Published on February 5, 2014
THE PAYMENT FUNNEL
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PAY WHEN PAID PAY IF PAID JOINT There are a lot CHECK AGREEMENTS BANKRUPTCIES of reasons why DELAY DISPUTES & DAMAGES getting paid is tough WORKMANSHIP DISPUTES inORDERS your industry CHANGE SCOPE OF WORK ISSUES CODE INSPECTION VIOLATIONS PREVAILING WAGES
Every time you can’t collect a $10,000 Debt Your company needs a lot of money just to break even and oﬀset that loss: ! 10% NET: $100k 5% NET: $500k 1% NET: $1m
Time Flies 10 DAYS
Time Flies 30 DAYS
Time Flies 60 DAYS
Time Flies 90+ DAYS
SO WHAT HAPPENS? Your A/R Report Gets Really Long & Debts Slip Away...
WHAT can you DO to create an ORGANIZED & REPEATABLE System to GET PAID?
You Need A Payment Funnel
What’s a Payment Funnel? ! 1.Start of Furnishing To A Project: Send preliminary notice to protect mechanics lien rights 2.After Account in Default for some period of time: Send a notice of intent to lien 3.If payment not received X days after NOI sent: File a mechanics lien 4.If mechanics lien not paid within Y days: Send to collections / attorney 5.If mechanics lien not paid within Z months: File a foreclosure / collection suit
Payment Funnel Protect Mechanics Lien & Bond Claim Rights On All Projects At The Start By Sending Preliminary Notices
Payment Funnel Smart Companies Always Send Preliminary Notices Because they prioritize your invoices above others.
Payment Funnel Protect Mechanics Lien & Bond Claim Rights On All Projects At The Start GCs and Owners Track Who Does And Does Not Send Notices
Payment Funnel Protect Mechanics Lien & Bond Claim Rights On All Projects At The Start 30 Days Overdue Send Notice of Intent
Payment Funnel What If... 50% Of Your Trouble Accounts WOULD PAY YOU Within just 20 Days If you just sent ONE really, really inexpensive DOCUMENT?
Payment Funnel Protect Mechanics Lien & Bond Claim Rights On All Projects At The Start The Notice Of Intent To Lien 30 Days Overdue Send Notice of Intent
Payment Funnel Protect Mechanics Lien & Bond Claim Rights On All Projects At The Start 30 Days Overdue Send Notice of Intent “X” Days Overdue File Mechanics Lien Two Factors to Consider in Determining When to ﬁle a Mechanics Lien: ! 1: Company Policy (How long was given in the Notice of Intent? What do you want your A/R report to look like?) ! 2: The statutory deadline in the project state. All states have a deadline by which a Mechanics Lien must be ﬁled - Don’t miss it!
Why Mechanics Liens Rule View This Other Presentation To Learn Why Mechanics Liens Work To Get You Paid ! Or Articles Here: Why Lien Mechanics Liens are the MOST EFFECTIVE tool to get paid in the construction industry.
Payment Funnel Protect Mechanics Lien & Bond Claim Rights On All Projects At The Start 30 Days Overdue Send Notice of Intent 75 Days Overdue File Mechanics Lien File Foreclosure Lawsuit Before State Deadline
Payment Funnel 100% Of Projects Need 5% Or Less Of Projects Need 2.5% Or Less Of Projects Need < 1% of Projects Or Less Need
Payment Funnel 1 Account = $10,000 1000 Accounts $10,000,000 Of Accounts 90k Uncollected (in Litigation) 50 Accounts = 0.9% Uncollected Percentage 25 Accounts And Even That May Be Collected Through Litigation 9 Or Fewer Accounts
Payment Funnel Client Example Bad Debt Write Oﬀs: 2010: .035% ! 2011: .067% ! 2012: .012%
Krupp A/R Funnel Analysis At 60 Days: 24% At 90 Days: A/R Funnel ThyssenKrupp’s 14% Percentage 5% At 120 Days: Outstanding New Installation Line of Business At 180 Since August 2013 Funnel Example Days:A/RN/A ThyssenKrupp’s Payment Funnel Results Client ThyssenKrupp A/R Funnel Analysis Projects Outside of zlien Payment Funnel ! without zlien timely notices Percentage Outstanding ThyssenKrupp’s A/R Funnel New 30 Days: of Business At Installation Line 56% Percentage Outstanding Since August 2013 At ThyssenKrupp’s24% Funnel 60 Days: A/R without zlien timely notices ! At 30 Days: 56% Percentage 14% At 90 Days: Outstanding At 60 Days: 24% At 30 Days:Days:56% with 5% At 90 Days: 14% At 120 Installation zlien Business At 120 Days: 5% New Line of At 180 Days: N/A AtThyssenKrupp’s 24% Funnel 60 Days:Days:A/R 2013 At 180 Since August N/A zlien notices timely sent At 90 Days: Outstanding Percentage 14% ThyssenKrupp’s A/R Funnel Percentage Outstanding 120 Days: At New Installation Line2013 46% At 30 Days: 5% Business of with zlien Since August AtDays: timely notices 60 zlien 15% ThyssenKrupp’s A/R At 180withoutDays: N/A Funnel ! Percentage At 90 Days: Outstanding 3% At 30 Days: 46% At 60 Days: 15% At 30 Days: Days: zlien 56% At 120 with 0% At 90 Days: 3% New Installation Line of Business At 120 Days: 0% At 60 Days: Days:AugustN/A At 180 Since 24%2013 At 180 Days: N/A ThyssenKrupp’s 14% Funnel A/R zlien notices timely sent At 90 Days: Percentage Outstanding Krupp A/R Funnel Analysis ! New Installation Line of Business Since August 2013 without zlien timely notices Projects Within zlien Payment Funnel ! New Installation Line of Business Since August 2013 zlien notices timely sent ! !
RESULT: Lower DSOs, Less Bad Debt
Learn More About Setting Up Your Payment Funnel GET ASSESSMENT
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