We get it, legal stuff isn’t easy, especially for people just like you in the construction business who probably didn’t go to law school. (But on the other hand, how lucky are you that you didn’t waste 3 years and tens of thousands of dollars on a pricey legal education!)
The people who write laws definitely don’t make it easy on those who need to follow them, and when someone you do business with starts using a bunch of legal jargon, it can sound like a foreign language.
Construction Is Dependent on Legal Documents
The construction business is especially dependent upon legal documents such as contracts, notices, and waivers, but it’s often hard to know what you need to send, why you need to send it, and even who you need to send it to. When it comes to preliminary notices, we know no one wants to muddy a good business relationship or scare off a new customer by sending a harmless document and we understand that this fear causes many contractors to skip sending preliminary notices altogether.
However, we can assure you that not only will you get paid faster by sending notices, you’ll also maintain good business relationships. The truth is that preliminary notices benefit both the senders and the recipients. In fact, by sending notices, you may end up with a whole list of people ready to thank you.
The People Who Will Thank You
1. The Property Owner
Typically, the property owner is the one with the money, but they’re only in contact with one or two of the many parties on a construction job. Generally speaking, the property owner isn’t not going to have a direct relationship with any of the project participants below the general contractor.
Additionally, as much as the typical subcontractor or supplier wants to avoid the cost and time required to file a lien, the property owner wants to avoid being surprised by one even more. Sending a preliminary notice is the best way to let the owner know you need that you’re involved on the project and need to be paid.
levelset’s customer data show that 90% of preliminary notices are sent by a party below the GC (right), and this is often the only way these companies can identify themselves to the property owner. They will will be happy to know you’re on the job up front rather than finding out through the court system after the job is long completed.
2. The General Contractor
Whether you were hired by the general contractor on the project or not, the GC undoubtedly plays a big role on any construction project. And the benefits the GC gets when they receive preliminary notices on a project are much the same as the benefits for the project owners: the prospect of a “hidden lien” from “hidden participant” is all but eliminated by receiving notice. Uncertainty in business is almost always a bad thing, and by sending notice to the top-of-the-chain project participants, you will help them to gain a much fuller picture of everyone that’s participating on the project.
3. Your Boss
No matter how much you have on your plate, if you’re responsible for your company’s receivables or collections, then your performance reviews are probably based in large part on the amount of money you’re able to get in the door, along with the time it takes for you to get that cash in hand. You don’t have time to hit the pavement and hassle customers, and your boss definitely doesn’t want to have to step in.
Preliminary notices help to keep the money flowing in quickly since the people you send notice to will prioritize your payments over the payments to other companies (that didn’t send notice).
Bonus: Your Friends and Family
Whoever said “money doesn’t buy happiness” certainly wasn’t responsible for collections! Clichés are true for a reason, and money really does make the business world go ‘round.
Whether you’re doing it for your own business or your employer’s, getting paid on projects promptly could be the difference between a staycation or a vacation, between the nosebleed section or seats right on the 50 yard line.
All kidding aside, we would never suggest preliminary notices are the key to happiness, but if you’re getting paid faster, you can pay the benefits forward to others in your life. Being happy at work can do wonders for your happiness in the areas of your life outside of work, and nothing makes someone in business happier than getting paid!
Ready to Get Started?
Now that we’ve convinced you to start sending notices, the next step is figuring out how to prepare your form with the right information. Fortunately, levelset has free forms and templates for all your notice needs and a JobSight team overflowing with research skills and project information that will help you fill them out. Find out how you can cross “get paid” off your to-do list and go back to focusing on what you do best.