3 Ways Preliminary Notices Build Better Relationships With the General Contractor

[Article was originally posted on www.constructconnect.com]

By: Justin Gitelman,

If you work in construction, you’re probably used to the long wait to get paid after completing a job. You wait patiently for payment from the general contractor (GC). You try calling, sending emails and invoice reminders. Nothing seems to get their attention, in fact, they seem annoyed that you keep asking. Then you ask yourself: Is there anything I could have done to establish a relationship earlier on in the project? In fact, there is: Sending a preliminary notice is one of the best ways you can improve communication and build a stronger relationship from the start. 

One of the most common misconceptions about preliminary notices is that they worsen the relationship between the parties at the top of the payment chain and the subcontractors towards the bottom. However, that couldn’t be further from the truth.

Vigilant subcontractors send preliminary notices whether or not there’s a payment issue—and GCs, property owners, and lenders prefer it that way. Just look at the numbers from Levelset, who collects feedback from every recipient that they send notices to:

• 30% of recipients respond positively to preliminary notices.
• 56% provide a neutral response, considering preliminary notices a part of everyday business.
• Less than 2% say receiving a preliminary notice makes them feel like a sub distrusts them.

Sending preliminary notice isn’t just about protecting your lien rights. There are numerous benefits to the practice. 

How Do Preliminary Notices Build a Stronger Relationship?

Building a strong relationship with the GC is important for every subcontractor. A good relationship not only helps you get paid faster on the current project, but it can improve your prospects for future business. Here are 3 ways preliminary notices can help you build a better relationship with your general contractor.

1. Preliminary Notices Create a Professional First Impression

First and foremost, general contractors like to know they’re working with professionals who know what they’re doing. Contrary to popular belief, one of the GC’s main concerns is making sure everyone gets paid without any unnecessary complications. Working with professionals means that work and payments are more likely to go smoothly. This is one of the reasons why GCs like to receive preliminary notices.

2. Preliminary Notices Reduce Risk for GCs

The parties at the top of the construction payment chain - the owner, lender, and GC -  have a vested interest in ensuring that payments move smoothly. Nobody wants a mechanics lien to be filed. Liens require a lot of paperwork, slow the project down, and could cause them to lose the property entirely. Liens can increase the risk of double payments to sub-subcontractors, if the payments from the GC don’t properly make their way down through their subs. 

When the GC, property owner, or lender receives a preliminary notice, they now have more information about a sub who is on the job, the work that sub is doing, and who hired them. This gives them a head start in ensuring that payment is made to the right person for the right work, effectively avoiding a mechanics lien and the risk of double payment. That’s their ultimate goal. 

3. Preliminary Notices Improve Communication

Most of the construction disputes that contractors deal with are the result of poor communication. To avoid any confusion down the line, it’s vitally important that you establish that strong line of communication at the very start of each project.

Considering the complexity of most construction projects, not everyone in accounts payable is aware of every contractor on the payroll. Preliminary notices bring everyone up to speed by making you more visible and helping you to stand out among that huge pile of paperwork. That transparency makes it easier to communicate with everyone on the job, ensuring that the project runs much smoother.

Preliminary notices help you accomplish this by informing the parties up the chain as to who you are, what work you’re doing, and how much it’s going to cost. Additionally, notices provide the opportunity for feedback early on in a project, allowing you to further avoid any roadblocks.

Take it from Albert, a contractor in Florida for more than 30 years. A few years ago, he visited the GC’s accounts payable to inquire about payment on one project. He noticed two large piles of invoices on the manager’s desk, and asked her about them. 

“This stack here is invoices from subs that have also sent me preliminary notices,” she said. “And this stack is invoices from companies that did not send a preliminary notice. We pay these invoices (from companies who have sent in notices) first. And we pay these invoices (the ones from companies who didn’t send notices) when we get around to it.”

Build Better Relationships by Sending Preliminary Notice Every Time

Building a strong subcontractor-general contractor relationship isn’t a “set it and forget it” action. Subcontractors should take steps before, during, and after a project to establish a relationship with their GC. It’s an ongoing process that requires open communication and transparent action. 

Sending preliminary notice is an early step in the process of building a good relationship. They actually improve relations up and down the payment chain by creating a good first impression, reducing risk, and improving communication for everyone on a project. As an added bonus, it can help you get paid faster. 

Subcontractors should make submitting preliminary notices a routine for every project they undertake, whether or not their state requires notice in order to protect lien rights.

SOURCE: https://www.constructconnect.com/blog/3-ways-preliminary-notices-build-better-relationships-with-the-general-contractor