Collection Strategies Beyond Lien Law

When you don’t have the option of filing a lien, don’t throw in the towel. There are other ways you can overcome the stress of dealing with slow-paying customers and collect those past-due payments.

Register for this webinar with Toby Brutsman, the regional credit manager at MORSCO dba Fortiline Waterworks, to learn:

  • How to have effective conversations about payments with customers
  • Ways to make it easier for your customers to make payments
  • Best practices for developing the credit and customer relationship

Transcript

Lori J. Drake, CBA (01:04):

Good afternoon, everybody. Thank you for taking time out of your busy schedule to join me and Toby today. Toby is the regional credit manager for Ford align waterworks. As we talk about collection collection strategies beyond lean law. If you don’t know me, excuse me. There’s Toby Toby. Thank you for joining us today. Absolutely. Sorry, the opportunity. Awesome. If you don’t know me, I’m Lori Drake. I’m the new payment professionals community manager here at Levelset. And if you don’t know, Levelset, we take the complicated construction industry and try and make it simple for everybody. We have lean management software. We have a contractor payment profiles and as well, the new credit community, that’s going to be getting launched here shortly.

 

Toby Brutsman (01:50):

There.

 

Lori J. Drake, CBA (01:51):

I went ahead and put there, you have a chat box in your screen there. Please utilize that throughout the entire presentation. If you want to ask any questions and we’ll try to get them either as soon as we can or during the Q and a, Okay, we’ll talk about the different avenues available to collect on your customer’s past due balance. When you don’t have the option of lien rights, we’re going to cover just shifting your mindset, changing our approach, different strategies and tricks of the trade.

 

Lori J. Drake, CBA (02:20):

Knowing what tools you have available in order to collect on a customer’s past due balance is as important. If not more important than when you open their account and set up their credit line. Initially when lien rights aren’t available, you have to stay on top of the balance and you have to move faster during the process just to make sure you don’t wind up with a bad debt. Now you still work with Toby. So I had the pleasure of seeing him live in personal. He’s made a career out of remaining educated and aware of how to keep his aging out of the red. He’s also built up a great team of credit professionals that have been able to utilize him and his experience to also keep their territory’s current. Hey, Lori, real, real quick. You’re out. You’re actually not sharing your slides. Oh shoot.

 

Speaker 3 (03:10):

Yeah, Justin. I can see the chance that come through.

 

Lori J. Drake, CBA (03:15):

Um, okay, so it’s just so she says it’s sharing.

 

Toby Brutsman (03:22):

So what audio, how about that? There we go.

 

Lori J. Drake, CBA (03:38):

Sorry for that technical difficulties there. All right. Toby, would you like to go ahead and take it off?

 

Speaker 3 (03:44):

Sure. Welcome everybody. Thank you for the opportunity today, Lori. I appreciate it. Uh, your, uh, your request for me to, to, to join and I should actually have a topic covered, um, was, was kind of a, uh, a humbling experience. And then I had to be honest with you. I, I take a lot of this information for granted just because I’ve done it for so long. So, uh, having someone reach out to me to ask me to do this, this is an honor. So I appreciate everybody joining us today. And, um, you know, we’ll kind of just jump into it. We’ve got an interesting topic because you think collections, especially commercial credit collections, um, with the construction side, you know, we lean so much upon, uh, the lean and bod rights that we do have to securitize the collateral that we’ve got out there. But as everybody knows, if you’ve been in this industry for any length of time, you realize there are problems that are going to incur.

 

Speaker 3 (04:34):

Whether you have a leaner bond, rights intended, bad addresses for jobs on timely notices that go out, uh, you know, any circumstance can, can prevent you from losing those lien rights. So when that happens, you kind of have to shift your mindset a little bit. Um, and one of those things you can do is kind of leverage the relationship that you have with the customers by that. I mean, how well do you know the customer? You know, like, is it something that’s been in a long time relationship that you’ve had with them, um, that are going to be something that’s gonna, you know, you want to continue the relationship with them. You didn’t get paid on this job and you don’t have any rights on it, but as the customer is still in business, is it still something that you’re going to sell? If that’s the case, then you try to look up, uh, options that you can to, to, to recoup that money later on down the line, uh, depending on the volume that they’ve got it and the experience that you have with them, um, they’re likely a vested interest, uh, between the both parties between you and the customer.

