How to Make a Payment Claim Under Security of Payment Legislation

You’re three months into a commercial fit-out. You’ve invoiced on time. You’ve followed up. The payment is now 45 days overdue, and the excuses are getting thinner.

Most contractors at this point pick up the phone, send another email, or just wait it out. They treat unpaid invoices as an unfortunate cost of doing business.

But if you’re working under a construction contract in Australia, you’re not powerless. You have access to one of the most effective cashflow tools in commercial law: a payment claim under Security of Payment legislation.

And no, it’s not just a fancy name for an invoice.

A properly made payment claim triggers strict statutory deadlines, opens a pathway to fast adjudication, and puts real commercial pressure on the party holding your money. But only if you get the detail right.

Get it wrong, wrong wording, wrong timing, wrong recipient, and you’ve just wasted time you didn’t have.

This article walks you through how to make a payment claim that works. Not just technically compliant, but strategically sound. The kind of claim that moves the conversation from excuses to payment.

What Security of Payment legislation is trying to achieve

Construction projects run on cashflow. Contractors, subcontractors, and suppliers do the work upfront and get paid later. Sometimes much later.

Security of Payment laws exist to fix the imbalance. They create a rapid, low-cost process for recovering progress payments without waiting months for a court hearing or burning through legal fees on interlocutory applications.

The legislation applies across Australia, with each state and territory operating its own version. The mechanics vary slightly, but the principles are the same: regular progress payments, strict deadlines, and fast adjudication if there’s a dispute.

If you’re working under a construction contract, whether you’re a builder, subcontractor, consultant, or supplier, Security of Payment legislation gives you a statutory right to claim payment at defined intervals and to have disputes resolved quickly.

But here’s what the legislation doesn’t do: it doesn’t give you a free pass to slack contract administration, vague invoicing, or wishful thinking about what you’re owed.

Security of Payment rewards discipline. You need to know when you can claim, what must go into the claim, how to serve it, and what to do if the response isn’t what you expected.

Let’s start with the threshold question: does Security of Payment even apply to your project?

When you can use a payment claim on your project

Not every construction-related contract is covered by Security of Payment legislation. Before you draft a payment claim, you need to confirm the legislation applies to your situation.

Most commercial building and construction work is covered. That includes head contracts, subcontracts, consultant agreements, and supply contracts where goods or services are provided in connection with construction work.

But there are exclusions. The most common one: residential building work where the contract is with an owner-occupier and the contract price is below a certain threshold. These contracts are often carved out as “exempt residential work” and fall outside the Act. The exact thresholds and definitions vary by state, so check the rules in your jurisdiction.

You also need a valid construction contract. If there’s no agreement (written or oral), or if the work you’re claiming for falls outside the scope of your contract, you can’t rely on Security of Payment. You’re back to common law claims, which are slower and more expensive.

Assuming the Act applies, the next question is timing. You can’t just issue a payment claim whenever you feel like it. The legislation ties claims to reference dates.

A reference date is the date on which you become entitled to a progress payment. Your contract will usually define reference dates: monthly on the last day, fortnightly, or tied to milestones. If your contract is silent, the Act provides default reference dates (often monthly intervals from the contract start date).

You can only make one payment claim per reference date. That’s a hard rule. If you issue two claims for the same reference date, the second one is invalid and gives you nothing.

Can you think back to your last three invoices and clearly identify which reference date each one related to?

If you can’t, that’s a sign your invoicing system isn’t aligned with Security of Payment requirements. You might be issuing invoices that look like payment claims but don’t actually meet the statutory definition, which means you’re not getting the protections the Act offers.

What a valid payment claim must include

A payment claim is not a request. It’s a formal statutory document that triggers strict deadlines and consequences. If it doesn’t meet the Act’s requirements, it’s not a payment claim. It’s just a letter asking for money.

Here’s what must be in every valid payment claim:

It must be in writing. Verbal claims don’t count. Email is fine if your contract allows email service. A letter, a PDF, a formal document on letterhead, all acceptable, as long as it’s in writing.

It must identify the construction work, goods, or services to which the payment relates. This doesn’t mean you need to attach a 50-page breakdown (though detail helps). It does mean the recipient must be able to understand what you’re claiming for.

