Standard AP workflows are designed around a direct relationship between a purchase and a payment: a supplier delivers something, sends an invoice, the invoice is approved and paid. The AP approval software guide covers what standard workflows handle well and where they fall short. Subcontractor progress claims in construction operate under a different set of rules - ones that involve legal deadlines, certified site documentation, retention calculations, and variation registers that exist entirely outside the accounting system. Finance teams that process progress claims through a standard approval workflow are not just inefficient; they carry legal exposure they may not have mapped.
The Newcastle queue problem
An AP coordinator at a head contractor in Newcastle described the operational reality directly. Their subcontractor invoices were being processed through the same approval workflow as materials and equipment hire bills. Progress claims requiring site superintendent certification and a comparison against the contract schedule sat in a standard invoice queue alongside AU$800 tool hire invoices. The approval steps were identical. The information requirements were not.
The consequence was not just inefficiency. Progress claims were approved based on the invoice amounts rather than verified completion. Retention calculations were handled in a separate spreadsheet that didn’t feed into the approval record. When a claim included a variation that hadn’t yet been formally approved, the variation amount was processed as though it had been - because the approval tool had no mechanism to distinguish it from the rest of the claim. The auditor found no fraud. They found an approval process that couldn’t demonstrate what had been verified before each payment.
What does the Security of Payment Act change about timing?
Under SOPA, a principal must respond to a progress claim with a payment schedule within 10 business days, or in some states within whatever timeframe the contract specifies. A payment schedule delivered even one day late makes the full claimed amount payable by default - including any amounts that would legitimately be disputed or adjusted.
This is a workflow timing problem that accounting software alone cannot solve. An approval system that routes a AU$180,000 progress claim through a standard seven-day approval queue - with threshold escalation to a director and back - can inadvertently miss the SOPA response window. The consequence is not a delayed payment relationship. It is a legal liability for the full claimed amount.
The SOPA deadline needs to be tracked from the date the claim is received, with an alert built into the workflow before the deadline approaches. Standard invoice approval tools don’t track this because standard invoices don’t have it.
Variation invoices and the separate approval chain
A subcontractor’s progress claim may include variation amounts - work performed outside the original contract scope. Variations go through their own approval process: agreed in principle by the site supervisor, documented in a variation order, priced and approved by the project manager, before they can be included in a progress claim.
For construction businesses managing this complexity, implementing purchase order matching in AP workflows provides the systematic comparison that manual review cannot sustain at volume. When a claim arrives that includes variation amounts, the finance team needs to confirm that each variation was formally approved and documented, that the amount in the claim matches the approved variation order, and that the variation hasn’t already appeared in a prior claim. A standard approval queue has no mechanism for this. The approver either does it manually - consulting the variation register outside the AP tool - or approves the claim without that verification. In the Newcastle example, it was the latter: approvals were happening, but the audit trail showed only that approval occurred, not what was verified before it did.
Payment redirection fraud in subcontractor billing
A Victorian construction company was defrauded of AU$900,000 in 2024 when an attacker compromised a supplier’s email and sent fraudulent invoices with altered bank details. The invoices referenced real contracts, real amounts, and a real supplier relationship. The bank account number was different. No one checked against the historical record.
The ACCC identifies construction as one of the sectors most frequently targeted by payment redirection fraud, specifically because of high transaction values and frequent invoicing from multiple subcontractors. The Australian Federal Police has separately identified construction as a primary BEC target. Supplier bank account change fraud detection - automated comparison against historical records for every incoming invoice - is the control that addresses this directly. It needs to apply to every subcontractor payment, not only to invoices that look suspicious. Fraudulent invoices are designed to look legitimate.
Sources: Fair Trading NSW - Security of Payment Act · ACCC - Targeting Scams Report 2024
Further reading: Construction Accounting Software Australia 2026: Buyer’s Guide · Why PO Matching Fails in Construction · Best AP Automation Software Australia 2026