 

Speaker 3 (05:27):

Um, you know, you have to coincide together. So if it’s something that has a lifespan on it and something that you want to try to continue to do, um, and keeping that business relationship open is key. Um, it’s a chance to kind of show good faith to strengthen the relationship. Like I mentioned with them going forward, maybe find a common ground with it, with a payment plan, again, the relationships that we have. And, and I find quite often that the relationships with our customers are more important. Um, when the collection side, many times, because we talk about money and we’ll talk about that in a little bit later, but it’s important for us to have those relationships because we’re usually dealing with decision makers in the company, right? We’re dealing with, we’re dealing with the CFO’s many times, we’re dealing with a lot of the individuals that, that make those decisions on who pays the bills.

 

Speaker 3 (06:14):

Uh, so we connect with the companies that we deal with on a different position than we do on the sales side. Another one is knowing the customer’s financial standing, you know, do your homework on that. What’s their outlook financially. We’ve been through, you know, what, 13, 14 months now, or longer of COVID. So a lot of our customers have had really had some impact on that. Hopefully they took some of the PPP loans and some of the information is available on those trade reports. She gets so kind of know their status. Did they access the PPP loans? Do they have access to money? Take a look at the trade reports, um, you know, see where they are, uh, as far as the DMPs and the NACS and all the other reports that you pull for your customers to do your credit, you know, reviews pull the current one.

 

Speaker 3 (06:57):

Are they really in dire financial straits or is this just a one-off job? All of that Mason is going to kind of help you understand, can they repay you? Cause if they can, you kind of have to go a different route, but if there is financial abuse, uh, information available to you to, to locate do your homework on that and find out, find out the capacity that they have, um, you know, in, in the debt to repay you in a, in a timely period, um, there are things that we can do, uh, like, you know, looking at other vendors, situations that we have on trade reports. Those are great assets for us to see. Is it just us that’s having difficulty or are there other vendors, uh, that are having some of the same difficulty? Uh, you’ll hear me say this later on, but misery loves company.

 

Speaker 3 (07:37):

Hopefully it’s not just you they’re paying for Lee. Maybe it’s anybody else they’re paying for Lee as well. Um, but, uh, things that you can kind of do is, you know, just check out some of the references most of the time when your credit applications, you know, there’s references out there and maybe there’s a bank reference or something too. So, uh, see if the things have changed, uh, periodically and, and work within the rules that you have to find out if the customer has solid financial standing to go forward. The next one is, do you have a solid credit application? Uh, you know, we, we talk about these a lot from a credit perspective and I’ve had the, I don’t know if it’s a pleasure of having a very unstapled credit application, I guess, where it didn’t give you a whole lot of options. You know, you got the name, you got the phone number, uh, and that was about it.

 

Speaker 3 (08:30):

Um, but there really wasn’t anything else on there, a solid credit application that can give you a lot of leverage. Um, if you have to pursue legal action. And a lot of times these are where these are ended at these ended up heading that direction. You know, for example, did you get a personal guarantee? A lot of credit applications have that on there, but when a customers don’t want to sign it because they, I understand if we’re going to tie it to them from a personal perspective, there’s a lot more intent for them to pay their bills timely. Um, do you have recovery of legal rights written into your credit application? That’s a huge one, uh, because it’s not cheap. If you decide to go legal or have to go legal and certain aspects, uh, and if you don’t have the ability to recover your legal expenses, that’s another cost you have to contribute.

 

Speaker 3 (09:12):

Do I want to put good money after bad? Um, how old is it? How old is the credit application? You know, we, I deal with some customers that have in the business with us for, for 20 years or longer, right? I mean, and, and some of the credit applications they signed may have come from companies that we’ve, you know, merged with and those files have been lost. You know, how old is that credit application? Are there names that have changed, uh, both for your, the company that you’re, that you’re working for as well as the customer has name changes? So it’s good practice, obviously, uh, to, to follow up on those and, and make sure that we have active credit, uh, applications that are on file that we can use. Um, no credit app likely means elections will be even more difficult to collect. Uh, and, and we sometimes our own worst enemies.

 

Speaker 3 (09:58):

We don’t get the credit applications. Now we’re going to make this, this almost impossible job that much harder, because we don’t have a credit app, or we can’t put our hands on a credit application. So, uh, you’ve now closed even more doors for you to kind of go after it. You always want to remain positive. Um, and sometimes the alert of pursuing a debt through an attorney, um, is, is just that the leverage that you need to do, um, to, to get them to come to the table. Um, if there’s a personal guarantee on it, sometimes, you know, um, you can have an attorney, um, send a letter to the customer and that’s all that’s needed. Usually you’ll get a prompt phone call back because no one really wants to go through any type of litigation. Um, and if they realize that you are well-intended to get this bait and you bring it to their attention, um, it’s worth the cost of investing it.