Vague descriptions kill claims. “Works to date: $150,000” isn’t enough. You need to tie the claim to specific work packages, stages, or milestones: “Demolition and structural works completed under Stage 2, as per approved programme dated 10 January 2025.”

If your claim is for variations, identify them clearly. If it’s for materials supplied, specify what and when. The test is simple: could a reasonable person reading your claim understand what you’re asking to be paid for?

It must state the amount you’re claiming. Break it down if there are multiple components (base contract work, variations, materials on site). If you’re claiming GST, state it separately.

Don’t inflate the claim to create a negotiating buffer. Adjudicators and courts can see through that, and it damages your credibility. Claim what you’re genuinely entitled to under the contract, and be prepared to prove it.

It must include a statement that it’s made under the Security of Payment Act. This is the magic wording that transforms an invoice into a statutory payment claim.

The wording varies slightly by state, but it’s usually something like: “This is a payment claim made under the Building and Construction Industry Security of Payment Act [Year] (State).”

Some practitioners include the specific section reference. Others just cite the Act. Either way, the statement must be there. Miss it, and you don’t have a payment claim under the Act. You just have an invoice.

Does that mean your existing invoices are worthless? No. They’re still evidence of debt under general contract law. But they don’t trigger the statutory adjudication pathway, and they don’t force the other side into the payment schedule deadlines that give you leverage.

Attach supporting documentation where it strengthens your position. You’re not required to attach every piece of evidence, but if you have site instructions, approved variations, progress reports, or sign-offs that back up your claim, include them.

Think of the claim as the opening move in a potential adjudication. If the recipient disputes your claim and issues a low payment schedule, you’ll want a clean paper trail that proves your entitlement. Starting strong with the claim itself puts you ahead.

Serving the claim: timing, method and proof

You’ve prepared a compliant payment claim. Now you need to serve it, on the right person, at the right time, using the right method.

Get any of those wrong, and the claim is ineffective. Let’s break it down.

Timing: when can you serve the claim?

You can serve a payment claim once a reference date has passed. If your reference date is the last day of each month, you can serve the claim on or after that date. Most contracts give you a window (say, within 10 or 15 days after the reference date) to serve your claim. If your contract is silent, the Act usually provides a default period.

Serving too early (before the reference date) can invalidate the claim. Serving too late (after the window closes) might mean you’ve missed your entitlement for that reference date entirely.

Set up a system. Diarise your reference dates and claim windows. If you’re managing multiple projects or subcontractors, use a tracker. This isn’t optional administrative overhead. It’s how you protect your cashflow.

Who do you serve?

Serve the payment claim on the party who owes you the money under the contract. That’s usually the principal or head contractor if you’re a subcontractor, or the head contractor if you’re the principal claiming against an owner.

Check your contract. Some contracts specify who notices must be sent to (a particular address, a project manager, a company secretary). Follow those requirements. If the contract says serve on the project manager at a specific email address, that’s what you do. Serving it on someone else might not be effective service under the contract.

If the contract doesn’t specify, the Act usually allows service on the party itself or an agent authorised to accept notices.

Method: how do you serve?

Your contract will often set out permitted methods of service: personal delivery, post, email, fax. Follow the contract first.

If the contract is silent, the Act provides fallback methods. Personal service is always safe. Registered post or certified mail gives you proof. Email is increasingly common and valid if the contract allows it or the parties have been using email throughout the project.

Do not rely on informal channels. Handing the claim to someone at a site meeting or texting a PDF doesn’t count as valid service unless your contract explicitly allows it.

Proof: why you need evidence of service

Here’s the scenario that plays out too often: you serve a payment claim, the recipient doesn’t respond, you apply for adjudication, and they argue they never received the claim. No payment schedule was required because there was no valid service, they say.

If you can’t prove service, you’re stuck.

Keep evidence. If you serve by post, keep the tracking receipt or the signed registered mail docket. If you serve by email, keep the sent email and the delivery receipt or read receipt if available. If you serve in person, get the recipient to sign and date an acknowledgement, or bring a witness.

This sounds pedantic, but in adjudication, it’s often the difference between winning and losing. The adjudicator won’t just take your word for it. You need proof you can put in front of them.

What happens next: payment schedules, due dates and silence

You’ve served your payment claim. Now you wait. But not passively. You need to know what responses are possible, what deadlines apply, and what each scenario means for your next move.

