Thursday, May 4, 2017

Who are you getting into bed with?


Know who you are sleeping with

Before bidding on a new job or starting a new project with an unfamiliar customer, ask yourself, “Who am I getting into bed with?” Another way to ask this question, in nicer terms, is “What do I really know about this potential customer?”

Many companies operate on good-faith, established relationships or are doing business to help a “friend”; however, sometimes this can come back to bite you. Just because you think you know someone doesn’t mean you know their credit and financial history.

What skeletons are in the “credit closet”?


As a credit grantor, it is important to know what is in your customer’s credit closet. Have they previously gone bankrupt? How quickly are they paying their trade suppliers? Are there any ongoing legal or collection items? Everyone starts a job with the idea they are going to be paid for the work they provide. Sorry to tell you, this doesn’t always happen! Imagine going on a blind date – how do you know what you are in for? You would probably check the person out a bit before just to get an idea of who they are. You should do the same thing in business. Check out your customer before to avoid “going on your blind date”.

The risk you are taking by not checking your potential customer can have devastating effects on your business.  To help you truly understand the magnitude of this discussion, one must know a few basics about your business. Basics like: net margin (profit after tax) and cost of customer acquisition (how much does it cost you to get a new customer). Let’s look at how this would play out.

According to Home Builder Magazine*, the projected profit margin in the Canadian Residential Construction Industry in 2017 is 3.3% ** For example, if you were supplying $50,000 worth of work to a job and all of a sudden your customer cannot pay you or goes out of business, you are potentially out the full $50,000. That means you need $1.5 Million in new sales to make up for the loss if you have a 3.3% profit margin ($50,000 x 3.3% = $1.5 Million). That is a lot of ground (30 new $50,000 projects) you need to sell to cover the original loss. This doesn’t include your new client acquisition costs for the 30 new jobs!!! As you can see, even one loss can significantly impact your business.
   

Practicing “safe credit” to avoid surprises


There are tools you can use to protect yourself, in the beginning, to help mitigate potential payment issues in the future. As a business, you want to do anything you can to make a sale because you want to make money. A credit check on your customer before you started work could have told you how quickly they pay or if your customer has financial troubles currently or in the past. Credit Checks and tools such as Construction Project Credit Reports are a small price to pay if it means you could avoid a financial loss.

Just because they are a nice person doesn’t mean they necessarily know how to manage a checkbook.

Credit checks allow you to analyze your customer’s credit potential. What is their capacity to pay you and how quickly will you get paid? There are several credit checks available depending on how thorough you want to be. A basic credit check will determine your customers’ credit-worthiness by assessing a customer’s credit bureau, conducting a bank check, trade reference checks, and analyzing trade payment history.

If you are going to do work on a new project and do not know the parties involved, a Project Intel Report will give you a full overview. Project Intel Reports provide full credit checks on your customer. Company profile reports on both your customer and the general contractor tell you who you are working for and who is running the company. Project/property reports outline, in advance, if the project you are working on has any existing builders’ or construction liens, legal action or other registrations against it that may impact the project.

Professional credit managers know and understand the need for credit checks and project analysis. They want to do everything in their power to ensure you do not miss out on any opportunities and avoid getting burned.

Lien-Pro Inc. provides one-stop credit and collection services for the construction industry. We have the project spectrum covered:
Beginning: Credit Checks, Project Intel Reports, and searches

*http://www.homebuildercanada.com/ 
**http://www.homebuildercanada.com/_images_Pub/20130511_ind_outlook.pdf 

Wednesday, April 12, 2017

Notice of Furnishing

How does it benefit me?


A notice of furnishing is a letter sent on your behalf letting your customer, general contractor and owner know that you are working/providing goods and services on site and that you expect payment in accordance with the terms of your contract. Notice of Furnishing is also known as a Pre-Lien.

