Shifting Financial Risk: Take Your Company's Neck Off The Line

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In the construction industry, property owners and general contractors try to shift the risk of non-payment or financial hardship down the contracting lien to subs and suppliers. Laws are in place, however, protecting these parties and enabling them to fight back.

Let us show you why your company is at risk, and how to offset that risk.

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Shifting Financial Risk: Take Your Company's Neck Off The Line

  1. 1. Taking Your Company’s Financial Neck Off The Line
  2. 2. Construction Credit Knowledge Every Wednesday
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 zlien.us/z-web
  3. 3. Shifting Financial Risk There are many contractually based risk shifting mechanisms, but the most sure method is using mechanics lien and bond claim laws. ! Here is why.
  4. 4. Thomas Jefferson introduced the first mechanics lien legislation.
  5. 5. And You Don’t Get Paid For It If You Build It You Can Have It
  6. 6. America believes that trade contractors and suppliers should get paid.
  7. 7. America believes that GCs and Owners should shoulder the burden of a project’s financial risk.
  8. 8. 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
  9. 9. 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
  10. 10. An epic battle between contract and policy
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. An epic battle between contract and policy
  16. 16. America believes that trade contractors and suppliers should get paid.
  17. 17. Liens were created to protect subcontractors and suppliers.
  18. 18. Liens were created to protect subcontractors and suppliers. To shift financial risk away from the trades and suppliers….
  19. 19. Notices were created to protect owners and general contractors.
  20. 20. Notices were created to protect owners and general contractors. To shift financial risk back down the contracting chain.
  21. 21. Notices to general contractors. How? To shift financial risk back down the contracting chain.
  22. 22. What do GCs and Owners do with preliminary notices?
  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. What this means to you.
  28. 28. PRIORITIES
  29. 29. Smart Companies Always Send Preliminary Notices
  30. 30. Smart Companies Always Send Preliminary Notices Because they prioritize your invoices above others.
  31. 31. Secure your debt.
  32. 32. 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
  33. 33. 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
  34. 34. START OF YOUR WORK END OF YOUR WORK 30 DAYS PAST DUE 90 DAYS PAST DUE File your lien or bond claim.
  35. 35. • 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
  36. 36. Ask Us!

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