You have made all the phone calls you can make, and the GC still hasn’t paid you for the job you finished five months ago. Short of filing a lien, what extraordinary measures do you take to make sure you get paid?
Hold final paperwork, i.e., warranties. If already issued, write the (Return Receipt Requested) owner and let him/her know that these are null and void for non-payment.
—Greg Earhart, Vice President, Northeastern Specialty Systems,Inc., Schenectady, NY
I would send a certified letter to the GC and copy the owner requesting a Notice Of Commencement and Letter of Furnishing. I would also state that the GC has failed to make final payment and that in one week’s time I will file a lien to preserve my rights. Furthermore I would ask the owner that any monies owed to the GC be back-charged for my outstanding balance and paid directly to me, otherwise add my name to any check that the GC has coming. If that doesn’t work, then lien!
—Jonathan Diepstra, Estimator, The Bouma Corporation, Grand Rapids, MI
Visit the GC. Determine what is wrong exactly. Work out a plan from that
point.
—Anonymous
I call every day, sometimes 2 to 3 times per day, to their accounting department and make them nuts to the point they just send the money to get rid of me.
—Anonymous
Speak to the project lender. Have an attorney said a letter to the GC.
Start a communicating with the other subcontractors.
—Anonymous
Beg.
—Anonymous
First of all, if you are waiting for payment five months after completion, you have a serious problem in your A/R department. No bill should be more than 30 days, and any customer who is unable to pay within that time frame isn’t worth doing business with. If he isn’t a problem now, eventually he will be. We have a clause in our contract
stating that the contract price has been discounted in exchange for prompt payment. This amount is usually about 10 to 15% of the total contract price. We have had to enforce this clause only a
couple of times, but I can guarantee you, if a customer is late in paying, they definitely sit up and take notice when you remind them they will need to fork over hundreds or thousands of dollars. One customer was completely ignoring us … we went to court, got a default
judgment including reimbursement of the discount. Because we consider it a discount and not a penalty, the judge was willing to give us the extra 15%. When the sheriff levied his account, we definitely got a call from him. This has been a very effective collection
tool.
—Anonymous
We are a specialty geotechnical contractor with a nitch. We usually get tied into the project by the soils engineer so we will have contacts with the owner’s representative. We know the typical pay cycle (typically 45 days for larger jobs) and find out if the GC has been
paid. If so, we go to our contact with the GC and inform them that we know that they have been paid by the owner. We also ask if the owner is aware that the GC is not paying the subs. If this has no results we show up to the weekly job meeting and bring up the fact that we have not been paid for the work. After several weeks of that we usually get paid. If we have to go to extreme measures to get our money, we put that contractor on a list and do not work with them again.
—Michael J. Miluski, P.E., President, Compaction Grouting Services,
Inc., Media, PA
The first problem is letting the collection go five months. We always react while we are still in our window for doing a lien, which is 90 days in New Jersey. If we make no headway with the builder, we reach out to the owner to introduce ourselves, explain the problem, and to advise that we may put a lien on the property. If they have not paid the builder, this most likely will show results. If they have paid the builder, we file arbitration. We always make certain there is an arbitration clause in the contract. We win the arbitration, get a
judgment, and in some cases have contacted the local sheriff, who will seize assets. This is rare. Usually along the line, a check shakes loose.
—Anonymous
Break his legs. If it is a female, take her to dinner, then break her legs.
—Joe Vernaglia (full blooded Italian), Operations Manager, DP Plastering
Shame on you for letting it go this long, I would place a call to the contractor and state that my bank is forcing me to take action. That action would include a call to the owner, the bonding company and the financial institution that funded the project explaining our position and requesting their assistance before they became a part of legal action.
—Mike Chambers, President, J & B Acoustical, Mansfield, OH
Our policy is to file a lien after 90 days, unless we hear good lies from the GC. A lien is the only way to get the GC’s and owner’s attention.
—Richard Meacham, Owner, R.T. Meacham Drywall Inc., Charlotte,
NC
Typically if the GC is not paying the subcontractors it’s because the money has not been released to the GC from the owners. I’ve found that communicating directly with the project owners produces faster results.
—Paul Talsma, President, Talsma Drywall Inc.
I send certified letters that require a signature by the recipient stating the amount owed, date due and my right to file a lien on the property to the GC and the owner. When the owner receives the letter, they get things taken care of.
—Anonymous
If it is under $3,000 I find five key people from super to VP, A/P officer (everybody I have talked to) and file small claim against all of them for a cost of filing fees—$76, and see if five people really want to spend part of a day “x” in small claims court. It has never failed.
— Walt, CEO, Spal-Tech