 

Speaker 3 (10:50):

Um, but a well-timed well-worded letter, uh, may get the message across that tells them how far I’d let lets them know how far you’re willing to go to, to collect this. Um, so you, you may have a little bit of initial cost there, but if you’ve got valid information, valid addresses and somebody who’s not working with you, um, then I suggest you, you, you reach out to an attorney and have them file that letter for you, uh, the lorry onto the next slide for me, if you would, um, strategies. So some of the strategies that I think are vital, uh, that I’ve been able to utilize that may help you guys as well is check the different state options. Um, you know, what is your trust fund statute or does the state that you have the job in, um, do they have a trust fund statute?

 

Speaker 3 (11:34):

There are 19 States that, that allow you to go after trust funds and construction money is considered trust funds in those 19 States, I believe use them to your leverage. Um, I will tell you that I’ve been very successful utilizing our trust fund statute in the state of Texas, for example, uh, when there are no lien and bond laws or rights available to the project, um, those trust funds statutes can tie back to an individual, whether it’s a general contractor, whether it’s an owner of a project or a subcontractor to them personally, uh, there’s a fiduciary responsibility they have with those monies that they receive for those projects to pay their suppliers. A lot of people don’t know that option there, but it is something that can, can turn into a very huge asset for you that you can leverage against them, uh, individually, uh, appeal to the general contractor.

 

Speaker 3 (12:29):

You know, I find that for us, the best practices to always to call the general contractors before we ended up filing a lien or a bond, um, it causes a lot of hassle for the general contractors. And most of the time they actually want to pay us before the liens or bonds get filed on there. It causes more headache, more heartburn for them. They have to answer to the owner. So I think a relationship with the general contractor, at least giving them a chance to direct defy the situation before you have to pull the trigger is always a good practice, but there are things that, you know, general contractors can do to help you. Um, in worst case scenario, if a customer didn’t pay, didn’t pay you, but they got paid by the GC. Sometimes we reach out to the general contractor. We asked them, Hey, do you guys have any retainers left?

 

Speaker 3 (13:13):

You know, do you have anything that they, that you owe them, maybe bonuses, maybe change orders, items that they have not paid out to the customer yet. I do find the general contractors have our best interest as suppliers and heart now at heart. Uh, they want to do what they can to help us make sure that we get paid because they understand the position that we are. Uh, they understand that, you know, we are there to, to assist and get the projects done. Um, but, um, if there’s the retainers that they’re holding back for the customer, or if there’s a large change order that they have yet paid for, those may be a way that may be a way for you to kind of trap some funds and get you paid from the general contractor directly or with a joy check. And then the next one is other available contexts.

 

Speaker 3 (13:55):

Um, trade groups are a great source. I alluded this a little earlier. Um, you know, we, we’re in several trade groups and we share a lot of information, um, you know, where we can, when we can and in clearing names and things like that, uh, misery loves company, right? So if you find that you’ve been struggling project, you know, that’s likely that you’ve had not there with other people, uh, other contractors, other subs, uh, suppliers of businesses or material that have actually are in the same boat with you. And, and you know what, reaching out to some of those trading, uh, contacts that you have to say, Hey, you know, are you guys on this job as well, or you guys supply material to this? Um, that’s always a good option for you to kind of see, see who else is, is, is stung on this and where they have gone.

 

Speaker 3 (14:38):

There are some con or some suppliers out there. And Lori and I had the pleasure of dealing with, with several, um, that were stung so bad. And they, they took them out on kind of as a personal vendetta that they went all around the world trying to find these individuals. And they got some great contact information and they were more than happy to share it with us because that customer did them dirty. And they wanted to make sure that they paid all their bills. Uh, but those are things that are, are, are vital to, to helping collect, you know, to share the stories, to share the information. It kind of brings everybody together and you never know who else who’s been burned. The other thing I’ll tell you is our sales field members, uh, ask them what they know. Um, there’s a good chance that those sales guys told you, Hey, he’s a great guy.

