Receiving a Pay Less Notice does not mean you should start negotiating the deduction.

That reaction could give away leverage before you have established your legal position.

For a contractor expecting a significant payment, the commercial pressure is immediate. Forecast cash disappears, margins tighten and attention shifts from delivering the project to managing the shortfall.

The instinct is often to challenge the amount.

I think that is the wrong place to start.

Before arguing about the number, check whether the notice stands in the first place.

A Pay Less Notice needs to comply with the relevant contract and, where applicable, the statutory payment regime. The precise requirements depend on the contract, but your review should start with four questions:

• When was the notice served?

• What sum does the paying party say is due?

• Is the basis of that calculation clear?

• Does the notice comply with the payment provisions in the contract?

Timing, content and clarity matter.

A notice served late, or one which fails to identify the sum considered due and the basis of its calculation properly, should not simply be accepted as the starting point for a commercial negotiation.

Yet I still see teams move straight to discussing the deduction.

£500,000 becomes £350,000. Then £300,000. Everyone focuses on finding a number both sides will tolerate.

But you might be negotiating from a premise that should have been challenged first.

Before entering those discussions, establish the position.

Review the contract. Check the payment dates and notice deadlines. Preserve the Pay Less Notice and surrounding correspondence. Then determine whether the paying party followed the required process.

Of course, a properly served Pay Less Notice should not be ignored. Where a valid notice has been issued, it affects the payment position at the relevant final date for payment.

The point is simpler.

Do not concede the validity of a deduction by treating negotiation as your automatic first response.

Where there is a genuine dispute over payment, adjudication provides a relatively quick route to a decision. Under the statutory framework, an adjudicator will generally reach a decision within 28 days, subject to the applicable rules and permitted extensions.

For a contractor facing a significant cashflow problem, that speed matters.

A material deduction deserves more than an irritated email, a hurried commercial meeting and an attempt to meet somewhere in the middle.

It deserves a proper review of the notice, the contract and your payment position.

Because the first question should not be:

“How much are we prepared to accept?”

It should be:

“Are they entitled to deduct this sum in the first place?”

If your commercial team starts negotiating a Pay Less Notice before checking whether it stands, are they protecting the relationship, or giving away leverage?