How to Deal with a Disputed Invoice as a Subcontractor

Receiving a disputed invoice from a head contractor is one of the most stressful and frustrating situations a subcontractor faces. You’ve done the work. You’ve sent the invoice. And now the head contractor has come back saying they dispute it. What should you do? Here’s a practical guide to dealing with a disputed invoice as a subcontractor.

Don’t Panic — a Dispute Doesn’t Mean You’re Wrong

The first thing to know is that a disputed invoice is not necessarily a lost invoice. Head contractors dispute invoices for many reasons — some legitimate, some not. A dispute simply means the head contractor is contesting part or all of your invoice. It doesn’t mean you’re wrong, and it certainly doesn’t mean you have to accept a lower payment.

Get the Dispute in Writing

If the head contractor tells you they’re disputing your invoice verbally — by phone, on site, or in a meeting — ask them to put it in writing immediately. You need to know:

• Exactly which items they dispute
• Why they’re disputing each item
• How much they say they owe you (if anything)

If the dispute is about quality of work, ask for specifics — which areas, what defects, what they say the rectification cost is. Vague “quality isn’t good enough” claims are much harder to sustain in adjudication than specific, documented defect claims.

Serve a Formal Payment Claim Immediately

Don’t wait for the dispute to resolve through ongoing negotiation. Serve a formal payment claim under the Security of Payment Act as soon as possible. When you do this, the head contractor is legally obligated to:

• Issue a payment schedule within 10–15 business days
• Specify exactly which items they dispute in the schedule and why
• If they don’t issue a schedule — the full amount becomes legally owed to you

The formality of the SOP process often changes the dynamic. Head contractors who were vaguely “disputing” an invoice find it harder to maintain that position when they have to put specific reasons in writing.

Review the Payment Schedule Carefully

If the head contractor responds with a payment schedule, read it carefully. The schedule must identify each item disputed with reasons. If the schedule:

• Fails to specify the reasons for dispute in sufficient detail
• Claims deductions without legal basis
• Sets off amounts for alleged defects that are exaggerated or fabricated
• Disputes items that clearly fall within your contract scope

— these are all matters that can be challenged in adjudication.

Collect Your Evidence

Before lodging an adjudication application, gather all relevant evidence:

• Signed or initialled site instructions, delivery dockets, and timesheets
• Photos and videos of work in progress and completed
• Inspection certificates and sign-offs
• Emails and text messages showing instructions and approvals
• Site diary entries describing daily work
• Any payment schedule or communication from the head contractor about the dispute

Lodge Your Adjudication Application

If the head contractor disputes your payment claim, you have a short window to lodge an adjudication application (typically 10 business days from receiving the payment schedule). The adjudicator will assess the evidence from both sides and make a binding determination.

How PayClaim Handles Disputed Invoices

PayClaim specialises in disputed invoice recovery for Australian subcontractors. We assess the dispute, prepare a strong adjudication application, and present your evidence effectively. Start your free claim today.