If the recipient issues a payment schedule

The recipient (the party you’ve claimed against) has a statutory period to issue a payment schedule. In most states, that’s 10 business days from the date they receive your payment claim, unless your contract specifies a different (and compliant) period.

A payment schedule is a written response that states how much the recipient proposes to pay (which can be the full amount, a partial amount, or zero) and the reasons for any difference between your claim and their proposed payment.

If the payment schedule offers less than you claimed, it must set out the reasons. Vague reasons like “amount in dispute” or “works defective” aren’t enough. The schedule should identify which items are disputed and on what basis.

Read the payment schedule carefully. It defines the dispute. If the recipient disputes a variation on the basis that it wasn’t approved, that’s the issue you’ll need to address if you go to adjudication. If they accept liability but argue you’ve overclaimed the quantity, that’s a different fight.

The payment schedule also sets the amount the recipient must pay by the due date, even if it’s less than you claimed. That becomes a debt, recoverable through the courts if unpaid.

If you receive no payment schedule

Silence is powerful under Security of Payment legislation. If the recipient doesn’t issue a payment schedule within the statutory period, they’re deemed to have accepted your claim in full.

That means they owe you the entire claimed amount, and they can’t later dispute the claim in adjudication or raise defences in debt recovery proceedings.

This is why recipients take payment schedules seriously. Miss the deadline, and you’ve lost the right to argue about the amount.

For you as the claimant, a failure to issue a payment schedule is a strong position. You can immediately pursue recovery of the claimed amount as a debt, either through adjudication or court proceedings (depending on the state and the Act’s specific pathways).

If the scheduled amount isn’t paid by the due date

Once a payment schedule is issued (or the claim is deemed accepted because no schedule was issued), the recipient must pay the scheduled amount by the due date.

The due date is either the date specified in your contract or, if the contract is silent, a default period set by the Act (often 10 business days after the payment schedule is given, or after the claim was served if no schedule was issued).

If the recipient doesn’t pay the scheduled amount by the due date, you have a statutory debt. You can apply for adjudication, or you can commence debt recovery proceedings in court. Both pathways are available, but adjudication is faster.

The key point: even if the recipient has disputed part of your claim in a payment schedule, they must still pay the scheduled amount by the due date. They can’t just withhold payment while the dispute is unresolved.

Can you track these deadlines in your head, or are you relying on the other side to do the right thing?

If you can’t confidently answer “10 business days from service” when someone asks how long the recipient has to issue a payment schedule, you’re not ready to use Security of Payment strategically. These deadlines are the entire mechanism. Miss them, and you lose leverage.

If you’re underpaid or not paid at all: options and the role of adjudication

You’ve served a compliant payment claim. The recipient either issued a payment schedule offering less than you claimed, or they’ve gone silent. Either way, you’re not holding the money you’re owed.

What do you do?

Option 1: Negotiate

Just because you can adjudicate doesn’t mean you should. Adjudication costs money (application fees, adjudicator’s fees, legal costs if you engage lawyers). It takes time. And it can damage relationships, which might matter if you’re halfway through a project or hoping for future work.

If the gap between your claim and the payment schedule is small, or if the disputed issues are genuinely arguable, pick up the phone. Commercial resolution is faster and cheaper than any formal process.

But don’t negotiate from weakness. You’ve served a valid payment claim. The other side is on a countdown. Use that leverage.

Option 2: Apply for adjudication

Adjudication is the fast-track dispute resolution process at the heart of Security of Payment legislation. If you’re not paid the amount you claimed (or the amount in the payment schedule), you can apply to have an independent adjudicator determine what’s owed.

You must apply within a set period after the due date for payment (often 10 to 20 business days, depending on the state). Miss that window, and your right to adjudicate that particular claim is gone.

The adjudication process is document-heavy but relatively informal. You lodge an adjudication application with an authorised nominating authority (each state has its own). You attach your payment claim, the payment schedule (if any), your contract, and any supporting evidence (site records, correspondence, variation approvals, invoices, progress reports).

The respondent gets a short period (often 5 to 10 business days) to lodge a response. The adjudicator then reviews the material and makes a determination, usually within 10 to 15 business days from accepting the appointment.

Adjudicators don’t conduct hearings like a court trial. They work on the papers. That means your written submission and your supporting documents are everything. If you haven’t clearly explained your entitlement and backed it up with evidence, you’re in trouble.

