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How to Make Getting Paid the Easiest Part of Your Job

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Julian Bustillo
Julian Bustillo

A proverb, if you will: a construction job without a lien notice is a house made of hay. You might be able to live in a hay house for a while – in other words, you might get paid without sending notices. However, that “hay house” is susceptible to catching on fire, quickly. A job that is protected by notices and proper expectations is like a house made out of concrete.

Listen up for:
  • Why contracts aren’t enough to prevent non-payment
  • Easy steps to protect your payments using lien rights
  • How to make sure your payments are always prioritized

 

Speaker 1 (00:03):
All right, so, uh, my name is Julian Bustillo. Uh, I’m a construction payment expert here at Level Set. Um, I work with businesses like yours to make sure that y’all are all getting paid on your jobs. And I love what I do because I empower businesses to get paid what they earn so they can focus on the important things like growing their business without worrying about when the money’s gonna come in. So, I know we have a mix here of current level set customers and individuals who are hearing about Level Set for the first time. So in the case that this is your first interaction with Level Set, I’ll give a brief overview of who we are and what we do. Basically, level set exists to help contractors and suppliers protect their lean rights and collect payment. So we all know that the construction industry presents all sorts of challenges when it comes to getting paid to solve those challenges.

(00:53):
We have all kinds of resources from profiles outlining contractors, payment histories to educational guides, and of course our, you know, lean rights management software. So I’m gonna go over all of that today. But first I wanna hop into a bit of an agenda slide here. So we’re gonna talk about why businesses in the construction industry experience slow payment more than in any other industry. Then I’m gonna go over the five steps you can take to making, getting paid the easiest part of your job, get your payments prioritized and get you paid a lot faster. And then last but not least, I’m gonna go ahead and show you some of the specific tools you can start using today to actually start getting that payment through the door in a timely fashion. So at the end, if we still have time, we will go over our questions.

(01:39):
Um, so keep that q and a box live Now, I mean, honestly the thing is you can be the best contractor in your area, have the highest quality services and still you could be dealing with slow payment. So let’s kind of dive, dive a little bit deeper into figuring out why that is. You know, it takes longer to get paid in construction than in any other industry. In fact, on average it takes 83 days to get paid. And since Covid we’re seeing that drag on even longer. You know, it can be rude, the route can be because you know, there are a lot of parties on the job. Cash can be moving slowly down the payment chain and it all starts with you having to complete time sensitive and information intensive pay applications just to get in line for payment while you’re waiting. You know, you might find yourself in a hole having to float all the upfront costs, the materials and labors required to get a project off the ground.

(02:35):
And then when those payments finally do come in maybe 83 days later, all these payment issues and disputes can result in ra razor thin margins, if any at all. And so on top of this, you have the complicated payment structure, failure to release payment down the chain, hidden parties and the risk of liens, as well as confusing or complex contractual clauses making, getting paid an absolute nightmare across your projects. But trust me, there is hope. And so let’s kind of flip this on its head here and talk about how we can make getting paid the easiest part of your job. So there are five steps I wanna go over that you can take to making sure your payments are prioritized. I’m gonna boil everything down, show you the helpful tips and tools so that everything’s easy to understand and we can talk about how we can apply it to your business.

(03:27):
So first things first, establishing a payment process for your business that you can stick to for each and every job. This means both your big and your small jobs. This makes everything related to payments extremely clear for your customers. It’s gonna demonstrate professionalism and it’s gonna set the expectations up front, leaving no room for surprises down the road. The same way that your customers are holding you accountable for the work you’re doing. You should make sure you’re holding them accountable to get paid as well. Your payment process shouldn’t be up for debate or discussion. You should apply a procedure for every single one of your jobs sticking to it. So for example, you could have a process where 15 days after a payment is due, you can go ahead and start leveraging some of our invoice reminders. If it gets to a point where you feel like things need to be escalated, we move and send out a notice of intent to lean.

(04:21):
And in the event that this doesn’t move the needle, then we go ahead and take things. One last step, the option of filing. And so I don’t wanna get too in the weeds on that, we’ll get into lean rights here a little bit later. But another really important thing that you guys wanna do to increase your chances, a fast payment is to get out in front of issues. So that starts with reviewing payment practices of customers before you begin working with them. You know, pre-qualifying your customers and that’s especially essential for your larger commercial projects. So we recommend that you use risk reports to pre-qualify your contractors. And so these are gonna give you a detailed look into their payment history, their payment reliability, and the speed at which they pay their contractors. You can also use a tool called Payment Profiles where you can search for general contractors or subs, see details about their payment history, right?

