In the News

January 23, 2020

 

With the new year just underway, construction creditors will begin to sign and date new forms for construction projects—but how creditors write out these dates and how they handle this critical information may see a new challenge in 2020.

When filling out document after document, it can be easy for creditors to develop a habit for writing in shorthand, especially when it comes to dating documents. Writing out dates in the form of “1/23/20” can shave a few seconds off of a creditor’s busy schedule, but it can also lead to fraud in the future.

Abbreviating “2020” to “20” on documents can allow fraudsters to tack on an incorrect year to the date: an abbreviated 20 can transform into a 2019 or 2021, should someone add a few numbers onto the end of the date. Unlike previous years, tacking on extra numbers can make fraud more difficult to detect than if someone attempted to change the numbers entirely. 

“When people get desperate and do desperate things,” said David Merbaum, an attorney with Merbaum and Becker. “It makes it easier now because you can just add those two numbers and make it any date. I can’t say I haven’t seen people fudge dates or change dates in the past.”

This notion of adding extra numbers to dates circulated around social media quickly during the turn of the new year, garnering the attention of county auditors and local police departments around the U.S. While it can be tempting to brush off viral social media posts, this story does have merit—should creditors encounter unscrupulous characters.

While it’s not likely every customer a creditor encounters has ill intentions and will falsify documents, remaining vigilant and careful could save a document from potential fraud. Anything a creditor can do that will make it more difficult to falsify information should be a practice a creditor adopts. Desperation invites risky action, Merbaum said, and careful deliberation can be a creditor’s best protection against fraud.

“It is a concern. I would suggest you fill in the full date and make a copy,” Merbaum said. “When things are so critical with liens and bond claims, this absolutely could affect the creditors. Changing it is one thing, adding to it is different. If you add it in and you can make it look like the original writing. It’s a little more noticeable when you’re actually changing the numbers.”

 

 

Credit managers just want what’s best. In addition to serving the department’s needs to best run a successful business, credit managers strive to create the best experience for customers. Technology, especially as it relates to payments, has a substantial role in making this a reality; however, it is also a double-edged sword in the battle of security versus convenience.

Any credit department is easily one Google search away from finding a long list of electronic payments (e-payments) security software programs available today. Each program offers its unique spin on keeping information safe between creditors and customers, including personal information and account details.

Making e-payments accessible to customers requires new platforms available on cell phones, tablets and computers, most of which use cloud computing. Microsoft defines cloud computing as “the delivery of computing services—including servers, storage, databases, networking, software, analytics, and intelligence—over the Internet (‘the cloud’) to offer faster innovation, flexible resources, and economies of scale.” However, working in the cloud comes with a caveat: The need for cybersecurity.

Lior Cohen, senior director of cloud security products and solutions at cybersecurity firm Fortinet, told PYMNTS cybersecurity is beneficial but can get in the way with customer convenience because of the everchanging rules and regulations.

“Financial services firms deploy more and more point security products to cover the gaps created by the expanding attack surface,” Cohen said in the interview. “The resulting security silos obscure visibility, grow operational inefficiencies and increase risk.”

At Vomela Specialty Company in St. Paul, Minnesota, Corporate Credit Manager Troy Auth, CCE, said the privately-held company navigates the security-customer convenience debacle by assuming some risks that the large public companies he has worked for in the past could never take, while utilizing other risk management strategies to protect its owners’ investments. The company is also utilizing third-party vendors like Billtrust to achieve and maintain PCI compliance and protect its customers’ confidential credit card data.

Auth said Vomela prefers ACH payments because they use highly-regulated financial institutions that generally operate with the proper security measures. Meanwhile, Vomela is in the process of implementing several Billtrust solutions to bring more convenience to customers.

“Billtrust’s applications will allow our customers to pay us via their own secure Vomela-branded customer-facing portal with a credit/debit/P-card and/or ACH by entering the required information for their accounts,” he said. “The amount they wish to pay us can be deducted from their bank account and deposited into ours. Billtrust does this for thousands of companies and is required to have the appropriate level of security in order to do so.”

Several of Vomela’s largest vendors—who are already using the same Billtrust applications that Vomela is in the process of implementing—have allowed Vomela’s accounts payable department to receive the same customer service experience that all Vomela’s customers will soon be able to use to their advantage, Auth said. Vomela’s accounts payable manager told Auth these vendors’ “Powered by Billtrust” technology applications provide her team with a level of service that the company’s own Enterprise Resource Planning system and IT department “can’t come close to matching.”

Billtrust is one of many companies that offer such service, so Auth’s advice: “Use a company who has a proven record and is small and nimble enough to provide exceptional customer service.”

 

 

Two separate construction projects are facing millions of dollars in mechanic’s liens in a Colorado skiing haven. The W Aspen hotel celebrated its grand opening in August, yet there are still mechanic’s liens against the property, the Aspen Daily News reported. Meanwhile, The Aspen Times states that in late December, a judge approved $1 million in financing for the Aspen Club & Spa, which filed for bankruptcy in May 2019.

Spacecon Specialty Contractors (SCC) filed a complaint on Dec. 31, claiming it is still owed more than $2 million for drywall work ($2.1 million lien) and additional damages ($169,300), according to the Daily News. SCC entered into a subcontract with Haselden Resort Constructors in February 2017. “Despite due demand, Haselden continues to withhold from SSC all sums due and owing for SSC’s work under the subcontract, including the changed and/or additional work,” states the complaint. SCC also claims Haselden failed to process change orders timely among other factors. The complaint states SCC followed statutory time frames to file its mechanic’s lien documentation.

Down Main Street, the Aspen Club faces liens ranging from roughly $30,000 from the city’s water department to nearly $2 million from Gould Construction, reports The Times. The redevelopment of the Aspen Club has been stalled in part due to more than $100 million in debts. According to the article, the U.S. Trustee has objected to the reorganization of the debts. The Aspen Club said it is still nearly two years shy of completion.

Despite one project already open for business and one at a bankruptcy standstill, material suppliers and others still waiting for payment need to focus to ensure they are paid for products, services and labor.

Colorado does not require a preliminary notice before providing labor or material; however, it is still not direct-to-lien either for private, commercial projects. Subcontractors and suppliers have the option to give the owner, among other entities, a written notice that they are on the job, giving the potential lien claimant additional protection under the law. Once the notice has been given, “it is the duty of the person who contracted with the principal contractor to withhold from such principal contractor … sufficient money due or that may become due to said principal contractor … to satisfy such claim and any lien that may be filed,” states the Colorado Revised Statutes.

A notice of intent to file a lien statement must be served to the owner and prime contractor at least 10 days before filing the lien statement before a lien can be preserved. The lien expires four months following last furnishing, at least for commercial projects. If still unpaid, lien claimants have six months from last furnishing or completion of construction, whichever is later, to foreclose.