Construction professionals at work

I’ve been a reader of Michelle Dunn’s Credit & Collections Blog for quite some time. While the blog doesn’t focus on mechanic liens and security instruments, as this blog does, it focuses on a topic that all of our clients and readers encounter: collections and credit. The relationship between mechanics lien claims and collection programs, after all, seems obvious.

Michelle’s blog (and her collection and credit books) does a fantastic job of educating readers about smart collections and credit practices. Many people only become interested in credit and collections when they are owed money, but in truth, the practice is a discipline and it works well only when you have a formal procedure you follow with each account. Michelle’s blog preaches this, and gives readers great Collection Tips on how to make their policies and practices better.

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Update (02/14/16): Much more on Michelle Dunn available on her site

But, how does this all relate to mechanic liens, bond claims and security instruments on construction projects?

Unfortunately, Michelle doesn’t spend much time within her materials discussing the role of security instruments in a strong collections or credit policy. In fact, though, security instruments can perform miracles for you in this area. In my personal experience as CEO of Levelset and an attorney, having a mechanics lien, bond claim, UCC filing, etc. will substantially increase the likelihood that your account gets paid, and gets paid in full.

Recently, Michelle wrote a blog post titled “Your 12 Step Debt Collection Program to Start Today.” In that post, she lists 12 things your business can do today to start your collections program and significantly decrease your bad debt over time. For those in the construction industry, I have just one thing to add: preserve and perfect your mechanics lien rights, of course.

In addition to having a credit policy in place, therefore, think about your company’s “Lien Policy.”  It very well may be the most significant thing you can do for your company’s bottom line.


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