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Construction Credit
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Construction Credit & Collection Portal
Construction credit presents its own unique way of doing business and we've created this portal with resources and materials designed to help those engaged in construction credit and collections.
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Collections -- The Human Side
"Credit professionals must be 'people' people," insists Kathleen Tomlin, CCE, credit manager at Kaiser Cement Corp. (Pleasanton, Calif.). "You have to realize that when you're calling a customer for money, you're not talking to a company, an account, or a statistic. You're talking to a real person--just like you. You're asking that real person to cut you a check and mail it to you." - what techniques Tomlin uses to develop a good personal relationship with her customers
- a little, but much appreciated, gift that Tomlin brings with her when visiting customers
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Helping Contractors Avoid Collection Problems
Difficult as they are, the collection problems of construction industry suppliers like Geneva Rock can pale in comparison to the problems emcountered by construction contractors themselves. The owners of small construction businesses often feel uncomfortable asking prospective clients for credit information. "However, it's essential for entrepreneurs and small companies to do this because they need to be paid on time if they intend to stay in business," observers one credit manager who often counsels his contractor customers on collection problems and tactics. He offers some simple tips to assure prompt payment: - how and why you should create your own credit report
- what six questions you should ask trade references
- three questions to ask a bank reference
- final considerations on how to make the decision to sell on open credit or not, and the possible alternatives if you don't think the customer is qualified for of open credit
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Construction Supply Credit Manager Develops New Collection Process
When customer accounts at one Alabama construction supply company get to the 60-day column, the credit manager calls to begin the collection process. In the past, she found that the reason for late payment was not a cash-flow problem or other financial difficulty, but a billing problem. For example, the invoice wasn't received, or it was lost or misplaced, or there was an error, question, or other problem. All of these led to delays of 30 days or more. Here's the new collection program she developed to alleviate these problems. . . .
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CFO Discusses Cleaning Up a Poor Billing and Collections Culture
"When I first arrived at this company three years ago, I was shocked at the casual attitude about invoicing," recalls one credit manager we know. "Worse than that, I discovered that our chief customer, a federal agency, had not been billed for thousands of dollars of legitimate expenses incurred years before. We now invoice its clients by the second or third working day of the month. The faster you get them out, the faster they are paid." . . .
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Separate Job Accounts Facilitate Contractor Collections
"Many distributors don't even know where the materials they're selling are going," observes Credit Manager Russell Bye of Judd Supply Company, a Coon Rapids, MN, electrical materials supply contractor. "That means they have no mechanic's liens or bond rights." This article discusses the merits of separate job accounts, in comparison to regular accounts, which are not protected by liens or bonds and which involve materials subcontractors purchases to restock inventory for use on a number of small jobs. - What specific information Judd asks of its subcontractors to determine risk and set credit limits.
- How often they check aging reports
- Why collection follow-up is important from a lien or bond rights standpoint
- How and why Judd interfaces with both general contractors and owners, as well as subcontractors, on payment issues, and the advantages of this strategy
- Unique ways Judd educates their subcontractor customers
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Deeds in Lieu of Foreclosure
This legal case study looks at a situation in which a contractor ended up taking over the second mortgage on an office complex he'd done work on. After the owner of the office complex paid him late a few times, he offered to turn over the property to the contractor to fully satisfy the mortgage. This case and its analysis examines the concepts of judicial vs. non-judicial foreclosure, and what is involved in each, including an overview of what procedures are required in each process. - How long a non-judicial foreclosure usually takes
- Why a deed in lieu of foreclosure is an attractive alternative
- How you (as creditor) should proceed if the property is worth less than the mortgage
- Why courts sometimes frown on these transactions
- The importance of independent appraisals in the process
- Steps to take to protect against future preference claims
- How when the same person owns a mortgage and the property, the mortgage merges into the title and why this can present a strategic disadvantage to the lender... What steps you should take to protect yourself.
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Competing Liens: the Basics
by Ann Morales Olazábal, MBA, JD
One customer of Denton Auto, a large supplier of auto parts, is Fitch Motors, Inc., a full service auto dealership in the business of selling new and used cars, as well as providing warranty, other service, and body work. Fitch has established a credit agreement with Denton, and as part of that arrangement Fitch has agreed to grant Denton a security interest in any and all inventory sold on credit until that auto parts inventory is paid in full. Fitch has experienced some cash flow problems and is now "slow pay." Invoices are 120 days out and a few are even longer, but Fitch has continued to send a steady stream of payments. Lisa Stein, Denton's credit manager, is concerned but not terribly so because she knows legal action can be taken, if necessary, to repossess the bulk of the auto parts Fitch stocks. However, in a telephone conversation with Fitch's accounts payable staff, Stein hears something that does give her pause. Apparently Fitch has also given a lien on its entire inventory of automobiles and auto parts, as well as in its equipment and receivables, to a local bank. Can Fitch do that? . . .
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Here's what our members are saying ...
"What a great resource! This is the perfect place to refer our customers who have collection problems so they can improve their collections.
I figure if we can help them collect faster, they can pay us faster and order more product."
William C. Edgar, CCE
Director of Credit
Zippo Manufacturing
"I can't believe I didn't find out about your site sooner."
"It was exactly what I was looking for."
Jim P.
Hot Springs, AR
"The first item I found in your download library made my subscription worthwhile. I'm definitely renewing!"
John A.
Kerrville, TX
"Your site saved the day for me. The video tutorial helped me quickly and solve a problem I've been struggling with for a year.
Robert K.
London, UK
"I can't say enough about how valuable your site has been to our business. The articles and especially the free downloads really are great."
Victor O.
Seattle, WA
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