Managing money going in and out of a construction or material supply business can be a very demanding occupation. Construction projects are huge cash suckers, and since getting paid often relies on money trickling down through other parties on these projects, collecting money for your furnished materials or labor can require patience.
It’s inevitable you’ll have aging accounts. It’s inevitable you’ll have write-offs. It’s inevitable you’ll need to commit substantial resources to collecting debts and tracking down payments. Or is it?
If you think these are unavoidable industry problems, you’ll be surprised to know there are many controllers, CFOs and accounting departments that never have accounts receivable aging or problems. This post gives a few reasons why.
Savvy Controllers Aren’t Afraid To Use Mechanics Lien & Bond Claim Laws
[quote style=”boxed” float=”right”]Savvy controllers know the facts about notices and mechanics liens, and they aren’t defensive or afraid to preserve their company’s lien rights.[/quote] Too many in the construction industry are simply afraid to use the mechanics lien and bond claim remedies available to them. They fear retribution of withholding future contracts, or of spoiling relationships with other parties on the project.
Here are some commonly heard lines:
- “I’ve been doing this for X number of years and have never had a payment problem.”
- “We do lots of business with our customers and they always pay.”
- “We don’t want to upset the good relationships we’ve built with a party by sending notices and liens.”
There are a lot of flaws with this logic, and savvy controllers see right through the defensive mindset.
If a company has never had (and never will have) a payment problem, they don’t need a controller. If you’re customers always pay, you’re extra vulnerable for the occasion when they finally don’t. And so on and so forth.
The fear that you’ll spend relationship capital by preserving and exercising your mechanics lien rights is an unfounded fear. We’ve written about this in the past (Justify Sending A Preliminary Notice On Every Project).
When a preliminary notice is required, contractors and property owners are receiving hundreds of them! Heck, in some jurisdictions, you can even be fined for not sending a preliminary notice. Your notice is a fact of life for the project, and won’t raise a single eyebrow.
Savvy controllers know the facts about notices and mechanics liens, and they aren’t defensive or afraid to preserve their company’s lien rights.
Savvy Controllers Understand Nuances In The Lien Laws
The mechanics lien and bond claim laws are super complex and technical. Mastering these laws on a national level is an undertaking, as even a mastery on the state level is complex. There are many, many attorneys who struggle with the mundane and voluminous requirements found in these statutes.
[quote style=”boxed” float=”left”]What savvy controllers understand are the big picture principles that run throughout each state’s laws.[/quote] It’s impossible (or impractical) for any controller to know everything about mechanics lien laws. What savvy controllers understand, however, are the big picture principles that run throughout each state’s laws.
For instance, a savvy controller understands the difference between filing a claim against a private, state and federal project. A savvy controller understands how mechanics lien deadlines are generally calculated, and knows that the lien period may or may not include punchlist and warranty type work.
While the details with each state’s laws change, there are general principles that shine throughout, and understanding these basic principles will put you ahead of the mechanics lien and bond claim requirements on most occasions. Plus, savvy controllers rely on a mechanics lien and preliminary notice service like zlien to help them wade through the requirements, calculate deadlines and manage claims.
Savvy Controllers Pull The Trigger and File Liens
[quote style=”boxed” float=”right”]All of the preparation and know-how is worthless if you’re not ready to pull the trigger and file a mechanics lien or bond claim. [/quote] All of the preparation and know-how is worthless if you’re not ready to pull the trigger and file a mechanics lien or bond claim. When debts go unpaid and deadlines come knocking, savvy controllers know how to pull the trigger and file their mechanics lien claim.
The relationship with the customer may be great, but sometimes whether your company gets paid isn’t up to your customer. It’s up to the general contractor, the owner or the lender, or it may be held up because a subcontractor has a workmanship problem on the job that isn’t your fault.
Relationships need not disintegrate when liens are filed.
Liens can be filed in an amicable manner, and sometimes, it’s necessary to just talk to the customer and give them the “it’s not personal, it’s business” line. Because it’s not personal, and it is business, and savvy controllers understand that unless they want a dent in their accounts receivables report, looking past personal likes and dislikes and focusing on sound business decisions is key.
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