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Upon completion of the job, authorize signed documentation of satisfactory completion and issue resolution if it would further protect your interest. Any extra work requested above the original scope needs to be directed to your site foreman. He or she will relay requests back to management to obtain a signature for authorization of work and the price increase to reflect the change. Do not proceed if this cycle is broken or if you are pressured to do work without the documented authorization. If design drawings are needed, do not proceed to build until an authorized signature has been obtained before the build. This rule should apply to vendors and manufacturers as well. Keep a journal for every job, and log daily activities along with any issues that arise. Also, keep a labor log to reflect and establish the first and last date on the job to secure your lien rights should you need to file. Documentation will help further secure your interests and justify your case should there be any issues. Those without documentation are at risk. Unscrupulous Debtors As soon as an unscrupulous debtor realizes that you are being lenient, he or she will take advantage of you. He or she will look for ways to back-charge you, penalize you, and hold the money as long as possible, or simply not pay at all until it's required. Some people think that once they have it (whatever "it" is), they own it. Only a small percentage of people pay on time as required Days 0 days 15 days 31 days 40 days 45 days 50 days 60 days 70 days Action Invoice/statement sent How are we doing letter 1st past due letter Collection call #1 Collection call #2 Termination of credit letter in 10 days Collection call #3 and send 10-day final demand Place 5-, 7-, or 10-day demand letter with agency before collection efforts begin* Table 1. Internal Flow *The demand letter gives you third-party intervention. The demand will be sent out on the collection firm's letterhead with instructions for the debtor to send payment directly to you. Many agencies do not offer this service, so do your research to find one that does for free. and do good business. To plan for the non-payers, take the following measures: • Conduct a weekly review with your credit managers to determine if any red flags have arisen, so you can initiate your collection efforts immediately. • Get deposits if you can. • Make sure your payment applications are submitted on the due dates required. • Obtain confirmations that payment applications have been delivered or send certified to ensure delivery. • Check with other trades your clients are doing business with; check their references. Protecting Yourself Business is like a game of chess; you have to make a move. Ask yourself a few questions: What resources do I have? What leverage do I have? Do I know the lien laws in my area and the time frames required for documents to be filed? Use an open source search engine, the library, or state website to acquire information, or simply seek counsel that specializes in construction law. Even if you are familiar 30 CoatingsPro g July 2013 with the process and have successfully filed liens internally, you must stay abreast of the changes in your state, as some states' lien laws change frequently. Seek counsel if you are not familiar with the lien laws. The requirements differ for each state and for commercial or residential jobs. Generic services provide documents for filing, but if you are not familiar with how to use them, do not pursue. Seek counsel instead. If liens are filed improperly, they will be deemed frivolous and can end up costing you a countersuit along with damages. In some cases, this can add up to over three times the amount you were initially seeking. If you are unable to obtain documented payment arrangements or good-faith payments and your internal efforts have failed, seek outside assistance within 70-90 days or sooner depending on the time frames involved in securing your lien rights. Consider adopting the internal flow seen in Table 1 as standard business practice (adjust to 70 days to get the best results in today's business climate). Third-Party Assistance Options Reaching out to a commercial collections firm that specializes in the construction industry and that is licensed in all 50 states minimizes your risk of throwing good money after bad. It's even