Keep the builder old debt out of a misleading completion invoice
Document an owner contribution toward old builder debt without misdescribing it as newly completed work.
Corporate Recovery Partners
01 / 06
The owner offers to help with the old account
After the builder collapses, the owner wants you to finish and offers an amount towards what the builder already owes. Have that proposal reviewed and documented clearly. Do not simply add the old debt to a new invoice described as completion work. The parties, purpose and effect of the proposed payment need to be understood before the records are changed.
Imagine a subcontractor owed for earlier work who is quoting to complete the remaining tasks directly for the owner. Show the old unpaid account and new completion price separately. Preserve the original invoices and contracting records. Ask the lawyer whether the owner's proposed contribution changes any rights or obligations and what wording is appropriate for the arrangement actually intended.
business.gov.au recommends clear invoices identifying the goods or services and payment information. Ask the accountant how the advised arrangement should be recorded. Do not describe money for earlier builder work as a new variation that never occurred or create a false date to make the amount fit the owner's purchasing system. Administrative convenience should not replace an accurate transaction record.
Clarify conditions before relying on the contribution
In the subcontractor example, the owner may intend to pay only after completion or subject to an agreement about the remaining claim. Those conditions need review. A statement that the owner will help does not establish when payment will occur or what it settles. Keep the promise out of confirmed available cash until its basis is properly established.
Ask the adviser how any actual payment affects the claim against the builder or information supplied to its insolvency practitioner. Do not seek double recovery or assume every payment automatically releases the entire old account. Retain the source, amount and agreed allocation of the receipt so the relevant parties can assess and record its effect correctly.
Use the new agreement for the completion tasks and track its invoices and payments clearly. Keep the documented old-debt contribution alongside the original claim history. A transparent structure lets the business assess the opportunity to finish without turning a helpful owner proposal into an inaccurate invoice or an unexplained change to the debt left by the failed builder.