The determination is binding (though not finally binding, it can be challenged in court or reopened in later proceedings, but in practice, most determinations stick). If the adjudicator decides in your favour, the respondent must pay the determined amount. If they don’t, you can enforce the determination as a judgment.

Adjudication isn’t free. Application fees and the adjudicator’s fees can run into thousands of dollars, and you’ll often want legal help to prepare a strong application. But it’s vastly cheaper and faster than litigation. You get a decision in weeks, not months or years.

When should you adjudicate? When the amount is worth it, when the dispute is clear-cut, and when you’ve got the documentation to back up your claim. If your records are thin, your entitlement is arguable, or the relationship is commercially critical, think carefully before pulling the trigger.

Option 3: Suspend work

Some state Acts allow you to suspend work if you’re not paid the amount in a payment schedule (or the claimed amount if no schedule was issued) by the due date. This is a powerful but risky remedy.

Check your contract and the Act carefully. There are usually notice requirements and conditions before you can lawfully suspend. Get it wrong, and you might be in breach of contract yourself.

Suspension is most useful as a negotiating tactic. The threat of suspension (backed by a valid payment claim and an unpaid debt) often moves the conversation faster than a stern letter.

Option 4: Court proceedings

If no payment schedule was issued, you can skip adjudication and go straight to court to recover the claimed amount as a debt. The respondent has very limited defences in that scenario, they can’t dispute the merits of the claim because they failed to issue a payment schedule.

Court is slower than adjudication, but it can be the right path if the amount is large or if you’re also pursuing other claims (damages, termination, defects) that fall outside Security of Payment’s scope.

The choice between adjudication and court often comes down to speed and cost. If you need the money now and your claim is solid, adjudicate. If you’re in a broader dispute or the claim is complex, court might make more sense.

Practical pitfalls and how to avoid them

Most payment claims fail not because of bad faith, but because of small, avoidable mistakes. Here’s what goes wrong, and how to stop it happening to you.

Wrong reference date

You serve a claim for works completed in March, but you attach it to April’s reference date because that’s when you got around to preparing it. The recipient challenges the claim as invalid because it doesn’t align with the correct reference date, or because you’ve already claimed for that reference date under a different invoice.

Fix: know your reference dates cold. If they’re monthly, mark them in your calendar. If they’re milestone-based, track them in your project schedule. Each claim must clearly state which reference date it relates to, and you can only make one claim per reference date.

Missing or incorrect wording under the Act

Your invoice describes the work, states the amount, and looks professional. But it doesn’t say “This is a payment claim made under the Building and Construction Industry Security of Payment Act.”

Without that statement, it’s not a payment claim. It’s just an invoice. The recipient doesn’t have to issue a payment schedule. The statutory deadlines don’t apply. You’ve lost your SOP protections.

Fix: create a template. Every payment claim includes the mandatory wording, the reference date, and a clear statement of the amount claimed. Don’t rely on memory. Systemise it.

Vague description of work

You claim $80,000 for “works to date”. The recipient issues a payment schedule disputing the claim on the basis that it’s impossible to tell what you’re claiming for.

In adjudication, the adjudicator agrees. Your claim doesn’t identify the work sufficiently, so it’s invalid.

Fix: be specific. Tie the claim to stages, milestones, line items in the contract, or approved variations. If you’re claiming for multiple components, break them down. The test is whether a reasonable person reading your claim could understand what you’re asking to be paid for.

Serving on the wrong person or using the wrong method

Your contract says notices must be sent to the project manager at a specific email address. You send the payment claim to the site supervisor’s personal email because that’s who you usually deal with.

The recipient argues they never received valid service. No payment schedule was required. Your claim collapses.

Fix: read your contract’s notice provisions. Follow them exactly. If it says registered post to a specific address, do that. If it says email to a nominated address, use that address. Keep proof of service.

Missing the adjudication application deadline

The due date for payment passes. You’re not paid. You’re furious, but busy, so you wait three weeks before applying for adjudication.

By then, the statutory window for lodging an adjudication application has closed. You can’t adjudicate that claim anymore. Your only option is court, which is slower and more expensive.

Fix: diarise every deadline. The moment you serve a payment claim, work out the date by which a payment schedule must be issued, the due date for payment, and the deadline for lodging an adjudication application. Set reminders. Treat them as non-negotiable.

