Security of Payment Act

The Security of Payment Act (SOPA) is state and territory legislation designed to ensure that contractors, subcontractors, and suppliers in the construction industry receive prompt payment for work performed. Each Australian jurisdiction has its own version of the Act (NSW: Building and Construction Industry Security of Payment Act 1999; Victoria: Building and Construction Industry Security of Payment Act 2002; Queensland: Building Industry Fairness (Security of Payment) Act 2017, etc.) with broadly similar provisions but important jurisdictional differences in timelines, thresholds, and adjudication processes.

For AP teams in construction businesses, SOPA creates legally binding obligations around how progress claims are received, assessed, and responded to. Failure to respond to a valid payment claim within the required timeframe -- typically 10 to 15 business days depending on the jurisdiction -- results in the claimed amount becoming a debt due and payable, even if the principal contractor disputes the claim. This has directly caused large, unbudgeted payment obligations for construction businesses whose AP process did not recognise and escalate SOPA payment claims within the statutory timeframe.

How SOPA claims work in AP

A SOPA claim is a progress claim for payment under a construction contract that is served in a manner that invokes the Act's protections. The claim must be in writing, identify the construction work or related goods and services for which payment is claimed, and (in some jurisdictions) include a statement that it is a claim made under the Act. When such a claim is received, the AP team (or contracts team) must issue a payment schedule within the statutory period, either paying the claimed amount or stating the amount that will be paid and the reasons for any difference.

If no payment schedule is issued by the due date, the full claimed amount becomes a debt due and payable, and the claimant can obtain an adjudication certificate (equivalent to a judgment debt) without further litigation. Recovery of an overpaid or incorrectly paid SOPA amount requires separate civil proceedings, which is more expensive and slower than having responded correctly in the first place.

Practical AP process for SOPA compliance

The practical challenge for AP teams is identifying which incoming invoices are SOPA payment claims versus ordinary invoices. Not all progress claims from construction subcontractors are formal SOPA claims; many are ordinary invoices processed through normal AP channels. The difference matters because SOPA claims have statutory response deadlines that ordinary invoices do not.

Best practice is to route all progress claims from construction subcontractors through a review process that checks for SOPA indicators -- reference to the relevant Act, specific claim structure, explicit demand for payment by a statutory date -- before they are processed as ordinary AP items. Claims that appear to invoke SOPA protections should be immediately escalated to the contracts or legal team for review of the payment schedule response. The AP team's role is triage and escalation, not assessment of the merits of disputed claims. Building SOPA claim recognition into the AP intake process is a practical and important control for any construction business with active subcontractor relationships.