dispute into a clean next step

If the deduction still does not move, send a formal letter of demand and attach the supporting documents. Business.gov.au says a letter of demand should state what is owed, what it is for, when you expect payment, and only include late payment interest if the contract specifies it. Keep a copy and the delivery record. ([business.gov.au](https://business.gov.au/people/disputes/write-a-letter-of-demand?utm_source=openai))

Your next step is to turn the dispute into a file that someone else can assess quickly: contract, invoice, deduction list, photos, messages, and your line-by-line reply. If you want help planning the response, contact CRP today about dispute resolution. CRP coordinates independent qualified professionals and can help you map the next move. ([business.gov.au](https://business.gov.au/people/contractors/prepare-a-contract?utm_source=openai))