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Preliminary Notices: The Secret Sauce For Your Credit Department
 

Preliminary Notices: The Secret Sauce For Your Credit Department

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Establishing a policy to send a single document – the preliminary notice document – may change your company’s fortunes with DSOs, aging receivables, and bad debt. So, why aren’t you doing ...

Establishing a policy to send a single document – the preliminary notice document – may change your company’s fortunes with DSOs, aging receivables, and bad debt. So, why aren’t you doing it?

Getting paid in the construction industry is an art form, and the preliminary notice document has been used by contractors and suppliers for nearly 200 years to position themselves in line for payment. As this Webinar will explain: if you’re not sending it, you’re not in line.

Watch a recording of this webinar here:
http://hub.zlien.com/preliminary-notices-secret-credit-success

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    Preliminary Notices: The Secret Sauce For Your Credit Department Preliminary Notices: The Secret Sauce For Your Credit Department Presentation Transcript

    • Preliminary Notices Secret Sauce To Credit Departments
    • Construction Credit Knowledge Every Wednesday
 1pm CST
 
 Signup At:
 zlien.us/z-web
    • 1. History and Purpose Of Notices! 2. What GCs and Owners Do With Notices! 3. What this means to you! 4. The Results
    • WHY?
    • WHY? Thomas Jefferson introduced the first mechanics lien legislation.
    • No one was willing to build out Washington D.C. because they were afraid of not getting paid
    • And We Don’t Pay For It If You Build It You Can Have It
    • This would have never worked pre-America, because land ownership was reserved for aristocrats. America, however, was land-rich.
    • America believes that trade contractors and suppliers should get paid.
    • America believes that GCs and Owners should shoulder the burden of a project’s financial risk.
    • 77.8% Facing Serious Difficulty Getting Paid ! 22.2% Have Some Delays But Cash Coming Through ! 0% Paid Fairly & On Time http://zlien.us/17Fx31Y
    • PAY WHEN PAID PAY IF PAID JOINT CHECK AGREEMENTS BANKRUPTCIES DELAY DISPUTES & DAMAGES WORKMANSHIP DISPUTES CHANGE ORDERS SCOPE OF WORK ISSUES CODE INSPECTION VIOLATIONS PREVAILING WAGES
    • An epic battle between contract and policy
    • Mechanics lien laws provide contractors remedy in event of non-payment 1791 Notice Claim Provisions now appearing in contracts with strict claim periods. Contracts start to include “pay when paid” clauses. Courts say this is only a “timing” clause 40’s Contracts start to include “no lien clauses.” Courts void these provisions as anti-public policy 60’s 80’s “Pay when paid” turns into “pay if paid.” Many courts declaring this void as against public policy. 2000
    • Mechanics Lien Rights ! Payment bond requirements ! Contractor license bonds (i.e. WA) Laws Protecting Subcontractors & Suppliers ! Misappropriation of funds laws and criminal statutes ! Contractor payment timing laws
    • Mechanics Lien Rights Laws Protecting Subcontractors & Suppliers ! Payment bond requirements ! Contractor license bonds (i.e. WA) ! Misappropriation of funds laws and criminal statutes ! Contractor payment timing laws No Lien Clauses ! Pay When Paid Clause ! Pay If Paid Clause ! Notice Claim Provisions ! Retainage Requirements Owners / GCs Attempt To Shift Risk With Contract
    • Mechanics Lien Rights ! ! ! ! Payment bond requirements Contractor license bonds (i.e. WA) Laws Protecting Subcontractors & Suppliers Misappropriation of funds laws and criminal statutes Contractor payment timing laws No Lien Clauses ! ! ! ! Pay When Paid Clause Pay If Paid Clause Notice Claim Provisions Retainage Requirements Judges (usually) tip the scales back to subs & suppliers Owners / GCs Attempt To Shift Risk With Contract
    • Liens were created to protect subcontractors and suppliers.
    • Notices were created to protect owners and general contractors.
    • Liens were created to protect subcontractors and suppliers. You can be fined or charged with a crime for not sending some notices. TN, CA, AZ, NV, WA, OR... Notices were created to protect owners and general contractors.
    • 1. History and Purpose Of Notices 2. What GCs and Owners Do With Notices! 3. What this means to you! 4. The Results
    • 1. History and Purpose Of Notices 2. What GCs and Owners Do With Notices! 3. What this means to you! 4. The Results
    • Use Software to manage “financial risk” - which is the risk of lien
    • GCs and Owners Track Who Does And Does Not Send Notices
    • Track Preliminary Notices
    • If not Textura, they are using something to distinguish between those who do and do not send preliminary notices.!
    • 1. History and Purpose Of Notices 2. What GCs and Owners Do With Notices! 3. What this means to you! 4. The Results
    • PRIORITIES
    • Smart Companies Always Send Preliminary Notices Because they prioritize your invoices above others.
    • Smart Companies Always Send Preliminary Notices
    • 1. History and Purpose Of Notices 2. What GCs and Owners Do With Notices! 3. What this means to you! 4. The Results
    • 6% As preliminary notice policy implemented at Graybar, percentage of projects that need a lien to get paid falls from almost 6% to <1% 4% 2% 0% 2011 2012 2013 % of Projects Liened
    • 50% Again, more preliminary notices means less payment problems, and therefore, less liens. 38% 25% 13% 0% 2010 2011 % Projects Noticed 2012 2013 % Projects Liened
    • Secure your debt.
    • START OF YOUR WORK END OF YOUR WORK Secure your lien rights with a Preliminary Notice. This is sent right when you begin furnishing. 30 DAYS PAST DUE 90 DAYS PAST DUE
    • START OF YOUR WORK END OF YOUR WORK 30 DAYS PAST DUE Send a notice of intent to lien after work is completed and you are unpaid. 90 DAYS PAST DUE
    • START OF YOUR WORK END OF YOUR WORK 30 DAYS PAST DUE 90 DAYS PAST DUE File your lien or bond claim.
    • Recap ! 1) Preliminary Notices Benefit The Owner, Not You ! 2) GCs / Owners Expect Them, and Manage Them ! 3) You will not scare away customers 4) It will prioritize your invoice ! 5) It will protect you in the event you are unpaid
    • Secure your debt. Always get paid. it’s really that simple
    • • 2 Emails Per Week For 6 Weeks ! • Credit & Collection Policy Tips ! • How Successful Credit Professionals Increase Revenue And Decrease Risk Free! http://zlien.us/6week-creditpro
    • scott@zlien.com