 

Speaker 3 (15:24):

I’ve known him for years. You know, he’s my neighbor. They sold us as to why we should open that account. Right. So I think there’s an obligation they always do when the account goes bad. All right. So you knew this guy and he was your best friend, excuse me, your best man at your wedding. You know, where is he now? What can we do? Um, and believe it or not. Well, I think, you know, our, our sales side sometimes gets a bad rap for it. I do believe that they will go out and help you because they, they understand the position that they put their necks on the line for their customers. And if there’s a problem, they want to be the ones to help where they want should be at least the ones facilitating, helping to get us paid. But I think it’s always a good idea to check with them.

 

Speaker 3 (16:05):

Maybe they have a different phone number. Maybe they’ve got a different way to contact the individual, uh, that we didn’t get on the credit application. It’d be cell phone numbers changed, um, things that, that we may not have had access to at the time. Uh, they may actually have a better route for us. So, uh, Lori, if you go onto the next one for me and the tricks of the trade, so we, we talked about enlisting. Yeah. You know, sales and branch guys. Um, I think that’s, you know, we’ve kind of covered that quite a bit. Um, but I think the branch managers have absolutely can help us as well. Um, I think that there’s, you know, opportunities for us that, that, that not just happen at the sales field, but the guys come to the counter. Um, the project managers that they’ve dealt with on a certain project, they usually call the branches for orders and materials.

 

Speaker 3 (16:49):

There may be some information that they may have as well as our salesperson may deal with a different project manager or somebody in the office. The branch managers actually have a lot to do with the operations. So they know who came in to pick up material. They know where material was delivered. They know who was at the job sites and drop those things off, never underestimate the operation side and how critical they can be to also providing information for you. Customer visits, you know, this prior to COVID will tell you that, okay, these were very vital for us. Uh, we’ve kind of learned to deal things, deal with things differently through a COVID world for virtual. Um, but I’d say stop by the office and have those face to face conversations with the customer. Um, let let’s face it. We talk about the most difficult, one of the most difficult topics, uh, every day, all day that’s money.

 

Speaker 3 (17:34):

And I think those conversations are best had one-on-one, especially if you’re in a difficult position with the money not being paid or, or severe past due money. Um, you know, there’s, uh, an opportunity to see the emotion. There’s an opportunity to see the professionalism, uh, to understand both sides, um, you know, where we can come to an agreement on it, um, you know, kind of hold each other accountable for what we’ve got and, and, and hammer out kind of a payment plan that you’re all welcomed and customed to and can live with. Um, it’s difficult anytime you’re talking about money. Um, and luckily, you know, we get the opportunity to do that every day. So we’ve become subject matter experts at it. Uh, I’ve had, so several sales guys who just can’t talk about money. I’ve had several operations guys, how you guys do that.

 

Speaker 3 (18:18):

I don’t feel comfortable. And that’s okay. That’s an opportunity for us to kind of show our, our worth and our value, uh, to both the customer as well, to the sales side. Um, and then the last one’s the accounting adjustments. And I love this one. I don’t mean cook the books. I don’t mean anything in that is of sorts. What I do mean though is, um, there could be a material that is out on the job site that was not incorporated or used that could actually be returned for some type of value, uh, to drop the balance that is owed. You know, if you’re looking at a $50,000 or a $10,000, any type of balance, but let’s say you can get, you know, maybe a thousand or $1,500 dropped off that amount by recovering some material that’s out on the job site. Um, are there backorders that haven’t shipped yet?

 

Speaker 3 (19:04):

You know, are there, you know, items that we need to get back that were returned, um, from the console, the customer, or, you know, the, but the project itself, um, is there anything we can do to, to reduce the amount of outstandings that we are owed? Uh, because what we do on our side now is going to really help the AR later on and reduce the impact of the bad debt potentially if it goes out there. So I think that’s one that we overlook quite a bit, uh, that is always something of value from our accounts payable side or from our brand side. But again, it goes back to, you know, reaching out to your branch managers and asking them the questions of what do we have out there. That’s still outstanding. Um, but on the opposite side of that too, a lot of us get a chance to deal with direct inventory inventory, going from a manufacturer out to the job site.

 

Speaker 3 (19:50):

It’s kind of important to get all of our branch managers to stop the bleeding, right? Hey, we’ve got this material that, you know, it takes six weeks for us to, to manufacture, but it’s four weeks into the manufacturing process. And all of a sudden now we’re not getting paid, might be a good idea for us to stop the material shipping out there. And then the two weeks so that we don’t increase the volume. Um, but I think that’s where all of us have to be in tune with the steps and the communications that we have to across the platform for the company, making sure that we aren’t increasing the already exposed issues that are out there, Laurie, uh, onto the next one for me, if you would. So kind of in summary, you know, um, dig deep, find out all you can about the customer.

