Three Steps to Avoid Growth Killing Cash Flow Problems on Construction Jobs
You’re taking on more projects, bigger projects, and doing great work, but how can you grow if you’re not getting paid for them on time or in full?
Watch this free webinar to hear Payment Expert Bianca Briggs share a simple three step method to get paid every time, so you can invest cash back into growing your business.
- Why cash flow is the #1 killer of construction businesses, and how to take control of it
- Why having no knowledge gaps related to your payment is critical
- How Levelset can help you send out preliminary notices on all jobs without adding more to your plate
Earn a certificate that can be shared on LinkedIn by watching the recording of all three parts of the Construction Business Growth Series and taking this quick quiz.
Part three: Three Steps to Avoid Growth Killing Cash Flow Problems on Construction Jobs
Speaker 1 (00:05):
Thank you so much, everybody for joining us here today. And for those who are here watching this recording after the fact as well this is a topic that’s so important. It’s literally why this company was founded and was like what we have done since the beginning. So we hope you find what we’re gonna share today. Valuable and thanks again. So, so today we’re talking about a three step method to get paid on construction jobs, which I think we can all agree, healthy cash flow. Sounds like a good thing to want in general. Specifically why that so critical to growing your business? I also wanted to let everyone know that this is the third part of our construction business growth webinar series, and everyone who’s watching will have the opportunity to take a quick quiz and get a certificate to share all what you’ve learned about growing your business on LinkedIn afterward.
Speaker 1 (01:00):
So I’ll make sure everyone gets the links to the recordings of the previous two episodes, which were nine tips to grow your construction business in 2022 and how financing can grow your construction business. And you’ll also get a reporting to this one, three steps to avoid growth, killing cash flow problems on construction jobs tomorrow as well. So I’m gonna hand this off to our construction payment expert. Bianca Briggs here will be our speaker for today’s session. And I just wanna remind everyone that there will be a dedicated time for Q and a at the end. So feel free to drop questions in the chat or Q and a boxes at the bottom of the zoom window here, anytime throughout. She’ll try to get to them if she has otherwise. We’ll get to them all by the end. So thanks again, and Bianca take it away.
Speaker 2 (01:49):
Thanks Justin. Well, hi everybody. My name is Bianca. I’m one of the construction payment experts here at level set. I do a lot of training and onboarding of new customers who have signed up and I’m so happy to be. So speaking with you all today about this three step method to avoid cashflow problems and keep your business growing and expanding. All righty, just a quick level set intro here we are here to help you get paid faster on your construction. We work with contractors and suppliers all over the country to use level set, to protect their payment, their construction payment jobs, and speed up time to payment Today’s agenda. We’re gonna be covering a few things. Why the construction industry is plagued by slow payment in the first place, how you can get paid on time and in full on all of your jobs using the set method. And then finally how to put the cash that you’re getting back into your growing business. Without adding more to your plate, we know that you all are so busy, have a lot going on. We wanna make things as easy as possible for you.
Speaker 2 (03:14):
All right. So why does the construction industry have such a slow payment problem? There is a few things. There’s a payment chain where documents have to go up and money has to trickle down. Paperwork is super complex. And just on average, that takes a lot of time. It takes quite a few months to get paid on your job. As mentioned on that earlier slide on average, it takes 83 days to get paid on a construction job. A few years ago, PWC did a study on how long contractors, suppliers, subcontractors were getting paid and they found that it takes quite a few months on average to get paid. This is why levels that we’ve started releasing our own cashflow reports. We had one come out last year and the one with the 2022 results will be coming soon. So definitely keep an eye out for that.
Speaker 2 (04:20):
And the payment chain in construction is complicated. It can involve a lot of parties with a lot of people. And so money has to flow from the top down sometimes strategically as slow as possible. Unfortunately money can take years to be released at the end of the job that’s that retain. And then documents have to sort of flow up to the top of the payment chain. Subcontractors have to, you know, make those higher tier parties aware that they’re on the job. Sometimes your property owner, your GC, isn’t always aware of who else needs to be paid. And so those two things combined can really clog up cash and slow down the payment process. Third, the paperwork isn’t friendly, it’s really complicated and complex.