Sending a Notice of Furnishing establishes communication that benefits everyone. There are no surprises to the owner of the property – they know which contractors are involved in their project and can manage their cash-flow properly and better manage their relationship with the general contractor.  The general contractor is made aware of your involvement (you could be a sub of a sub-contractor and may not know who you are or that you part of the project). Your customer (if different than the GC) will know you are managing your accounts correctly and you are demonstrating attention to detail and you are providing your goods/services as agreed and you expect them to do the same.

What does Notice of Furnishing (Pre-Lien) do?


Who – Send the notice to your customer! Depending on the type of Notice of Furnishing you wish to send, notice can be sent to the property owner(s) of the project and the General Contractor.

What – The notice will outline the work provided, state the amount owing (if any), request bonding and project financing information, and remind of your rights (lien, collections, legal, etc.) in the event of non-payment. The notice is a reminder to your customer and those involved in the project that you expect your account to be managed properly and paid on time.

When – Send the Notice of Furnishing at any time during the lifecycle of the project.  Send before a project starting, during your supply of work and materials to a project, or send the notice after your work has finished as a way to finalize your account.

Where – It is recommended to send the Notice of Furnishing on a per project basis. By sending notice to each of your projects you can gather all important information (project financing, bond info, etc.) about your specific job. You are also able to ensure notice is sent to the appropriate parties involved on a specific project.

Why – Using the Notice of Furnishing will help promote prompt payment of current and future invoices. Let your customer know that work is occurring, you expect payment, & reserve your right to take action if payment is not received. You are simply conducting good business.



The notice is a non-threatening way to let your customer and those involved know that you are a professional and manage your receivables effectively and you expect the same in return.   If your account is already past-due, a Demand Letter (Notice of Intent to Lien) may be a better alternative as it is a more serious letter outlining your intent to lien if payment is not received on your account.

The benefit to using a lien filing agent to send all of your notices is that all communications are going out on the lien agent’s letterhead. This is a subtle way of letting everyone know that you have the systems in place to manage and protect your cash flow.

Tuesday, April 4, 2017

Ontario – No “Do It Yourself” Paper Lien Filers Allowed



As of October 11, 2016, Land Registry Offices (LRO) across Ontario have stopped accepting paper format Construction lien documents. All documents must now be submitted electronically. Individuals and companies who have previously completed their Construction lien paperwork and physically taken it to a land registries office will no longer be able to file their liens. All documents submitted for registration must be submitted electronically unless the number of properties and parties exceeds the electronic system’s requirements. The only way to file your lien by paper is if the total number of people you are filing a lien against is more than the LRO’s electronic system can handle. How often does that happen?!

Nobody Likes Rejection

Many customers are calling our office because they had gone to the trouble of preparing their lien claim (pulling the land title information, researching their property, completing the construction lien application, and took time off work to go to the LRO) only to be rejected by the land title clerk. The clerk would not accept their lien as it now must be submitted electronically. How much time have you put into completing your lien and making sure it is accurate before the lien deadline only to be turned away at the final step? Talk about frustrating!!

The clock is ticking. What are your options?

Your options are to find a lawyer, use lien agent, or begin your application to get access to file electronically (credit check, background check, police check and valid Errors & Omissions Insurance required).

Lawyer – Select a lawyer with previous construction lien experience. They will be able to assist with the lien filing and lien perfection (legal action) should you require it. Lawyers maintain professional liability insurance for your mutual protection.

Lien Agent – An agent must have direct access to the land registry system and a lot of experience to make sure your lien is filed correctly and on time. Like a lawyer, a lien agent must also maintain professional liability insurance.

Self (Electronically) – Once you have an electronic land title account (approval typically takes several months) you will have direct access to file your lien. To successfully file your lien you must take the time to fully understand the electronic land titles system. Unlike lawyers and agents, you likely do not have professional liability insurance to protect you from making mistakes.
For most contractors and suppliers, their first thought is to find a lawyer to help them; however, they hesitate as the cost of using a law firm can make a bad financial situation worse whereas lien agents are fast and economical.  Some even offer guarantees to file a lien on time and accurately or its free.

