PRE-CONSTRUCTION CREDIT REPORTS

Minimize Surprises With Your Cash Flow

Back in the 70’s and early 80’s a Builder or Construction Lien all but guaranteed that you would get blackballed in the local market. Today’s construction market conditions are quite different. Developers and Project Managers are taking all necessary precautions to protect themselves from risk and so should you. In fact, many suppliers and sub-trades are embedding language in their credit applications and customer contracts that specifically state that a lien will be filed in the event of delinquency.

LIENS ARE BECOMING STANDARD OPERATING PROCEDURE

Make no mistake – liens are a collection tool, not a credit granting tool. Upfront due diligence of the proposed project is the best way to decide if a potential bid is within your tolerance for risk. Liens only help once your cash flow is already in trouble whereas a Construction Credit Report may provide some advanced warning of how a Developer, Engineering firm, or General Contractor typically manages its sub-trades and pays its bills.

 A Construction Credit Report should provide you with the following data:

• Construction Credit Reports providing credit ratings, in-depth analysis, supplier payment trends, legal and business data
• Freshly investigated bank & trade ratings with historical references for comparative analysis
• Legal Name Verification and Business registration details on all reports
• Principals & Directors verified & linked to related businesses
• Affiliated companies reported

SOMETIMES THE BEST DEAL IS NO DEAL

Before you formalize your bid on a project, we recommend contacting our office to obtain a full Construction Credit Report which contains lien data for Alberta, Saskatchewan, Manitoba, Ontario and Quebec, as well as project credit reports, bank reports and business ownership cross-matching.

Many Lien-Pro® customers have commented that the cost to obtain a Construction Credit Report was “cheap insurance” when compared to entering into a contract with a high credit risk customer.

Contact us today for a quotation and sleep better

International Forwarding

International forwarding or legal forwarding are the terms used by collection agency insiders when they must retain the services of an attorney in a foreign jurisdiction if the agency is unable to collect on their own.

Generally the practice of most collection firms throughout the United States, and for that matter, the rest of the world, is to automatically sue a foreign past due customer using an attorney in the debtor country. This is a long-established practice that has been satisfactory to creditors for many years. Unfortunately the original collection agency doesn’t have the ability to thoroughly research the debtor to ascertain the probability of recovery and ironically neither does the receiving attorney. Many times the creditor is suing blindly and incurring an even bigger loss due to suit filing fees and attorney fees.

Is Suing Blindly a Good Idea?

Rather than allowing your collection agency to follow the old established methods, we recommend a different approach. In today’s market, the creditor can ask that the past due customer be sent to a specific attorney or third-party debt collection agency in-country. The benefits to contracting with a collection agency in the debtors country is that, unlike most lawyers, they report your claims to the local credit bureaus.

Many times the account gets paid due to bureau reporting because you have “brought the fight” to their doorstep and have negatively affected their credit. An equally important benefit to contracting with a foreign collection agency is that they work on a contingency basis too. The agency will provide you with a very conservative estimate of recovery if legal action is required. They only get paid on recovery whereas a foreign attorney will be sending invoices for each step they may take.

So What Should a Creditor Do?

Just as in any industry there are good operators and bad ones – and collection agencies are no exception. We recommend using a collection firm, in your customer’s country that is an active member of ACA International or other professional associations such as The International Association of Commercial Collectors or the League of International Creditors. These professional associations vet their members very carefully, looking for proof of compliance, proper insurance and client trust bond coverage.

Don’t make a bad debt even worse by suing blindly. Be sure to ask your foreign attorney or agency to conduct a full pre-legal investigation first. This step is significantly less expensive than traditional alternatives. 

Balanced Score Card Management

According to Wikipedia, the Balanced Scorecard is a strategy performance management tool – a semi-standard structured report, supported by design methods and automation tools that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the consequences arising from these actions.

The origins of a Balanced Scorecard run deep and have been called various names such as “dashboard” and “performance management” or “corporate scorecard”.

The commercial debt collection business is, in some ways, the ultimate production and results-based environment. Compensation is solely based upon performance – No-Collection No Fee. Many factors and business processes must come together to result in the recovery of money. In more cases than not, the collection agency can do all the right steps, and the recovery may not happen. The best outcome in these situations is a timely report as to why the account should be sued or written off.

At Priority Credit Recovery (PCR), we look at the top 20 action items (like KFC's eleven herbs and spices) that MUST be completed if a client’s receivable is considered fully worked. Our operations, sales, and finance teams are all scored according to the vital components of their work. Weekly meetings are held to review our individual and team results. Each team lead must present their results and discuss. Issues that may be identified during team presentations are discussed in management strategy sessions and plans are made to address those issues.

At PCR, we have borrowed a phrase from Gino Wickman’s book “TRACTION”. The phrase is “everyone has a number”. If you have developed your scorecard correctly, objective data (numbers) can be allocated to each business process. We have found this process to be very illuminating at times. Once you shine a light on something – it gets fixed quickly. 

Our firm highly recommends that a process similar to this be implemented in your business. Each business unit - Sales, Credit, Warehouse, Procurement, and Human Resources as well as Information Technology, can provide the executive management team and business unit leaders with the critical data they need to run the business.

If you would like help to set up, implement, or manage the ongoing scorecard process, give PCR a call. Our executive team can provide the consulting necessary to get your business running at peak efficiency.  Our number is 1-866-266-0117.  Dial extension 350 for assistance.