In Tom Reber’s book, Winning the Contractor Fight, he refers to the idea of having enough money to run your business without the stress and worry of oxygen. Just like we need oxygen to live, our businesses must have oxygen to survive. Creating a consistent collection strategy before there’s ever an issue of collecting your money is one of the best ways you can make sure your business never runs out of oxygen. Here’s why you absolutely must collect your money!
The Biggest Legal Land Mine of All: Losing Your Lien Rights
We once represented Super Concrete Subcontractor (“SCS”). They were so busy it was difficult to finish their work on schedule. Even though they were constantly busy, they had one huge problem: they were broke. They had no money in the bank and were constantly worried about making payroll—but this made no sense. How could they be so busy and have no money?
It all clicked when we saw their open invoice report. SCS was due over $600,000 that was more than 90 days old. All their cash was being used to finance other people’s projects and not their own business. The more serious issue was that they had lost their lien rights for all the money more than 90 days old because they had not sent the notices required by their state.
Creating a Consistent Collection Strategy
Our team got to work at once, trying to collect the money that was more than 90 days. We also set up a consistent collection strategy that solved their cash flow issues and protected SCS’s lien rights. We fixed their cash flow issues for the future, but there was still pain involved when collecting on the past projects.
But unfortunately, we could not collect $100,000 from projects more than 90 days old because they did not have lien rights anymore. If they had the strategy in place before collecting their money had become an issue that $100,000 would be in their pocket, not written off as bad debt.
Don’t work for free
Collecting what is yours is crucial to the livelihood of your business. We have a team ready to take your call to protect what is yours, collect what is yours, and educate yourself on the front-end!
Why Collect the Money You’re Owed?
You have a responsibility to your company, all the people who work for you, and your family to collect the money you are owed. They are all depending on you. Creating and implementing a collection strategy before collections become an issue is essential to ensuring everyone who depends on you is taken care of. Your business needs oxygen (income) to survive—and knowing how to collect your money is essential for the health of your business.
What Does a Consistent Collection Strategy Look Like?
A consistent collection strategy is based on your business and the state that you live in. What does your contract say about when payment is due? What happens if that payment is not made on time? These are crucial questions you must understand to create a specific collection strategy based on your cash flow needs.
Give us a call and we can develop a foolproof collection strategy for your business. You can hire us for one predictable flat rate, and we will be your collection department. Speak with our Lien and Collections Team today at 713-715-7334.