The Hard Work is Getting Paid

September 29, 2011

What really stinks is how much effort has to go into getting paid on time. For many reasons, public works projects, most new construction, even projects sold directly to the end-user have become mired in delays. I swear it’s a game that other players know the rules better than we do. 

This is often a result of the funding entity, yet other times it seems like a game. I’ve spoken to several members who are starting to keep track of the time spent by project managers and office staff in just getting requisitions done, chasing payments, filling out forms, etc. I know it’s grown dramatically and has become a major profit killer and especially troubling when the margins are lean to begin with. 

Are liens the answer? I hope not, although I know some members who file a lien the same day they sign their contract in order to be in line, just in case. I think more importantly we have to focus on knowing the game, understanding who we are contracting with and reading carefully the front end of the spec book.

Ok, so what’s the correlation between the spec book and payment terms? I have seen other contractors expedite payments by knowing their rights as it relates to stored equipment, their schedule of values, exact dates for submitting requisitions, etc. I know members who send there A/R person out to meet in person the payables staff at the GC before the first billing. You see that’s how the game works. When the CM or GC knows the game better than you do, they keep your money longer, but you can level that playing field.

A few quick suggestions;

  • First, never fall into the trap of showing your invoice pricing upon request for payment. Instead, submit a schedule of values with your itemized marked up selling price. Read the contracts carefully before submitting a price.
  • Second, don’t get caught believing a payables clerk when they suggest late requisitions will be allowed… No they won’t. Keep your house in order and it will eliminate many of the excuses why you can’t be paid this month. 
  • Third, remember our type of business is very equipment oriented work back at the shop vs. the more obvious job site labor oriented trades. This requires you to have excellent documentation, time sheets maybe even video clips showing your work in progress. They don’t believe you because they don’t see you at the front end of the job.    

My advice to our integrator members is to learn the game on the contract side. It’s not fair to your vendors to hold up their money when you’re not paid, but that’s the current remedy. When you sign a dealer agreement, then you should honor the payment terms of the manufacturer. Likewise, when someone buys from you, they need to respect and honor your terms and conditions. No one wants to be the bank… including some banks. — CW

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