Speaker 2 (05:22):
There’s 50 states in this country and they differ across all of them. There’s a lot of deadlines to keep track of, and there’s a lot of requirements. Even prior to the mechanics lie that need to be met before you can file a lie. If you are facing slow payment mechanics liens, they’re an incredibly powerful tool to get you in front of the payment line. However, if you haven’t taken steps prior to that, in many cases, you might accidentally be throwing your payment rights out of the window. So on these documents, the details definitely need to be correct. And in many cases, deadlines need to be met. If those two things aren’t happening that really complicated paperwork can ultimately impact human rights. So these three things, you know, just a history of really slow payment in this industry. The fact that people at the top of the tier aren’t aware of who needs to get paid and people sort of lower tier need to make sure they’re visible on the job, as well as the, the paperwork involved in all of, of it being really, really tricky and a lot to manage is why this industry is facing such slow payment.
Speaker 2 (06:43):
And it can be difficult to expand your business. So we’re gonna talk about some solutions for this.
Speaker 2 (06:52):
But one thing I wanted to mention in regards to that paper, that complex paperwork in general, or even keeping yourself visible on a job is how do you find out who some of these stakeholders are, how do you find out who the property owner is, or a GC or a lender, for example, it’s really, really common to not know who these parties are, but there are a few things that you can do to keep yourself informed and to keep them informed that you are on the job as well. You can conduct your own project research by searching for things like a notice of commencement and or a building permit. A lot of the times these notices will out outline some of those stakeholders. I’ll let you know what property owner is or a GC is a lender. If there is one, you can definitely look for those notices for that information.
Speaker 2 (07:50):
You can hire level set to do some project research for you. We have a dedicated research team. There are scout research team and they are experts at pinning down and verifying who stakeholders are on your jobs so that we are getting out paperwork for you. That is correct. And you can be confident in our research. You can also send a formal request for preliminary. I notice information to your customer and or the GC. Sometimes it may take a little while to turn that information around, but it’s also good to reach out to other stakeholders to get information about who a lot of these parties are ALA got Turk over. She’s one of our customers who uses our scout research team. We’ve been able to really work with her to help her get a lot of the owner information for her notices. It’s given her business a lot of confidence in making sure that her notices are going out with the correct information. You can. We, we do have this again, this job research solution. We have access to incredibly comprehensive job data and construction. And we can use that. We do use that to research and confirm the details on your paperwork. We get instant updates about who’s on your job, and you can sometimes partner with an expert research team to verify property information. So you can definitely GLE on us to do a lot of that heavy lifting at the beginning of a job to make sure that your paperwork is going out accurately.
Speaker 2 (09:46):
How can you get paid on time and full on the job and utilize the set method? We recommend these steps to everyone working in construction, because we’ve seen it time and time again, that following these steps will get you paid faster on the job, give you more successful jobs in general and help you have really wonderful relationships with your customers.
Speaker 2 (10:16):
So first we’re gonna talk about step one C and be seen on the oh, but also if you did join us for those two sessions earlier in this series, you might remember the session nine solutions to support your growth goals. The set method really, really speaks to some of the steps that were outlined in that webinar specifically around setting clear payment expectations on your jobs and protecting your lean rights from the beginning. And then finally staying tuned to the cash problems that may arise on a job and getting really proactive about them. So this does tie into a lot of stuff that’s been covered in earlier parts of series, if you weren’t able to join for those, as Justin mentioned earlier, we will provide you with links so that you can check those out as well.
Speaker 2 (11:11):
All right, so CN be seen on the job. This is what we recommend everybody do at the start of their job so that their lean rights are protected and payments are coming in faster. You wanna know who you’re working with so that you can get the right paperwork to the right people at the right time. And there are, again, a few ways to do this notices of commencement building permits, request for information, these documents. And then of course, sending out your own preliminary notices to the appropriate parties. Once you know who they are. It keeps everybody on the same page about contract terms from the start. And we’ve seen that most customers who are sending out preliminary notices consistently are not facing slow payment or no payment at the end of their jobs. So the, again just a few more things to touch on here. We believe it’s always a best practice to send a preliminary notice on your jobs even when it’s not required. And sometimes these notices may have different names based on where you are in the country. You might notice as a notice to owner or notice of furnishing. You just wanna make sure that on every job you’re getting that notice out when you start working.
Speaker 2 (12:44):
Second thing in the set method is exchanging paperwork easily, easy, streamlined paperwork is gonna give you confidence that you’re using the right to documents at the right time. You want your paperwork to have language that is professional and simple and clear so that you are always communicating great expectations with your customers and making it easy for them to communicate with you. If they have questions or if problems should arise. Finally,
Speaker 2 (13:26):
You wanna keep the lines of communication open by talking across the payment chain, communicate with everybody on the job, reach out to the parties. If you have questions so that you can avoid disputes like liens, people don’t wanna file liens. Nobody wants the lien filed against the property. So you wanna make sure that you’re being proactive and staying informed. And if issues do arise, you wanna take action really, really quickly to fix misinformation and resolve miss understandings so that you can avoid having to file things like a notice of intent or a mechanics lie, or a bond claim on a job.