(05:17):
Think Yelp for contractors. And while you finally are on the job, you can use our newest tool, job Radar Premium to actually have a pulse on your job, right? Monitoring payment speeds, receiving alerts as to when others are paid, letting you know if a lie has been filed or if there are any other payment issues like outstanding payments or even bankruptcies. So unlike a lot of risk mitigation tools that are currently out there, these reports are built specifically for the construction industry. They’re not just like a simple credit report. We give you insights into past payment disputes and the payment health of a company’s job. So if you’re interested in a report on a specific company, you just go ahead and reach out and we’ll build that out for you anytime. And I know it can be particularly difficult, especially when you’re a small business trying to grow into a larger one and you’re working with new contractors trying to manage all the risk associated with it. Running these checks on companies can be the difference between getting paid and not.

(06:20):
So a very common thing I hear when people are starting to kind of get immersed into this world is they say, Well, how do I know all the information? How do I know who the GC is or the property owner who the lender is, right? I mean, who knows all the information on every single one of their jobs, all the specific parties involved and the necessary fields associated with them. If you’re like most contractors, you probably don’t, but it is absolutely critical to make sure you have all of the right information about the job before it starts. So there are a lot of different ways you can go about doing this. Maybe you wanna spend your day driving down to the county recorder’s office or going through pages and pages of Google, but oftentimes those are not the most cost effective ways and they can be really cumbersome in time consuming. So at Level Set, we leverage our scout research team to help you verify the accuracy of any information you have. And as all you need is the job address, your role on the project and type of project, we’ll go ahead and track down everything else. We’ll then be able to upload all that confirm job information into your payment paperwork so you have peace of mind and confidence that any of these high risk legal documents being sent out by Level Set are sent out correctly.

(07:37):
Preliminary notices, right? Who’s heard of Prelims pre leans, NCOs, maybe you just heard of notices, right? In some states they are required in order to protect your lean rights in other states, they’re not. What we’re suggesting is standardizing a process so that you’re sending prelims out on all your jobs, whether it’s required or not. And before someone starts yelling at me in the comments or saying, Hey, this is gonna upset our customers, I think it’s important to know how these sort of things are communicated and what they do, right? Our preliminary notice is safe. Essentially, you know, your business is proud to be providing service or materials On this job, we’re using Level Set to set us up for payment success. Here’s the information we have about your project. We’re looking forward to doing business with you. The word lean is never mentioned, right? There’s nothing threatening about ’em.

(08:32):
It’s a way of you to set the expectations and it’s an industry industry standard for professional contractors. Puts good customers at ease to receive them and it gives you an alert if people push back on them. If you work in a state where notices aren’t required, it’s still a best practice to send them. I mean, think of it as like low cost insurance. They protect your right to file lien if you’re not paid. And it makes it easier for your customer to pay because it increases visibility and transparency on projects and it prioritize your payment over those who don’t send it because one, it’s easier to pay you. And two, now they know you have the right to file a lien. In fact, you can even send your first notice for free with Level set. And so last but not least, Lean Waivers can be a really effective way of also making sure that your bets are hedged and your payments are prioritized.

(09:24):
Um, you also might have heard of them referred to as Lean releases, but essentially it’s a receipt that acknowledges you’ve been paid. So it’s important to only send these once you have been paid, um, depending on which one of these waivers you receive, because if you do sign them you can give up your lie, right? So the two types you have conditional and unconditional waivers. Each can be used for either partial payments or final payments. But essentially sending Lean waivers helps construction businesses get paid on time because they provide the property owner with assurance that you won’t file a lien claim against their property. This is another thing that you can easily track and send out through our system. So those are the steps you can take to make the payment process much easier. However, I realize that some of these things might sound like extra work, however, if you have the right tools in place, it’s no extra work at all.

(10:19):
And that’s where level set really comes in handy. We’re here to simplify all those steps we just discussed. And I mean the same way, you don’t cut corners with any of your work. We don’t cut corners with your paperwork. So I wanna get into real briefly how Level Set helps you make getting paid the easiest part of your job. So first and foremost, we’re gonna streamline your entire payment paperwork process. All you do is enter in your active jobs that you’d like to protect, um, either manually or through one of our many integrations. We’ll let you know what notices to send and when to send them and you’ll get alerted as to when those deadlines are coming up. So you never miss one. However, if you’re busy, like most people feeling like you’re wearing so many hats, you can’t even fit through the door. We can also automate this entire process. So all you do is just like the Ron Code Chicken rotisserie, set it and forget it. You just let it run. And this is a customizable tool. So if you want somethings to be automated, somethings to be more hands on, we can build it out according to exactly what’s gonna be the best fit for your business.