 

Speaker 3 (20:27):

Um, they didn’t pay it. So make sure you do everything you can to do to get paid. And it helps us to know everything you can to understand how far you want to go. No, you may have to go legal on this, but knowing that information before and how, you know, they are financially viable or not viable, may help you make decisions that are going to reduce your spend. And you may just have to agree that this is not one that we’re going to be able to, to, to make work. Um, you make a decision early on with the effort and time that you’re going to invest in. It is very, very critical. Uh, and that’s where that information becomes so important with, you know, the trade reports with the communication you have with your field, with your branches, you know, with trade groups, all of that stuff helps you form that decision early on to understand, is this worth the investment.

 

Speaker 3 (21:15):

Now you never really run out of options, uh, to obtain a payment. And you just run out of time. The integrity of a customer matters. Uh, if this was a bad job that went South or wrong, uh, then address that prevented the notices that was at, at w wrong or incorrect, then find out what happened and work on that. Um, worked through it and be respectful with both sides. Uh, credit gets such a bad rap because we always, you know, I, I hear a lot, I won’t say always, but I hear a lot of, Oh, we’re going to run customers off. Well guess what guys we’re, we’re in the business to get paid. So we do it with the best of intentions. We do it with professionalism, with integrity. Um, it just may take time for us to do it. Um, you know, there’s a lot of things we have to weed through to make sure that it gets done right.

 

Speaker 3 (21:56):

Uh, and to make sure that we can ultimately collect that money and have the customer buy from us again where we can. I think sometimes we have to be, well, every time we have to be firm, but fair. Uh, and we’ve got to make sure that we get paid and it takes the time to have to work through those, those emotions. It takes time to work through those situations. Um, so be prepared for that longevity of the conversation and, and, and several weeks of going through what you have to with different, different conversations at different levels. And the last one, you’re not alone. Reach out to those around you and pray bright, bright. Now, many times, many of us have been down the road before, but each situation is very, very unique. Reach out to your peers, see what they have done, you know, Lori and I used to, to get on conference calls together and say, Hey, this is what I’ve got.

 

Speaker 3 (22:43):

What have you done? Um, I’m sure you work with some pretty amazing people and everybody has different levels of experience. And everybody has been in situations that may be similar to yours, where, you know, you have had a opportunity to, you know, share some of the, uh, rotten experiences, but experiences nonetheless, um, that you were able to get paid. People love those stories. Oh, I used to have this one, but this is what I did. So you share those with your peers to help make sure that maybe you’re covering some things you had, you’re covering things that they had forgotten. Um, they maybe use different tools or different options, but never forget through this entire process when you don’t have leaves or moms, we are throwing what we consider to be hail Mary’s right. So at some point in time, a little prayer after those hail Mary’s may be needed, just to make sure that those hail Mary is actually get answered. No, we get some of this stuff back.

 

Lori J. Drake, CBA (23:35):

Okay. Love it, Toby. Thanks. Right now, we’ll go ahead and sneak to the chat box. And if you have any questions, go ahead and jump them in there. I actually have three that were previously, so I’ll go ahead and go with those first good Toby. Julie asks, what if you don’t know, you don’t have lien rights until the account is very past due.

 

Speaker 3 (23:56):

Hopefully you can identify those early, so you can kind of restrict some of the damage. If you don’t find out till, you know, the account is way past due. There, there’s likely not a lot that, that you’re going to be able to do other than following some of the, the, the, the options I’ve given you, you know, restrict it immediately try to, to, to reduce, stop the blood flow, if you will, uh, of anything coming through, um, you know, get in touch with the, the reports that you’ve got to see where the customer is and if financial situation, uh, are they past due with everybody? Cause that’s likely going to be a much bigger concern or is it just you as a company, maybe there’s some invoicing issues. Maybe there’s some problems with, uh, what, what you’re supplying to the customer. But if you are way past due, there are definitely some, some red flags that are going off.

