Company: An insulation contractor based in California
Levelset Customer Since: October 2016
Company Size: Multiple locations in 4 western states, and projects in as many as 8 states.
Primary Levelset User: Christi P.
Responsibilities: Receivables Manager, based at Corporate HQ
Challenge: Sending preliminary notices (“pre-liening”) was a long-standing corporate policy, but it was up to each location to manage the pre-lien process, and it just wasn’t getting done.
When we first got to know this California-based insulation contractor, we saw right away that they were not a newcomer to lien rights management. In fact, quite the opposite was true: they understood the value of lien rights management completely and had a long-standing corporate policy requiring all of their branches to complete the pre-lien process. However, according to Christi, prior to signing up with levelset, it “just wasn’t getting done.”
Project Information – The Biggest Obstacle
The most common explanation Christi got from the branches was that the sales teams weren’t passing along all of the required project information to the person at each branch that was responsible for managing the pre-lien process. In other cases, even if the branch was able to collect all of the required information on a given project, they weren’t tracking any of the important deadlines and other requirements, a crucial area where just one single mistake can kill a company’s lien rights.
“We had continuously asked each branch to complete the pre-lien process on new projects, but it wasn’t happening. The most common reason they gave was that they didn’t have, or couldn’t find, all of the necessary project information required to file notices.” ~Christi P.
Note: “pre-lien” is another name for the process of doing everything required in order to preserve a company’s lien rights on a project. The 2 main steps in the pre-lien process are collecting all required project information, and sending all of the required notices.
An Industry-Wide Challenge
When it came to problems with lien rights management, this particular insulation contractor was not alone of course. Over Levelset’s 10 years in business, we have found construction companies dealing with the exact same issues that that this company was dealing with (see table, below). Taken together, these factors caused the execution of their corporate lien policy to be extremely inconsistent, and the company suffered negative financial impacts as a result.
Levelset Solution #1: Scout Project Information – The Secret Sauce
More than any other single factor, problems with collecting and accurately documenting required project information is the biggest reason why companies lose their lien rights. This is illustrated by the lien law requirements in this company’s home state of California, where a subcontractor, equipment lessor, or material supplier must send preliminary notices to all of the following parties on a construction project:
- The owner or reputed owner
- The direct contractor (the party who contracted with the owner)
- The lender on the project, if any.
Wait…what? The lender? Finding the legal business name and address of both the owner and direct contractor is challenging enough. But having to find and send a notice to the bank that the owner is using to finance the project as well? In California, that is indeed the case. And if it seems like it might be tough for the average construction company to find the lender on a project, then you’d be correct: it is a very common issue.
And that’s where Levelset’s Scout team comes in. Scout researches and verifies all essential project information, including legal names and addresses for all project contacts (Property Owner, GC, Lender, Surety, Material Suppliers, and Subs) and critical project data (Project Type, Bond Info, Project Location, and Legal Description). The Scout team is able to find this data by using multiple sources: CoreLogic RealQuest, county records, Levelset’s proprietary database of project information, and more.
“Now, Levelset finds all of the missing project info for us. That’s huge.” ~Christi P.
But Scout doesn’t stop there. As shown in the following table (below), in cases where the project information either doesn’t match or is in conflict, the Scout team will find and provide the correct information.
As we have seen literally thousands of times, the project data that the Scout team provides and verifies can be the difference between a construction company losing their lien rights or keeping them intact. And without those lien rights, resolving payment issues successfully is almost impossible.
Scout by the numbers:
- 159: Number of documents processed through the levelset platform by this customer in April 2017. Scout verified and/or fixed the project info the company provided for each and every document
- Over $500,000: Total receivables secured by those 159 documents
- 86%: The percentage of this company’s projects in April 2017, where they were hired by someone other than the property owner (meaning, this company did not have a direct relationship with the property owner on the project). Without the project data provided by Scout, it would have been much more difficult for this company to secure their lien rights.L
Levelset Solution #2: We Can Handle Any Project, Anywhere, for Anyone in the Construction Industry.
Firms that do business in multiple states love Levelset because our platform is a true 50-state solution (including all U.S. Territories and Washington D.C.). Lien laws are largely determined by state governments, and this means that the laws vary widely from state-to-state. Further complicating matters, each state’s legislature can and often will change their lien laws in ways that can significantly impact lien rights requirements. Levelset’s in-house legal team stays up-to-the-minute on the ever-changing lien laws which means the Levelset software is always legally compliant. No matter what your role is on the project, the type of project it is, or where that project is located, Levelset will always be an effective lien rights management tool.
“We have locations in 4 states but do business in as many as 8 states. We didn’t have time to learn all of the lien laws. Levelset took care of that.” ~Christi P.
Levelset Solution #3: Feature-Rich Platform with Multiple Users and Custom Workflows Allows for Efficient Administration
Given their size and heavy volume of projects, this company knew that managing their lien rights efficiently and effectively would require a team effort. It would have been almost impossible for just one person at the corporate office to be responsible for managing the entire process across all of their locations. But at the same time, the company still needed to enable a senior manager to make sure the branches were pulling their weight and following the company’s policies and procedures. Also, it was extremely important that Christi has access to all of the necessary information needed to support important lien rights decisions, such as whether to proceed with filing a lien against a delinquent customer. Simply put, that’s not something that you want to screw up, and Levelset gave Christi the confidence – and the information – she needed to make those tough calls.
“Each branch has one main user that’s responsible for entering projects into the Levelset system. It’s very easy for me to keep tabs on all of the branches from the main office. I can immediately see if a branch is not keeping up with entering projects, and I’m able to get everyone back on track before anyone gets too far behind.” ~Christi P.
This customer’s relationship with Levelset can be summed up in one word: results. Since first becoming a Levelset customer in October 2016, this company is now successfully managing their lien rights, consistently and effectively, on a company-wide basis. Though only a Levelset customer for about 6 months, they’ve still been able to:
- Reduce Bad Debt to Near Zero
- Get Paid Faster
- Save Time and Money
- Reduce Risk
- Grow the Bottom Line
“Levelset has been huge in giving us the teeth we need to collect our accounts faster. Levelset is extremely easy to use, and easy to find information. It has worked better for us than we could’ve ever imagined.” ~Christi P.