(11:25):
Next is our scout research functionality. So I already talked a little bit about this previously, but essentially this is going to give you the peace of mind knowing that you have access to the most comprehensive data in the industry, making sure that you know you have the right property owner, right general contractor, any lenders are identified. Um, you need to make sure your notices and waivers are completely accurate. If not, you know, you could potentially invalidate your whole right to file a lie. We wanna avoid that. So we provide different levels of research based on your needs, but this is really giving you confidence knowing everything is done as it should be.

(12:07):
So the next feature is one of our newest ones and one of my favorites. In a nutshell, imagine getting alerted whenever someone is filing a lien on a job you’re working on whenever you’re sniffing out a potential payment problem. Um, even if someone’s getting paid, you know, if there’s subs sending out notices on the job, right? Job radar alerts give you insight into what’s happening with payments on a job, both good and bad. So you can make decisions about what steps you need to take to get paid instead of just waiting and seeing what you hear through the grapevine from other contractors who are also experiencing problems. Well now in real time you can have a gauge on what’s going on on your project so that if someone is on the job before you and they’re having a payment issue, you get alerted of it before that problem starts to take root for you. That way you can pivot accordingly and make sure that you’re setting yourself up for success every single time.

(13:04):
Last but not least, I wanna remind you about our payment profiles features that we talked about earlier. This is that Yelp for contractors and I definitely encourage you to take advantage of this because it is a free resource. These are gonna allow you to view a contractor’s payment history, see how reliably they pay their substance suppliers. You know, you might ask people and get word of mouth of how you know a contractor you haven’t worked with paid, but the thing is that’s a really small sample size and how they pay someone isn’t necessarily how they pay everyone. So this is gonna give you a really comprehensive understanding of who they actually are, how they pay their people reviews from contractors who have worked with them, as well as real time leans recorded on any projects they’re working on. This is gonna give you all the information to make a smart decision about whether or not you wanna get into bed with one of these contractors you haven’t worked with before. So I know we’re just here running out, um, running up on time and I wanna apologize again for the technical difficulties. You know, I put on a nice shirt and everything and here I can’t get my camera to work, but, um, I’m gonna make sure that all your questions do get addressed. If you wanna respond to them in the chat, I can go ahead and reach out later today and address any of the questions that have come up here.

Speaker 2 (14:30):
Awesome, thank you so much for going over everything in such great detail. Um, we do have a couple questions coming in. Um, I know I see one Lauren, Lauren might see a couple, but, um, first we have one from Christa. Thank you for sharing your question. Christa, she’s wondering who builds out the automation and do we have a team assigned to us?

Speaker 1 (14:56):
Yeah, Christa, great question. Um, we have a team who’s entirely dedicated to our training and onboarding where we go over all your, uh, integrations and automations. We’ll set that up from the very beginning. So by the time you are using Level Set, all of that has been taken care of. And there they’re gonna figure out what’s gonna make the most sense for your business, so what timeframe you want for your automations, how assertive you wanna be with that. Um, so they’re gonna get all, uh, get in front of that from the very beginning.

Speaker 2 (15:33):
Awesome, thank you. Um, another question here. Um, what, okay, I think that this, um, this is regarding, um, job radar. Someone’s wondering what is the good in finding out about payment problems on our jobs after they’re already happening? What, what’s level that gonna do to get me paid if the GCs already defaulting for other contractors?

Speaker 1 (16:06):
Great question. So, um, depending on where you are in the job, there might be subs who come on before you. Let’s say that the demo or the concrete sub is experiencing a problem getting paid from the GC for the sake of this. Let’s say that you do mechanical or plumbing work. Well, if you already know that the GC is slow paying other subs, having that information can be really beneficial because then you can say, well instead of waiting until day 45 to escalate things, I already know problems are occurring, so now I’m gonna escalate them at a much faster rate. Maybe we’re looking at day 20 to 30 to make sure they know that they’re gonna be held accountable so I can get paid with predictability regardless of what’s happening on the job. Hope that answers your question.

