Are you missing valuable credit information on those you deal with?
Find out what information is available. Just complete the form below and we will contact you.
Refer Potential Members
Why should I submit potential members to NACM?
Are you tired of dealing with
credit reference requests?
Direct the requesting company info to NACM. As a member they will have access to our reports. You will get fewer credit reference requests and their information will be added to your NACM reports.
Connect With Us
 |
Dec 01 2016 The Importance of a Payment Bond |
| The Payment Bond is
an important document that can often be overlooked; It is a supremely effective
collection tool for credit & AR managers in construction. The Payment
Bond is a document that has a value issued to it and can be truly invaluable if
job issues arise and payment is withheld. A good rule to assist with securing the copy is to
request it up front before a job is started. Another important reminder with
bonded jobs is to require the sales and counter teams to obtain signatures on
all delivery tickets in case of future legal proceedings because an unsigned delivery
ticket may be disallowed for payment. Many customers take issue when presented with requests
for bonds due to a misperception that when a bond is requested it is because a
company is not paying the bills. Build the relationship with the customer which
will establish a trust level and assurance that the request is a part of policy
and is strictly a way to protect both the suppliers assets as well as the
customers. Explain the benefits of securing a copy of the bond and ask the
important question, "Could they afford to not be paid?" The customer is concerned
about the perception of the request and how it will serve them.
A few suggestions to assist with the request for the
bond copy: 1. Set a job limit that
will require a bond. This will require an internal risk assessment of how much
risk the company is willing to put on the line.
2. Make it a requirement
for the job check list. A copy must be received before the job is entered.
3. If the customer is
not bonded but the general contractor is, extend an offer to request a copy on
their behalf due to it being a requirement for the job file.
It
is a good reminder to discuss bonds every once in a while since the markets are
always changing. At the time of writing this article I managed two different
markets with differing lien laws, Utah and Colorado. The Utah market is blessed
with the SCR (State Construction Registry) and many, but not all, contractors
and general contractors will file their information on the SCR and include the
bond information for public projects. This has been extremely helpful with customers
that are not willing to provide the information, and it assists the credit team with
an option to sell the job due to having the information necessary to make a
good credit decision. Colorado does not have the visibility of obtaining the
information so readily, and if the customer chooses to not provide the information,
then the credit department must find other avenues to support the decision to
sell.
Our goal is always a path to "YES." |
