Two women in office reviewing a file

Ellie Holman, the Office Administrator at Holman Inc., knows all about the frustrations of not getting paid. Ellie often found herself in situations where Holman Inc. was owed payment, but their customers simply wouldn’t pay. And because Holman Inc. didn’t have a process for keeping up with Florida’s complex lien rights requirements and deadlines, they were at risk of getting burned.

However, not getting paid became a thing of the past when Ellie started using software to send preliminary notices at the beginning of jobs and track lien paperwork deadlines. These are the four steps she takes to make sure Holman Inc. gets paid: 

Step 1: Send a notice to owner

Ellie sends out a preliminary notice — called a notice to owner or NTO in Florida — on all projects over $5,000. A preliminary notice is a vital step in getting paid on construction projects because it tells the property owner and general contractor that you are on the job and that you have procedures in place to collect payment. In fact, subcontractors in Florida are required to send a notice to owner within 45 days of starting a job to secure the right to file a lien. 

Now that Ellie is using Levelset, it’s easy for her to send notices and protect Holman Inc’s lien rights to ensure that they get paid. When Ellie sends notices, GCs prioritize her payments over payments to contractors and suppliers who didn’t send notices.

Why? One, because sending a notice to owner makes it easy to pay Holman Inc. by providing visibility to the people in charge of making payments. Two, because sending a notice to owner makes Holman Inc. look professional and shows that they know their lien rights and are prepared to use them.

Ellie makes sure that her customers understand why they’re receiving these notices so there’s no confusion.

“We send a cover page with the notice, so there’s more to it than just a piece of paper. We simply explain that this is what we do on every project,” said Ellie. “We just kept it very fact-based, and now, they’re all used to it.”

Step 2: Send a notice of intent to lien

In the case of late payment or nonpayment, Ellie sends a notice of intent to lien to key project stakeholders like the general contractor and property owner about 60 days after finishing work.

A notice of intent (NOI) is a warning letter stating that if payment isn’t made, you intend to file a mechanics lien. This document is often successful at speeding up payment because it informs the key stakeholders that there is a payment problem and gives them a chance to resolve it before a lien is filed. After all, no one wants a lien on their job.

Ellie sends NOIs about 60 days after finishing a job if Holman Inc. still hasn’t been paid. She chose this 60-day window carefully. In Florida, construction companies have 90 days to file a lien after finishing work on a job. By sending an NOI around day 60, Ellie gives her customer a chance to pay and gives herself enough time to file a lien, if necessary. 

“First we do the notice of intent to lien, and then it’s usually like 14 days later that I start the process for the actual lien. In that time, I definitely try communicating with the contractor. We have another one this week where that happened. And I was in communication and was promised I was getting paid. We went ahead and filed a lien anyways because we didn’t have payment, and then the next day, she told us it had gone to litigation and they weren’t getting paid,” Ellie explained. “So for us, it’s just following the guidelines of 60 days to get paid.”

Step 3: Check that they have communicated and done their part

After sending a notice of intent, and before escalating the payment issue by filing a mechanics lien, Ellie does her best to make sure there is clear communication between their company and the customer. Also, she makes sure her team has done everything on their end. She’ll ask questions such as, “What communication did you have? Were there any problems on the job? Do we have a punch list we haven’t done?” 

This extra step provides a sense of confidence that all avenues to collect payment have been explored before filing a lien. 

Step 4: File a mechanics lien

It’s not often that Ellie will file a lien, but when she does, it works. In one instance, Holman Inc. was owed $9,000 on a project.

“If we didn’t have the lien filed, this guy would’ve never paid us,” Ellie said. “So, because we had our lien filed, it held up the whole project and held up everyone getting paid. I had their banks calling me, and we got it worked out. We got our money. But if we didn’t file the lien, he just wouldn’t have paid us.”

Protect your payment rights

Throughout this entire process, Ellie uses Levelset to keep lien rights paperwork on track. She gets notifications in Levelset that remind her when to send a notice to owner or when to escalate to an NOI or lien. This has made a huge impact on the company’s receivables.

“Now, more than ever, we’re protecting our payment rights better because we have everything set up correctly in Levelset so that everything is tracked. Whereas before, we might miss deadlines. We might hit that 90-day mark and not be able to get the notice sent on time,” said Ellie.

Sending the right paperwork at the right time is one task, and tracking the deadlines for the different paperwork across different projects is another task altogether. By using Levelset to track deadlines and automatically send notices, Ellie no longer needs to stress about getting paid.

Subcontractors like Holman Inc. are seeing a drastically better cash flow from using Levelset to send notices, file mechanics liens, and speed up payment collection time. 

To learn more about how you can achieve similar results, schedule a call with the Levelset team today.

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