Speaker 2 (14:15):
We have some solutions at level said, and this first one, our payment profiles, you know, this is free on our website and open to everyone to use. And these are our payment profiles. We have profiles for contractors all across the nation, subcontractors suppliers as well. And we give information about their payment, reliability, as well as verified reviews from other contractors on their experience, working with them so that you can make informed decisions about working with particular parties. You can use our payment profiles to find trustworthy folks to work with and, or get a heads up about the history of a current customer you might be working with so that you know how to keep yourself and your payments protected. And again, our payment are available to everyone on our website. We also have job radar alerts. You can get notified if a payment issue arises on a job that you are on. If someone takes action on a payment, if someone takes a payment on a job you’re working on or associated with, we can get you real time alerts so that you can stay ahead of payment problems. So you can get insights into whether liens have been filed or foreclosures or bankruptcies have happened. Other financial issues as well by utilizing our job radar alerts.
Speaker 2 (15:58):
How can you invest cash back into your growing business without adding more to your plate? So we’ve talked about this very, very slow payment problem in construction and how the set method can really help you get ahead of that. So to bring that money back into your cash, you will wanna think about automating the set method seen and being seen on the job, keeping the paperwork easy and talking across the payment chain. If you add some automation to that, You’re going to start to see really, really wonderful results. Here.
Speaker 2 (16:34):
We offer lean rights, manage management here at level set. You can send your notices, lean waivers in bulk to protect receivables on every single job. We also offer things like invoice reminders and demand letters using standardized templates so that you can appropriately escalate payment problems when they happen. We also have levels set pay, which allows customers to send you payments online, speeding up that payment as well. And so think about ado, not only adopting the set method, but getting a rhythm going and a workflow going and at your workplace, make it automatic. We can take a lot of that off of your plate for you. Thomas box, he’s the director of credit Herby. They’ve been using us to get their preliminary notices going out automatically on every single job. That’s just one less thing him and his employees have to worry about or stress about. And then it also sets them up for success on every job. And then Don moer is at PCI Since automating that set method, they haven’t missed a notice deadline and they haven’t had a situation where they couldn’t move forward with filing Elena if needed, because they were keeping themselves visible on all of their jobs and sending those preliminary notices out from the very beginning. So these are the payoffs of automating the set method.
Speaker 2 (18:09):
The second thing you can do to bring cash back into growing your business is buy materials for bigger jobs. Allow yourself to, to take on these bigger jobs, which will bring more money back into your company. We offer materials unit level set, freeing up cash flow for you from the very beginning, so that you can work with any supplier to get materials, to take on these bigger jobs. You can apply for materials. Financing takes just a few seconds. It doesn’t impact your credit in any way. You can typically get approval within 48 hours and you enjoy 120 day payment terms. Definitely think about what it would mean for your business to take on these larger projects and what that money could do for you down the line. Finally, you can make strategic financial decisions. You don’t wanna get into a position where you are pulling money out of your business reserves, or even your own personal cash reserves to cover payroll, or just keep the operating expenses of your business. Growing as that money is coming in, you can learn and, and inform yourself to make better financial decisions going forward. And so, excuse me, these are
Speaker 2 (19:46):
A lot of the best practices that we’ve presented to everybody in the construction industry and our customers to keep the cash flow flowing, keep the cash coming in and avoid payment problems down the line. I hope this was helpful and I can open up the floor to any questions or comments that anyone might have.
Speaker 1 (20:20):
Give it a second here. See if anybody has any questions, but thank you, Bianca. That was fantastic. And thanks everybody who’s been here. Yeah, I hope, hope you enjoyed it. Let’s see. I don’t see any questions in here. Yeah, if anybody has any questions after the fact you can always reach out you know, will send an email out and we, we read replies to those also reach. Yeah. and also give a link to contact anybody at level set. If you have any questions about the things we talked about today and yeah. Thanks Karen for showing up as well. Yeah.
Speaker 2 (20:58):
Thank Karen for joining.
Speaker 1 (21:01):
All right. Yeah. And we also have a community online where you can ask questions that can answered by our construction payment experts like Bianca, as well as lawyers in the industry, even, and credit managers, just a whole, whole community up there. Level set.com/payment help slash ask a question with between we’ll a link to that as well. And thanks again. Yeah. Have a great day, everybody.