 

Speaker 3 (24:45):

Um, and again, you’ve probably heard all of us say, Laurie, you know, be earlier to the collection issue than later it gets. It usually means you’re going to be a little bit more successful, but sometimes we don’t have that opportunity. Sometimes we walk into it and it’s already bad. That’s where we get to put on our superhero capes and try to do the, you know, remarkable imaginable things that we can and be unicorns of sorts. And, um, you guess what, you know, it doesn’t usually work out the best for us, but, um, anything that you can collect off of those situations is considered a win because they’re almost impossible when you walk into that situation. So whatever you can get, um, I take it and run as quickly as you can and, and try to make sure that, you know, you get in front of other ones before they have.

 

Lori J. Drake, CBA (25:25):

Yeah. A lot of times it’s even better just to settle the account so you can get something rather than nothing. Absolutely not. See, we’ve got a question from Martin says, you say an option is reaching out to the general contractor. Are they really going to tell you if they have additional funds that they haven’t paid out?

 

Speaker 3 (25:42):

I love that question. And, and here’s the reason why I mentioned the trust fund statute, right? And general contractors have an obligation to the job, lean in bond free. Um, do they nest do the general contractors necessarily know that we don’t have lien rights? Maybe, maybe not. Um, let’s face it lean and bonds are not a topic that everybody knows. Now I take for granted that the audience that I’m talking to today knows a lot about them because we have to deal with them. But if I asked everybody here, you know, how do you day trade? Can you give me the specifics on day trading? Probably not a lot of people that answered that because that’s not the field that we work in, but a general contractor and some have some very fluent knowledge, but a lot of them don’t. And so the threat of a lien or a bond can usually start the conversation to get you paid because they don’t want to have to go down those roads.

 

Speaker 3 (26:32):

They may call your bluff and that’s okay. But I think if you call a general contractor, I do believe that if you have open communication with them, cause I’ve had it hundreds and hundreds of times, they understand. And also if they’ve gotten a lien waiver from their subcontractor, the state of you’ve been paid and it’s not yours, it’s a bigger concern for them because they didn’t do their homework. So I do believe the general contractors have a vested interest in making sure the suppliers get paid. The other thing you can do that I didn’t mention, we have a form for the more scale for line side, we have many, many general contractors on multiple different jobs with multiple different customers. Uh, so we were able to leverage that sometimes and say, look, you know, customer AOS is money and you’re on customer. We have material and customer B and C.

 

Speaker 3 (27:16):

And so, you know, is it going to be something that I’m going to leverage the general contractor on the second and third job? No, but he needs to be aware if he’s going to stick me on job one, I’m probably going to have less patience for him to pay me yet, you know, on other projects because we know we’ve already got some money in there. It’s a, is it his fault? Not really, but you know, we can tie it back to them and having those conversations with the general contractors is the first place to start.

 

Lori J. Drake, CBA (27:40):

Thank you. Uh, we have one on here. What can you do if you want to sell the bad debt to a collection agency?

 

Speaker 3 (27:49):

You know, I think there’s a, uh, an argument to be made there. Um, if you know that it’s going to be bad debt, um, why not try to make some type of money on it to recoup whatever you can, uh, even if it’s pennies on the dollar. Um, but there’s a part of that from a bad debt perspective. And I think it’s kind of a different topic. Um, you know, I think collection agencies play a huge part of what we do. Um, you know, there there’s there’s efforts there that they can take and they probably have a lot more time than we do if your company has a pretty strict, bad debt policies, uh, what they want to do and how quickly they want to move those off the books. Um, but I think there’s a definite option for them. If, if you have agencies that are willing to buy the bad debt, um, in our case, we place the accounts with agencies, even after we write them off to try to get the bad debt recovery.

 

Speaker 3 (28:37):

Um, but again, a different topic. I think there are a collection agencies out there. Some of them do really, really well. Some of them, you know, I haven’t had much success with, but, uh, it’s, it’s really a business choice business decision. Um, I think if you align yourself with some of the right agencies and attorneys that are out there, uh, you can really find a lot of the value in that, in the bad debt recovery. Uh, even if it’s, you know, lean suits or judgments that are out there, it may take three or four years on a judgment to get it. Um, but it was already been written off. And then three years later you’d get a windfall of a hundred thousand dollars. Then I think, you know, there’s a, a cost you have to weigh, but that’s more of a business decision. I think people have to make, depending upon the company.

 

Lori J. Drake, CBA (29:13):

Thank you. A question from Debra. Do we have to follow a collection rules example? Can we say we will do something if we don’t really intend to do it, like threatened liens collection agencies, I’m thinking they probably she’s probably dealt with consumer credit, but if you want to go ahead and explain our side of it.

