Debt Collection for the Construction Industry
The construction industry is a dynamic sector with constant changes in policies, demand, regulation, and practice. With multiple facets of the industry constantly changing it is vital for companies in the space to successfully collect their invoices. Failure to properly secure payments from clients can create a cash crunch that can result in continued losses and even insolvency. Even the largest construction companies can end up in bankruptcy proceedings just as Natelco Corp, Welded Construction, and Hultgren Construction found out if they are unable to secure their invoice payments. The key to successfully collecting payments in this sector is understanding the unique factors that can lead to problems with payment.
Despite having the ability to place liens when payment is not received, millions of dollars a year is written off by construction companies as bad debt. Perhaps one of the most difficult situations operators of construction companies find themselves in is the task of trying to collect payment for change orders that exceeded their original bids on contracts. When bidding a contract for a construction project there are circumstances that may be unknown at the time of the bid being placed. Additionally, developers will also make changes and adjustments mid-project which will change the pricing that was originally quoted. With many of the decisions being made on the job site, there are almost always occasions where changes are authorized but there is no paperwork or change order completed recording the changes. Of course, this will not be an issue when work is being performed, but the moment a contractor submits the invoice for the additional work they are faced with refusals and requests for documented proof of the increases.
In addition to this challenge, all contractors must deal with the burden of retainage. In the construction sector, 10% of an invoiced amount is typically left unpaid by the general contractor or the developer and held in retainage. As construction projects often involve multiple companies and contractors all working on the same project the work performed by one company may be affected by the work performed by another. This amount is customarily held so that if any work deficiencies are discovered later the construction company will still have an incentive to remedy the problem. Unfortunately for contractors, this last part is not typically paid out until the project is finished. This creates a huge burden for large and small contractors alike. With such a large margin of the invoice being withheld anyways, it is even more important that construction companies collect their billed invoices, or they will be faced with even deeper deficits.
When faced with unpaid invoices many construction companies will turn to a 3rd party debt collection agency to assist with the recovery of their funds. Our agents are trained to utilize various tools when addressing these issues. The agents handling a claim will focus on identifying the cause of the debt, explore remedies to cure the issues, and when appropriate use the appropriate leverage to incentivize the debtor into resolving the matter. Unlike other agencies that use cookie-cutter demand letters and scripted agents, often in an overseas call center, our agents thoroughly investigate the claims to ensure that no stone is left unturned in securing payment. When a company still refuses to address the obligation, we have a network of collection attorneys that will not only litigate the claim but collect through garnishments, liquidations, and other court remedies that force a recovery.
In addition to recovering the debt, there are also other factors that make selecting the right company when using a collection agency. On top of being taught collection tactics, our agents are also versed in business etiquette and conduct to ensure that our clients are being represented professionally and that their customers are being dealt with respectfully. In times where anyone can write a yelp or google review, it is vital that construction companies are represented as a collection agency that conducts business professionally.
If you are in the construction industry and faced with the problem of collecting on a delinquent debt contact our office to speak with a specialist to discuss your collection needs. Unlike other companies that will simply provide a standard quotation and a slick sales pitch, our intake specialist will consult with you to better understand the challenges that you are facing and devise a plan and pricing option that will serve your needs. Your focus should be on the development and growth of your business. The logistics sector is highly competitive and allowing our expertise to aid you in the recovery of your past due accounts will not only increase recovery rates but provide you time to devote to your business.