Dilemma 4:  Invoicing - Answer

In submitting the payment certificate, you are making a representation as to the amount of work which your company has completed, and, therefore, the amount of payment which your company is due.  It can be a criminal offence to make a representation which you know is false, or which you know is probably false, or which you do not honestly believe is true in order to gain some financial advantage for yourself or another person or organisation.  Overall the company is not claiming more in payments than it will eventually be due.  However, by claiming for early payment for work which it has not yet done it has nevertheless received the benefit of extra cash-flow and reduced the client’s cash flow.  The company has therefore gained an advantage as a result of a false representation.  If you submit the certificates in their current form, you may be personally committing a criminal offence, and so may your company.

 

You should therefore instruct the quantity surveyor to recalculate based on actual work done.  Do not submit any certificate unless you honestly believe that it is accurate.  If it is difficult to assess accurately, it is far safer to invoice for less work than has been done than for more work than has been done.  If there is any uncertainty in relation to any measurement, disclose this to the project owner.

 

You also need to consider what should be done in relation to previous certificates which over-claimed.  You should consider repaying the project owner the interest gain on the amount previously overpaid (although the risk of doing this is that it may alert the project owner to a possible criminal offence).  Get legal advice in relation to whether the company has actually committed a crime by previously over-valuing, and as to whether this fact should be disclosed to the criminal authorities, or whether it is justifiable to let the matter rest without disclosing it.

In some cases, invoicing ahead of progress can be legitimate.  For example, you may have agreed with the client that you will submit an application on the 15th of each month which estimates the value of work which will have been completed by the end of the month.  If this is the case, the application should clearly state that it is an estimate, and you should only include in the estimate the value that you honestly believe will have been completed by the end of the month.