Tag: Liens

Mechanic’s lien laws are the bedrock of the construction credit field, offering credit managers protection as they await payment during long projects. As credit managers work in multiple states, they will encounter two distinct types of liens: full price liens and unpaid balance liens. While both offer protection, it is critical that credit managers understand what type of lien they are filing.

When deep diving into a customer’s finances, the last thing a credit manager wants to see is a tax lien. While the first instinct may be to tighten that customer’s terms, more research needs to be done into the lien before credit managers can know the exact implications for their ongoing relationship with their customer.

Construction credit is a highly volatile business, in which risk is contingent on the project’s progress and outcomes. Cash flows down the “ladder of supply,” a tiered structure that determines when each stakeholder receives payment. With suppliers at the lowest tier, credit professionals are typically the last to obtain funds.

In a construction project, many elements come into play: planning, design, financing, materials, contracts, workforce and more. At the end of the day, everyone in the supply chain, from the owner to the supplier, wants to get paid. For credit professionals, the concern is the same.

Georgia’s two-step process for pre-lien notices and lien waivers can challenge even the most experienced credit professionals. Missing any key deadline can result in a complete loss of lien rights, regardless of the money owed on construction projects. For example, failing to serve a Notice to Contractor by day 30, even by mistake, can cost you tens of thousands.

As a credit manager, you are likely familiar with the sinking feeling you get after learning a customer has filed for bankruptcy. Whether they are aiming to reconstruct or liquidate their business entirely, customers filing for bankruptcies can send even the most experienced credit managers scrambling.  

Those working in construction credit know all too well how important lien rights are on any project. Regardless of what stage a project is in or whether you are serving as a contractor or subcontractor, it is essential that a credit manager understands their lien rights in that particular state to best protect themselves from risk.

In the construction world, a mechanic’s lien is a vital legal instrument protecting laborers and suppliers. Without it, contractors and subcontractors lose legal protection, resulting in significant losses. Several factors influence lien rights. However, can other contracts or agreements, such as a non-disclosure agreement, override your right to file a notice or initiate legal proceedings?

NACM’s Secured Transaction Services (STS) provides and prepares construction credit professionals with several tools for success. STS handles projects and assists credit professionals in securing corporate receivables to ensure profitability.