 

Speaker 3 (29:29):

Yeah. I mean that, there’s a beauty part of being in the, in the business to business side. Right. I know we, we, we don’t necessarily have to follow the FTC PA, although it is good practice. Um, but you know, from a business perspective, um, and I’ve done both, I much prefer the commercial world that we’re in, um, because you’re dealing with people who have a business and it’s likely their, their, their livelihood. Uh, so they want to keep it going and they’re usually more apt to have the conversations and to see what they can do to keep their creditors, uh, open, because if we closed them down, they have to go someplace else to get it and likely can’t, or can’t afford it. Um, and I think there’s a part of that, that, that we have to play from a, um, a lending perspective or they kind of treat us like a bank, even though we’re not supposed to be.

 

Speaker 3 (30:11):

Um, but from the, the, the commercial side versus the personal side of the personal debt. Yeah. I mean, you’ve got to be very careful how you walk those lines. Um, you know, I, as I mentioned before, you know, I can talk to a general contractor and allude to the fact that I’m going to be filing a lien claim. Uh, and you know, if he gets, we don’t have lanes, well, that’s his interpretation versus mine. I may not know I’ve got it, but those late rights, we all know some can be interpreted other ways. And so I think it’s something that you have to, you know, approach those topics very carefully, make sure you know, who you’re talking to. And, and, and don’t paint, don’t paint yourself into a corner.

 

Lori J. Drake, CBA (30:47):

Thank you. Uh, another one asked by DeLeon, do people use social media, like Facebook or Twitter to collect money? And if you do, can you get in trouble for that?

 

Speaker 3 (31:00):

I don’t know how to answer that one. Um, our company does not use social media platforms, um, to collect, uh, I guess I’m kind of old school. Uh, and the fact that I, I, I’m not so sure that’s a great tactic because I think you’re kind of airing everybody’s laundry out there. Um, but you know, if a company and I, I’ll be honest, that may be, you know, something that, that company you start to do going forward in the future. Um, but you know, we’re not at that point yet. And from a commercial perspective, I’m not sure we want to take that leap. Um, but yeah, I, I I’d caution people on doing it just cause I don’t know if the FCCPA has actually issued any type of, uh, legal ease on that is whether that’s acceptable or not. We don’t do it and it’s not a practice we have right now.

 

Lori J. Drake, CBA (31:47):

Thank you. Um, somebody had posted on the chat that that would possibly be third-party infringement.

 

Toby Brutsman (31:58):

Yeah.

 

Lori J. Drake, CBA (31:59):

Thank you for sharing that. Um, Emily says, what are your thoughts on using small claims court versus filing a lien? We have a lot of clients who are already well past 20 to 90 day Mark, and want to know what we legally can do.

 

Speaker 3 (32:14):

Um, you know, I think that’s a great question. And I think you have to decide what the cost of doing business is. Um, you know, some companies decide, Hey, we’re not going to go on a lien for anything less than a thousand dollars. Some companies may decide we’re not going to waste our time on a lien filing for $10,000, whatever that threshold is. Um, you know, there, there are some, some great cost saving and as everything, the more people come accustomed to doing it, the more services become out there, the cheaper, the price to do those things. I remember years ago, filing a lien, you know, it was 500 to $700 depending on, you know, the, the County, the city, the attorney that you used, that price has come down and, and there’s a lot of services out there, um, that are very competitive. Um, but you also have to weigh the cost of the time spent.

 

Speaker 3 (33:03):

Um, and during COVID, I will tell you that a lot of courthouses weren’t AF actually having a lot of people in there and many courthouses, uh, especially in some very rural areas, um, you know, are not open at all and they can’t, you don’t have the option of filing them electronically. Uh, so, you know, for me, because of the volume that we do, um, we don’t do the small claims. We do the lien filings, but we have a threshold balance that, that, that we decide, Hey, it’s not going to be cost-effective for us to file that lien again. I think you have to look at, you know, the time spent the cost of the lien itself, the County that you’re filing in all of those things weigh in options. We need to be weighed in before you make that decision

 

Lori J. Drake, CBA (33:42):

Agreed on that. Does anyone else have any more questions? I haven’t seen him pop in there. All right. Well, thank you Toby. For all of that, I know it was some great information for anybody that has any more questions on that. Feel free to reach out to Toby or myself. Uh, his email will be listed at the end really quick. I wanted to remind or let everybody know that we still have this free class given by Thea Dudley in our payment Academy. She talks about credit basics. Uh, it’s a four, four lesson course, and you do get certification for it, which you could possibly use for some CEOs. And then we also have her new book guide to credit collections by the credit overlord. Uh, you can actually enter the raffle to win a free copy of the book that will also be signed by Thea and we’ll have a personalized kind of sorta, uh, Levelset bookmark in it. There’s a Toby’s email address just in case you do have any additional questions, as well as mine. Oh, hold on one second. Let me just pop the question in there. Does Arizona have the trust? I think they mean trust fund. Does Arizona have the trust fund that you refer to that Texas has? Where does one file regarding this? The state or County? Okay.

