In the state of Florida, subcontractors must send a notice to owner (preliminary notice) to secure lien rights, but general contractors don’t need to do so. For contractors who work as both a GC or a sub depending on the job, keeping track of notice requirements is difficult. However, sending preliminary notices on all of your jobs even when they’re not required has real benefits.
A Florida-based window and door installation company started sending out notices on all of their jobs, and their average DSO (days sales outstanding) went from 60 days down to 14 days.
Joan Elmore, the human resources and accounting specialist at the company, shared the story of what her job was like before sending these notices and the impact she had on the business after sending them.
Before sending notices on every job
When Joan started in early 2019, the accounts receivable side of the business was somewhat unorganized. There were several outstanding bills, and Joan was responsible for attempting to collect these overdue payments.
“They asked me to call these overdue accounts and see what I could collect. It was so overwhelming, and we were past our lien rights on so many of those jobs,” Joan said.
At this time, their average payment collection time was 60 days, and there were also several payments that were close to a year overdue.
“I knew about notices and liens, and so did the rest of the company. But, they were just so overwhelmed in the office,” explained Joan. “They were so busy that when they would prepare to file a lien, they would realize they were past the lien deadline. It was so daunting to keep up with these deadlines, and the process was a mess.”
In fact, Joan felt that her biggest challenge at the time was trying to remember when she needed to send the preliminary notice — since they are only required when her company is hired by another contractor, but not when they are hired by the property owner. Basically, she had to keep track of two different workflows for two different types of jobs.
“I was only sending those notices when we were contracted to a general contractor. If we were the general contractor, I wasn’t sending them. Also, I was keeping track of all of this in my head and not in an organized place,” said Joan.
Joan came across Levelset and was excited to use the software to create a formalized process for protecting the business’ lien rights. However, she still had to deal with the complication of tracking when she was or wasn’t required to send notices.
“Emily at Levelset suggested that I send notices for all of my jobs so that I wouldn’t even have to think about it every time,” said Joan.
What seemed like a minor suggestion ended up making a huge difference in the company’s ability to get paid on time.
After sending notices on every job
“I sent payment requests through Levelset for some old invoices. We didn’t have lien rights, so we couldn’t file a valid lien, but I could still send this official-sounding reminder. And we received all of these super old payments from the previous year, and my boss was so happy.”
Joan’s job became much easier once she no longer had to spend time determining which jobs needed notices.
“Sending these notices on every job was a game-changer because now I know that they’re always going to go out, and the people who are supposed to get the notices are going to get them,” said Joan. “I can be so cheerful on the phone with the customer, and I’m not freaking out if they’re complaining about not wanting to pay right then because I just know that we’re going to be fine and I’ll file everything on time.”
By sending required notices and voluntary notices (those that aren’t required), Joan is confident that her lien rights are always protected. Not only did this remove a lot of stress from her role, but she found that sending notices on the jobs where they weren’t required actually got her company paid faster.
“Some of our bigger jobs average 30 days to pay, which is normal. For the smaller jobs, payment time is around 14 days. And of course, we occasionally get that rogue customer who forgets to pay, but one of the things I love is that by sending these notices on every job, I don’t have any emotional stress because I know that I’m on top of everything, and were going to stay within our lien rights,” Joan explained.
Their customers are paying faster because Joan has made it very clear to every single customer that they know their lien rights and know what steps they need to take to collect payment. Also, by using a formalized notice process, their business appears more professional.
“It feels so much more official when it’s Levelset as this third-party sending this really professional notice, and it’s just so effective because people get back to me so much faster,” said Joan.
Not only is Joan able to collect payment even faster by sending out notices on every job, but she has also been able to collect payments on jobs that were already past their lien rights.
“I sent payment requests through Levelset for some old invoices. We didn’t have lien rights, so we couldn’t file a valid lien, but I could still send this official-sounding reminder. And we received all of these super old payments from the previous year, and my boss was so happy,” said Joan.
Joan started sending notices on every job with the intention to make her workload slightly less stressful, yet she gained a ton of other benefits from shortened DSO to collecting unexpected overdue payments.
Interested in getting paid faster on every job?
Whether or not you are required to send preliminary notices on all of your jobs, preliminary notices are a key player in getting customers to pay you on time and in keeping your lien rights protected no matter what.
To learn more about what it would look like for your business to start sending notices on every job, schedule a call with the Levelset team today.
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