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Send Those Prelims. Contractors Understand.

Posted by Ted Rectanus

9/12/17 11:59 AM

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Taking steps to protect one's interests is status quo in the business world. Who hasn’t protected a big financial purchase with a warranty? Who hasn’t had some sort of insurance measure in place in case of emergency? The same mindset is held among most general contractors and property owners when they receive preliminary notices from their subs and supplies when they begin a project.  

Trust me, if you send those prelims, contractors will understand.  In this article, we'll help you understand why!

why they understand

General contractors and property owners understand why sub-tier companies want to protect the hard work they put into a job, but there are also other benefits for the higher-ups with this practice:

  • They want to know who’s on the project - Preliminary notices provide specific information about parties involved on a project, and it might be the only way folks with very high stakes in a job know which sub-tier parties were participants.
  • They want to stop payment issues before they start -  If the top parties on a construction project have a clearly defined project graph and know all the project participants, they will be able to plan out and manage payment plans. This will allow these vested parties to tackle potential disconnects in the flow of payment before they become bigger (and, frankly, more financially devastating) problems down the road.
  • They will have an accurate list of waivers - Lien waivers serve as a type of receipt for payment received within a certain timeframe. A party could pay 7 companies for their contribution to a project, but if there are 8 project participants, they are still a threat of lien. If they know who they will be collecting receipts from at the beginning, they will know everything is settled at the end.
  • They want to know they’re doing business with a company who knows what they’re doing - Sending preliminary notices doesn’t just show you plan to collect for work your company does, it shows that your company has a process in place for doing so. A business that knows what it’s doing and plans on doing it being baked into established company policy is reassuring to higher-ups.
  • They want open communication - By sending a preliminary notice, your company is opening up the line of communication if it is needed at any point. There are a lot of moving parts during a job, and it doesn’t  make sense for the controller of those moving parts to be disconnected from certain aspects of the job. Higher-ups want to be in touch with what’s happening on their project.

Explain your notice & lien process to your company & customers

what's next for you

The taboos surrounding sending preliminary notices on projects are evaporating, resulting in more and more business adopting this proactive model for protecting their interests. Call zlien today to see how your company can benefit!

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Topics: Best Practices, preliminary notices