Job Information: When to Gather It, What to Do With It
When extending credit to a customer in the construction industry, beyond the credit application, credit managers also need to be mindful of critical job information. Just as creditors give new customers a credit application before extending credit for the first time, job information needs to be gathered for each of the customer's projects. Should there be a dispute in terms of payment in the future, a creditor can take legal action by filing a lien on the customer's property.
Gathering job information has its challenges, such as distinguishing between public and private jobs or leasehold liens and traditional liens. But obtaining the correct information can be the difference between collecting potentially hundreds of thousands of dollars or recovering none of the debt.
"It's really just a part of best practices to make sure you have that sheet filled out. In a perfect world, everyone does business and everyone gets paid," said Matthew Jameson, an attorney with Jameson and Dunagan, P.C., in Dallas, Texas. "You need the job sheet because in case you have to send out these notices, you need to have all the information ahead of time. You don't want to be scrambling to gather this information because invariably, you aren't going to meet your deadlines."
Jameson suggests creditors gather job information before they even extend credit to the customer. A job sheet—which NACM members can find on the Secured Transaction Services website—is only a single page; it can provide leverage for a creditor early on. Demanding job information before extending credit instills a sense of professionalism and due diligence, which will encourage a customer to pay.
But receiving the information only accounts for part of the task. Verifying the information is just as crucial.
"One of the things I always recommend is to trust and verify," Jameson said. "Trust the information they've given you is correct, but you probably need to do a little due diligence to check what they've given you and make sure you have the right information."
If a customer returns a job information sheet with incorrect information, the creditor can be at risk for filing an invalid lien. Filing with incorrect information, such as a misspelled name or an incorrect address, in many states, means the creditor will not be able to lien on a piece of property and no debt will be recovered.
Creditors can verify information by looking through public records, double checking with the customer and other parties on the project, scrolling through the customer's website, etc.—be sure to verify information in a timely manner.
"You don't want to be [verifying information] at the last minute because that's when you make mistakes, and that's when you're going to send out information that is maybe incorrect because you haven't had time to research it," Jameson said. "It's always good to do that ahead of time before any problem arises, so you're organized and have all the information you need."
To learn more about job information, stop by NACM Commercial Services' Credit Education Roadshow. Chris Ring of NACM Secured Transactions Services will be giving a presentation on job information in Garden Grove, California, on April 15; Sacramento, California, on April 16; and Las Vegas, Nevada, on April 17. Visit the NACM STS website more information.
—Christie Citranglo, editorial associate