About the author:  Alysia Lohner is Vice President of Lien-Pro Inc. (https://www.lien-pro.com/), Canada’s first national Construction and Builders’ Lien Agent. For almost ten years Alysia and her team have been providing contractors and suppliers with fast and affordable lien filing services. At Lien-Pro, our trademark is It’s Time To Get Paid™ 

Wednesday, March 8, 2017

4 Things You Need to Know About Liens in Manitoba

   

With all due respect to our Manitoban brethren, up until the last five years or so, the province has been a beautifully quiet place that the rest of the country flies over living their busy lives; however, this is no longer the case. Oil and gas development (most noticeably pipelines) along with some larger infrastructure projects have shone a spotlight on the region.

     This new growth exposes all kinds of deficiencies in systems, processes, and risk management policies. In the world of construction and provincial lien procedures, this couldn’t be truer. Here are some of the differences you can expect:

1.    There is no centralized Land Title Registry. The province has multiple land districts, and you must determine the location of your project before you can obtain land ownership information.

2.    Each Land Registry is completely manual. Requests for a title search must be faxed to the registry, and then you must wait for a reply. There is no service level guarantee as to how quickly requests are processed.

3.    Not all Land Registries are located in urban centers; making delivery of documents for on-time filing difficult. Major courier companies do not make daily trips to some locations. If you are up against tight deadlines, you may not have enough time.

4.    The pace of business and sense of urgency. Because of its relatively new economic growth, many local service firms and government agencies have yet to invest in additional capacity, making fast lien filing, lawsuits, and quick post-judgment enforcement difficult at best. If one is used to particular turnaround times in other provincial jurisdictions, be prepared to learn patience.

If you suspect you may require lien filing services in Manitoba, we recommend starting early. Waiting till the last couple of business days usually results in disappointment. Further, we recommend partnering with a lien filing agent or legal practitioner that has the experience and capacity necessary to manage and successfully file your claim.

At Lien-Pro our guarantee is simple: “Your Lien Will Be Filed Correctly and on Time, or It’s Free.”

It's Time to Get Paid

Tuesday, November 8, 2016

How to Choose a Lien Filing Agent

When it comes to lien filing you want a service provider that is able to file your lien on time and correctly. These should be their top priorities. You need to choose a provider you will feel comfortable with knowing they will get the job done.

Selecting a lien agent can be overwhelming – there are many different options for agents, each will provide you with a wide range of information, services and prices. So what is the difference between lien filing agents? How do you know which option is right for you? What can your agent do for you and what are you really paying for?

Consider these few questions when determining which agent is your best choice.

1.  Know the basics – How long has the lien agent been in business? Who are they and what do they do? Do they know what they are doing or are they “practicing” with your money?

2.  Does your lien agent have the knowledge and experience to get your lien filed on time and correctly? Liens can be complicated – what type of project are you working on – a house, a commercial building, a condo, a tenant, oil & gas field work? All of these situations have different rules and options when it comes to filing a lien. Does your agent know how to approach these situations or do they have the idea that all liens are the same and are easy?! Experienced lien agents know how to get your lien filed correctly, regardless of circumstance. You should feel confident in your agent’s abilities and let them worry about the technicalities of each property type, after all that’s why you are hiring them!

3.  What additional services does your agent provide to help you during the lien filing process? A quick Google search will show you that some agents are “jacks of all trades”, trying to do it all personal services, lien filing,  I.T. and who knows maybe they are also good at changing your tires.  How confident does it make you feel and are you their priority? Your lien agent should be able to assist and provide helpful information and services to guide you along the lien process. You want to feel safe knowing that you are going to be taken care of.

4.  Is your lien agent insured?  And what happens if a mistake or error is made on your lien claim? Errors and Omissions (E&O) Insurance (also known as Professional Liability Insurance) is critical to any serious professional services firm. In the event a mistake or error is made on your lien claim, you will be protected from potential financial loss or law suit if your lien agent has Errors & Omissions Insurance. Find an agent that will protect you and your claim.