 

Speaker 3 (35:00):

Um, I’m not sure if Arizona does, but I will tell you, uh, there are plenty of places to look up that information really, really quick and Levelsets actually got some very good tools for you that I believe has an information because it’s not an actual leaner bond filing. Um, we actually use our attorneys and the respect to the States that we have. Um, I will tell you that as a recommendation for an attorney, find one that has the, uh, construction, um, background for them. They will be likely the best asset and area for you to find out about the trust fund. They’re more than likely familiar with it. Um, but I do know 19 States, I do too. Don’t have them on top of my head. I know Tennessee is one, I know Texas obvious has one. Um, but there are 19 different States that have that ability. And, and again, it’s, it’s, it’s used very useful, uh, especially when you don’t have willing and bond rights to fall back on.

 

Lori J. Drake, CBA (35:55):

Thank you. Uh, I don’t think we have any more questions there. Um, I want to thank you Toby for taking time out of your busy day. I know it’s crazy over where you are and everybody else for you joining us as well. Uh, we’ll let you go here. Um, I do have a lot of people asking for links for the, uh, class as well as the book, as well as some state stuff that we talked about and trust fun stuff. Um, I’m gonna go ahead and shoot you all that afterwards, and you can always email me as well to ask more. Um, one last question. Can you read, talk about the trust fund verbiage that you were mentioning? Somebody had had asked, they came in a little late there, they couldn’t catch really what you were saying, and they want to look up the it in their state.

 

Speaker 3 (36:40):

Uh, it’s the trust fund statute. Yeah. Uh, yeah, so the trust fund statute is a, um, it’s not in every state, but it, it alludes to the fact that, um, certain funds are, uh, required to be maintained for certain reasons and to pay certain, you know, products in the construction industry for Texas exam. And I’ll use that one because I’m more familiar with it. Uh, general contractors and subcontractors who purchased material from suppliers or from each other. Um, the funds that they receive are considered trusted funds, where they have obligations to pay out the money to those individuals that have used, uh, or have supplied the material or the labor to those projects. And a lot of customers tend to, how do I phrase this, Rob Peter to pay Paul different power projects. Um, and again, you know, that’s a business practice, but eventually if a job doesn’t pay and they’ve been paid for the project, they have violated the trust, right?

 

Speaker 3 (37:41):

They have violated in. And again, this is just a very brief overview. I strongly encourage each and every one of you to, to, to reach out to your attorneys. But you can read about these trust funds, uh, on the internet or on the websites is provided. Um, that says, it speaks specifically to the fact that those general contractors and subcontractors have an obligation. And if they don’t, it can be tied back to them personally, for fiduciary responsibilities that they had in regards to the money that was allocated for that specific project. Um, and so it’s not something that we like to use, um, because the liens in bonds are a bit stronger, um, for us. And it’s usually easier because we’re more familiar with those, but in the event, those are not options for you. The trust fund is there. Um, and it carries some pretty solid teeth, um, that, you know, the Lena of bonds don’t necessarily have, but I encourage all of you to look into as a definite option. Um, I prefer to stay with Elena and bonds, but one forced to, if we have to go to the trust fund statutes, they’re there for us to use, but, uh, just refer to your attorneys to make sure, uh, that, that that’s where the, the, the route that you want to go to it. Um, it’s, it’s an option, definitely, but I think it could be used kind of as a last option. In most cases,

 

Lori J. Drake, CBA (38:58):

I think he can get kind of expensive as well. Absolutely. Well, again, Toby, thank you for being here. Thank everyone else for joining us. Um, Toby, if you just want, I’ll actually reach out to you afterwards and we’ll let everybody wrap up here and y’all have a great afternoon.

 

Speaker 3 (39:13):

Thanks everybody. Appreciate it. Thank you.