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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-...
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 Ti...
PAY WHEN PAID
PAY IF PAID
JOINT CHECK AGREEMENTS
BANKRUPTCIES
DELAY DISPUTES & DAMAGES
WORKMANSHIP DISPUTES
CHANGE ORDERS
...
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
con...
Mechanics Lien Rights
!

Payment bond requirements
!

Contractor license bonds (i.e. WA)

Laws Protecting
Subcontractors &...
Mechanics Lien Rights

Laws Protecting
Subcontractors &
Suppliers

!
Payment bond requirements
!
Contractor license bonds ...
Mechanics Lien Rights

!
!
!
!

Payment bond requirements
Contractor license bonds (i.e. WA)

Laws Protecting
Subcontracto...
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
...
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
al...
50%

Again, more
preliminary notices
means less payment
problems, and
therefore, less liens.

38%
25%
13%
0%

2010

2011

...
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...
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 ar...
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...
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 R...
scott@zlien.com
Preliminary Notices: The Secret Sauce For Your Credit Department
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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 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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Transcript of "Preliminary Notices: The Secret Sauce For Your Credit Department"

  1. 1. Preliminary Notices Secret Sauce To Credit Departments
  2. 2. Construction Credit Knowledge Every Wednesday
 1pm CST
 
 Signup At:
 zlien.us/z-web
  3. 3. 1. History and Purpose Of Notices! 2. What GCs and Owners Do With Notices! 3. What this means to you! 4. The Results
  4. 4. WHY?
  5. 5. WHY? Thomas Jefferson introduced the first mechanics lien legislation.
  6. 6. No one was willing to build out Washington D.C. because they were afraid of not getting paid
  7. 7. And We Don’t Pay For It If You Build It You Can Have It
  8. 8. This would have never worked pre-America, because land ownership was reserved for aristocrats. America, however, was land-rich.
  9. 9. America believes that trade contractors and suppliers should get paid.
  10. 10. America believes that GCs and Owners should shoulder the burden of a project’s financial risk.
  11. 11. 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
  12. 12. 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
  13. 13. An epic battle between contract and policy
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. 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
  18. 18. Liens were created to protect subcontractors and suppliers.
  19. 19. Notices were created to protect owners and general contractors.
  20. 20. 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.
  21. 21. 1. History and Purpose Of Notices 2. What GCs and Owners Do With Notices! 3. What this means to you! 4. The Results
  22. 22. 1. History and Purpose Of Notices 2. What GCs and Owners Do With Notices! 3. What this means to you! 4. The Results
  23. 23. Use Software to manage “financial risk” - which is the risk of lien
  24. 24. GCs and Owners Track Who Does And Does Not Send Notices
  25. 25. Track Preliminary Notices
  26. 26. If not Textura, they are using something to distinguish between those who do and do not send preliminary notices.!
  27. 27. 1. History and Purpose Of Notices 2. What GCs and Owners Do With Notices! 3. What this means to you! 4. The Results
  28. 28. PRIORITIES
  29. 29. Smart Companies Always Send Preliminary Notices Because they prioritize your invoices above others.
  30. 30. Smart Companies Always Send Preliminary Notices
  31. 31. 1. History and Purpose Of Notices 2. What GCs and Owners Do With Notices! 3. What this means to you! 4. The Results
  32. 32. 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
  33. 33. 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
  34. 34. Secure your debt.
  35. 35. 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
  36. 36. 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
  37. 37. START OF YOUR WORK END OF YOUR WORK 30 DAYS PAST DUE 90 DAYS PAST DUE File your lien or bond claim.
  38. 38. 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
  39. 39. Secure your debt. Always get paid. it’s really that simple
  40. 40. • 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
  41. 41. scott@zlien.com
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