Debt Collection for Civil Engineering Companies
Regardless of size or industry, the truth of the matter is that bad debt is a problem that affects all organizations. This problem, however, is even more true for a construction company that frequently has to incur upfront costs. Many of which do not have sufficient cash flow to continue, making the debt issue even more evident and alarming.
Due to razor-thin margins, retainage, and long, unpredictable payment cycles, the construction industry is infamous for cash-flow bottlenecks. And why wouldn’t it be when each block must be purchased or manufactured with cash in order to pay employees and specialists and maintain the company's financial stability?
So, what happens if a client is unable to satisfy the project's financial goals? And every attempt at debt recovery has proven futile? Unpaid invoices are always a problem, especially for a company with the resources, customer service, and debt collecting expertise of a professional debt collection firm for civil engineering firms.
Why is bad debt every civil engineering firm’s nightmare?
You might think a civil engineering firm earns lucrative amounts of money; after all, it takes a considerable amount to finish construction projects. On good days, firms are even tapped to participate in large-scale projects.
It could be true, yes. But the reality is that a civil engineering company often makes enough—enough to pay for the materials, permits, and people who materialized the project.
Also, we’re being optimistic here. The cost of construction is one factor, but an even more sad reality occurs due to delinquent clients. Even one non-paying client makes it impossible for the firm to recoup, owing to the fact that the margin between taxes, expenses, and net profit is so narrow.
In an ideal world, the payment process should be smooth. But when getting your payment after you’ve completed a project is proving to be a headache, you should consider hiring a good collection agency that specializes in helping civil engineering companies.
Debt Collection for Civil Engineering Companies: When to Tap
True to its name, a debt collection agency puts its collection services to work to collect outstanding payments for you. Through them, your civil engineering company gets collection agents and even legal advice to help your repair your credit. You can even boost your credit score in the long run, thanks to the services of collection companies.
Due to the nature of their work, debt collectors often get a bad rep. But working with collection professionals specializing in the construction industry ensures you get what you're owed at a much faster pace. So, when can you ascertain that you need their help?
If your client checked off all three of the following, you better tap a construction debt collection company as soon as possible:
- Did the client say they won’t pay you?
- Is the debt past 90 days?
- Did they miss a committed due date? The pandemic did derail us all financially, so it’s understandable if a client asks for an extension. And it’s also understandable if you’re firm relented because it’s always better late than never.
The project is completed, and you have fulfilled your end of the contract. So why should the client tell you they won’t pay you? A joke in very poor taste? Could be. But if they have no sane reason to tell you this, then you should take their word as is. They really won’t pay you.
Ninety days is often the standard for most credit and collection companies. And really, that’s generous enough.
If the invoice has been unpaid for quite a long period of time, there’s a big possibility the client is no longer replying to you. If they did not pay dues back when they still communicated with you, how much more now that they’ve gone MIA on you?
But what happens when the due date comes and passes and no transaction has been made? Will you still allow an extension?
Being generous and kind is good, but it’s better if you no longer grant such requests in instances like this. If you’re lenient, the delinquent client may think you’re not in a hurry to get paid. They can even negotiate to push back the due date or deliver on their own terms.
Honoring a due date is a wise move because it protects your interests as a business. This commitment is what construction collections will guarantee for you.
Debt Collection for Civil Engineering Companies: Who to Tap
So your engineering company chose to hire a professional to collect all of the appropriate dues and payments. But where do you begin your search? What, above all, should your ideal debt collection agency look like?
Debt collection involves a lot of activity, including several notifications, phone calls, credit reports, and lawsuits.
The easiest and most effective way to locate the best is to look at their track record. Double-check everything:
- How long have they been in operation?
- How many different engineering firms have they assisted?
- Are their work ethics and staff reliable and trustworthy?
Debt Collection for Civil Engineering Companies: Who to Tap
You have tried everything in your power to get a delinquent account to pay—to no avail. Maybe it’s time to call in the experts. Aside from debt collection being their expertise, these agencies also have the staff, time, energy, know-how, and track record to complete a debt collection process.
By handing over the account, you allow experts to spearhead the conduct of multiple notifications, credit reporting, and even possible litigation. They free up your time and focus, so you divert your concentration and effort toward your area of expertise. With a seasoned debt collection helping you out, you can dedicate the time to maximize efficiency and boost the profitability of your civil engineering company.
To Wrap It Up
Be at ease working with a debt collection agency for civil engineering companies with a proven track record—one that has the resources and expertise to ensure your construction firm gets what it is owed.