5.  What coverage can your lien agent provide?  Do you do work throughout Canada? Make life simple and choose a lien agent that is able to assist you wherever in Canada you are working. With a nationwide lien agent you do not have to worry about finding someone that can help you for province you work in. One service provider for all your lien filing needed makes doing business hassle free.

Lien filing can be tough – you need someone you can count on to get the job done and you can trust!
  

At Lien-Pro we specialize in lien filing across Canada – filing liens is all we do! 

We get your lien filed on time and correctly or it’s FREE. It is our guarantee to you. 

Wednesday, March 16, 2016

2 Questions You Should Ask Before Filing a Construction Lien

via Pexels.com

Construction liens (also known as Builders’ Liens or Mechanic’s Liens) have the greatest influence over two things – land and money. Ideally once a construction lien is filed the land will not be sold and the money/financing for project is going to stop flowing. After the lien is filed, the people managing the project are going to want to address your resolve your construction lien and non-payment issue right away because the project’s funds are held up and/or the sale of the property is delayed. 

If you are thinking about filing a construction lien, consider the following two questions:
1.       Does the project have ongoing financing?
2.       Is the property going to be sold in the near future?

Your answers to these questions will help determine if you are a good candidate to file a construction lien.  If you have answered YES to either of these questions, you are in a potentially powerful position if you file a construction lien. After you file, your construction lien will have influence over the project by either tying up the financing or delaying the sale/transfer of the property.  This will result in a higher probability that your non-payment issue will be dealt with. Liens help get you to the negotiating table.

If you have answered NO to both questions, your construction lien may not have the desired effect and power over the situation that you are hoping for. If you file a construction lien it could potentially just sit there – there is no urgency to resolve your lien. The project stakeholders are not being directly impacted by your construction lien because the financing and/or the sale of the property is not directly affected.

Registering a construction lien is not for everyone, therefore; there are alternative collection tools you can consider. Third party collections or initiating legal action through either small claims or superior court (depending on your situation) may be a better option for you. Both collections and commencing legal action can be beneficial resources to utilize to aid in the recovery of your money.


If you are still uncertain about filing a construction lien, we are always available to consult with you.  Simply give us a call to discuss your situation. We can help provide clarity and assist you with finding the most suitable option for you. 

Let’s get you paid!

Monday, March 7, 2016

How to Find Your Builders' Lien Deadline

    Photo by: Sonja Langfod via Unsplash

Your eligibility to file a builders' lien has one major factor – timeline. The builders’ lien (also known as construction liens or mechanic’s liens) filing timelines, as set by each province, govern your ability to file a builder’s lien. From the moment you finish working on a project, it is essential for you to keep proper track of your lien filing deadline. NOTE: It is important to remember that your lien timeline is calculated from the last date you were on site providing work, services, labour, etc. or from the last date you supplied materials to a project. The date of your last invoice does not count toward your lien timeline. Deficiency work also does not extend your lien rights.

Once you are past your builder’s lien deadline, you cannot extend it.

Each province has different timelines to file a lien, outlined in their corresponding provincial acts – Builders' Lien Act, Builder’s lien Act, Mechanic’s Lien Act, etc. It can be difficult to keep track of the different rules and timelines for every province.

To make it easy for you we have created our Lien Calculator. Our lien calculator helps track your lien timeline and calculate the last day you are eligible to file a builders’ lien. Use the calculator by simply selecting the province where the work was performed and inputting your last day on site. Our calculator will generate the details and timeline for your lien. The calculator will determine how many days you have been off site and provide you with the exact date you must file a builder’s lien in order to preserve your lien rights.

If you are still within your lien period (deadline to file has not passed) you are eligible to file a lien. Lien filing is another tool in your collections toolkit. Not all situations will benefit from filing a lien. Feel free to contact one of our knowledgeable staff for a consultation if you are unsure of your lien deadline or to discuss your situation.