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What is the best approach to collecting after already sending invoice to customer twice.

OhioCollections

We are a roofing company and put on a roof for a customer that was being covered by his insurance agency. This was all under contract. During the process of the sub contractors putting on the roof, he asked our Project manager and the roofing crew to complete another area of the roof. He misread his coverage by the insurance company and asked us, verbally, to do more than was going to be covered. So now he is refusing to pay the remaining $5900 for the additional section. As the new office manager, I want to know what the best approach is for me to take.

1 reply

Oct 25, 2019

When unpaid for construction work in the state of Ohio, leveraging the right to file a mechanics lien is often the most powerful recovery tool available. And, a written contract isn't required in order to file a valid and enforceable mechanics lien in Ohio.

Before resorting to a lien filing, sending a demand letter or a Notice of Intent to Lien might compel payment

Mechanics liens are typically seen as the nuclear option. When payment is owed but unpaid, sending a demand letter can be a great way to force a customer to pay you. It shows them that you're serious about getting paid, without the messiness and headache of filing a mechanics lien. Taking things a step further by sending a warning like a Notice of Intent to Lien can be particularly effective, too. A Notice of Intent to Lien acts like a warning shot, informing a property owner that if payment isn't made and made soon, a lien will be filed on their property. Considering the drastic implications of a lien filing, an owner will typically do what they can to make sure a lien isn't filed against their property. More on that here: What Is a Notice of Intent to Lien and Should You Send One?

Sometimes a mechanics lien must be filed to force payment

When push comes to shove, a mechanics lien is the most powerful payment recovery tool in a contractor's arsenal. Mechanics liens force payment in a number of ways (Leveslet counted 17), and they put a lot of pressure on the property owner to make payment. Filing a mechanics lien is a relatively simple process, though there are some deadlines and other requirements to consider. For more background on how to file an Ohio lien and the associated requirements, here are two great resources: (1) Ohio Mechanics Lien Guide and FAQs; and (2) How to File an Ohio Mechanics Lien – A Step by Step Guide to Get You Paid.

Other recovery options outside of the mechanics lien process

Note that while a mechanics lien can be a strong recovery option, there are always other ways to recover payment. One option that may be available where there's no contract for work is unjust enrichment. Or, if a verbal contract was formed, nonpayment may result in a breach of that contract. In either situation, proceeding with a legal claim, or threatening to (potentially via demand letter, as mentioned above) could get things moving in the right direction. Further, there are also always other options for avoiding a lien claim by working with the property owner.

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