Speaker 2 (16:50):
Absolutely, I think it does too. Um, does Pennsylvania have lean notices that are required from Tommy? Thank you for your question, Tommy.

Speaker 1 (17:00):
Yeah, Tommy, great question. So, um, the answer for a lot of these is it depends, um, as a prime contractor, if you’re a general contractor, right, you don’t have any required preliminary notices. That being said, we still do recommend sending them out as a, you know, way to ensure you’re gonna get paid on the job. However, if you are a subcontractor, a laborer, or a supplier, you do have preliminary notices which need to be sent, sent out within the first 45 days of furnishing labor materials.

Speaker 2 (17:33):
Okay? Um, thank you. How do we automate sending out statement reminders to our customers? How do we, how to inter how do we integrate using your credit card payment services with our customers? So first, sorry, first question. How do we automate sending out statement reminders to our customers?

Speaker 1 (17:55):
Yeah, so that’s gonna be one of the things we get set up at the beginning. Depending on what you’re using for your billing and invoicing system, we’ll either build out a custom spreadsheet importation, um, we’ll have a team on our end enter your data in and, or we’ll set up one of our many integrations with, you know, QuickBooks or other invoicing systems we have and it’s gonna pull information from there. And then based on what kind of thresholds and constraints you put in at the beginning when you’re doing your training and onboarding, it’s all gonna just fire recording.

Speaker 2 (18:26):
And then second question, how do you integrate using your credit card payment services? Did you answer that?

Speaker 1 (18:34):
Yeah, so I mean that’s if, if we’re not gonna ask you to change anything, um, basically when you get paid and it populates in whatever your invoicing softwares, that’s gonna then, um, communicate what’s in your level set account that hey, we’ve been paid, we don’t need to send anything out. But if you are looking for us to, you know, be an additional way to get paid, they can always send things, um, through our level set pay function and it will go directly to your bank account.

Speaker 2 (19:02):
Okay, awesome. Thank you. Rich Martinez, where can I find what level set services my company’s plan has and their cost? Um, Rich, I just wanted to let you know Lauren is reaching out to you directly, um, right now. So, um, yeah and then so another question. Um, do you find that offering a 1% 10 net 30 term is more successful?

Speaker 1 (19:30):
Can you say the question again?

Speaker 2 (19:32):
Yeah, do you find that offering a 1% 10 slash net 30 term is more successful?

Speaker 1 (19:38):
So I mean really I think it depends on who your customers are and what sort of jobs you’re working with. Regardless of if you’re offering, you know, uh, 1% for 10 or net 30 day terms, it’s not so much what you say at the beginning, it’s how you hold people accountable. So whatever makes the most sense for your business, it’s still about having a process that is aligned with that to make sure you’re getting paid. Because I talked to plenty of contractors who are on quote unquote net 30 terms and the vast majority of them are never seeing payment in that 30 days. So whichever option you choose, which makes more sense for your business and your customers, it’s about having a way to hold them accountable to that.

Speaker 2 (20:22):
Got it. Okay. Um, another question here. So what is, what is all the information we would need to get to start sending prelims? I think they mean like what sort of, um, information is, is required, um, for prelims?

Speaker 1 (20:39):
Yeah, so it depends on the state you’re in. Um, some states have more requirements than others, pretty much as a general rule of thumb, you’re gonna need to know who the lenders are on the project, their name and their address, as well as the name and address of any general contractors and the property owners. Um, the amount of the project description of labor, sometimes legal property description, your start date, your, you know, um, end date, all, all that sort of stuff is gonna be included for your preliminary notices generally speaking. But what, let me just finish up. Sorry about that. When you’re using Level Set, all you need is the job address, your role on the job and the type of project. We’re gonna go find everything else for you. So if it sounded like all that other information was gonna be hard to track down, no need to worry.

Speaker 2 (21:32):
Yeah, I know that process takes a long time for people who don’t use the service like level set. So, um, thank you for answering that question and see, I don’t see any more questions coming through. Um, so if you have another question, um, or wanted to talk to Julian offline, um, you can email him and he’ll share his email address and we’ll also be following up with more information in general. So thank you guys so much. Back to you, Julian.

Speaker 1 (22:15):
All right, well thank you so much everyone for attending. I really appreciate everybody’s time here. Um, and then if you do have any other questions, my email address is gonna be Huon, J U l i a n at level set L e v e L s e t.com. Looking forward to hearing from all of you. Thank you again for attending.