Claiming amounts you can’t prove

You claim for a verbal variation that the project manager allegedly approved on site. You have no written instruction, no email confirmation, and no site diary entry.

In adjudication, the respondent denies the variation was approved. The adjudicator has no evidence to support your claim. You lose.

Fix: document everything. If a variation is instructed verbally, confirm it in writing immediately (“Further to our discussion on site today, I confirm you’ve instructed [description of variation]. I’ll proceed on that basis unless I hear otherwise.”). Keep site diaries, take photos, save emails. Your adjudication case is only as strong as your evidence.

When to get advice and what to bring to the first conversation

You’re reading this article because you’re already asking the right question: “Am I doing this correctly?” That self-awareness is half the battle.

But there’s a point where reading articles and trying to DIY your way through a payment claim stops being smart and starts being expensive.

Here’s when to bring in a lawyer who knows Security of Payment:

Before you serve your first payment claim on a significant project

If you’re about to issue a claim worth hundreds of thousands of dollars, or if the contract is complex, or if you’re dealing with a principal who has a history of disputing claims, get the claim reviewed before you serve it.

An hour of advice upfront can save you from an invalid claim that costs you weeks of delay and tens of thousands in lost leverage.

When you receive a payment schedule that disputes your claim

Payment schedules define the dispute. If the respondent has raised defences or set-offs you weren’t expecting, or if the reasons are unclear, you need to assess your adjudication prospects quickly.

Can you win in adjudication based on the material you have? Do you need to gather more evidence? Is the dispute even suitable for adjudication, or are you better off negotiating or going to court?

Those questions have commercial and legal dimensions. Get advice before you decide.

When you’re considering adjudication

Adjudication applications are technical. You’re not just telling your story. You’re making a legal submission, grounded in the contract and the evidence, responding to the payment schedule’s arguments.

If you’ve never done it before, or if the stakes are high, engage someone who has. A strong adjudication application, prepared by someone who knows what adjudicators look for, materially increases your chances of success.

When the other side has failed to issue a payment schedule

This sounds like a win, and it is. But you need to move fast. Debt recovery proceedings, enforcement options, and the interplay between adjudication and court proceedings vary by state.

Get advice on the best pathway to actually recover the money, not just establish the debt.

What to bring to the first conversation

If you’re engaging a lawyer for advice on a payment claim, here’s what makes that conversation productive:

• Your construction contract (all of it, including any amendments, variations, and annexures)
• The payment claim you’ve served (or are about to serve)
• Any payment schedule you’ve received
• Correspondence with the other party about the disputed amount
• Site records, progress reports, variation approvals, and any other evidence that supports your claim
• Your contract programme or project schedule, if timing is an issue
• A clear summary of what you’re owed and why, in your own words

The more organised you are, the faster the lawyer can assess your position and give you practical options. Don’t just dump a pile of emails and hope for the best. Think through what matters, and bring the key documents.

Making payment claims part of your project discipline

Security of Payment legislation is not a nuclear option you pull out when a project has already collapsed into chaos. It’s a tool you build into your project administration from day one.

The businesses that use Security of Payment well don’t wait until they’re three months unpaid and desperate. They structure their contracts to align with the legislation. They track reference dates and serve compliant claims every time. They keep evidence of service and maintain proper records.

When a payment dispute arises, they’re not scrambling to work out whether they have a valid claim. They know they do, because the system is already in place.

That discipline, tracking dates, drafting claims correctly, serving them properly, and acting quickly when payment doesn’t arrive, is what separates businesses that get paid on time from businesses that spend half their lives chasing money.

Litigation is complex, yes. But the pathway shouldn’t be.

The right approach to payment claims starts with understanding what the legislation requires, building systems to meet those requirements, and acting decisively when things go wrong. If you can do that, you’ve already moved ahead of most of the market.

And if you can’t, or if the stakes are high enough that you need certainty, that’s when you bring in advice. Not as a last resort, but as a strategic investment in protecting your cashflow and your business.

Disclaimer: This article provides general information only and does not constitute legal advice. Security of Payment legislation varies by state and territory, and the application of the law depends on the specific facts of each case. You should obtain professional advice about your particular circumstances before relying on any content in this article or taking any action.