If you are looking to put up a construction business, or already have one, but you’re looking to learn more about the industry, mastering lien waivers is a good start. It’s because payments in construction are tied to lien waivers, and it’s common to see them get exchanged on construction projects.
Knowing a little about them puts you at a disadvantage; understanding how they work, mastering the best practices, and applying them at your projects would help you minimize financial risks. For starters, a lien waiver is a document from a supplier, lessor, contractor, or other parties involved in a construction project, stating that they have already received payment, thus waiving their future lien rights to the property.
The party that receives the payment—the contractor, supplier, or lessor—signs the waiver in exchange for the payment. What’s unique about a construction lien waiver is that it can originate from both parties, not only from the one receiving the payment.
The most common example would be if you’re from the party making the payment, you create a waiver and send it along with a request for a signature from the one receiving the fee. Now, if you’re from the party awaiting the payment, you can also create a lien waiver and send it to the other party so that the payment process could speed up and you’ll be able to receive the money with little delay.
Having lien waivers go both ways can be very convenient for everyone involved, but it can be a big headache to track. For construction companies and general contractors with a limited workforce, handling lien waivers require requesting, collecting, and tracking them, which can be a big headache if mismanaged or not at all.
Fortunately, technology has dramatically improved and can now help make the process less manual, time-consuming, and risky. There are ways to make this process more efficient, as well as reduce financial risks like double payment or failing to meet mortgage deadlines. For more useful information about handling construction lien waivers, here are five keys to keep them error-free.
If there’s one thing that you should do to lessen your document management problems, that’s to digitize paper-based records. That includes bid documents, drawings, contracts, and yes, construction lien waivers.
This is an ongoing trend in many other industries, but it is the construction industry that stands to gain a lot from this practice. Imagine having all the paper documents lying around in your small office reduced to nothing but a folder in your computer, or backed up in the cloud, accessible on your mobile device.
By going digital, your handling of construction lien waivers will be more efficient as compared to when you’re actually sending out and waiting for actual physical copies. Sending and receiving them through email is infinitely faster than the post.
Digital signatures keep everything secure and take a lot of time out of the continuous process of printing, signing, scanning, and sending back paper documents. Tracking and organizing them in your email is also a breeze, and even if you have a digital repository or database for your company, it’s as easy as copying and pasting them for safekeeping.
Use every bit of technology to your advantage, especially when it comes to the lien waiver exchange process. Your office managers can easily track the status of lien waivers through automation. You set up an application to track any submissions through email or through a project management portal.
This also helps your managers prioritize projects which are close to the deadline. It makes the payment process more efficient and secure while promoting transparency in every step of the process. If you need more information about lien waivers, check out this site.
All of this can be done anytime, anywhere, as long as you have your project management solution online. Most of these apps are accessible on mobile, so you can check the status at home, on your commute to work, or even while on vacation. You can contact concerned parties, follow-up on delays, and more even when you’re away from the office.
The problem with the traditional paper lien waiver is that it greatly lengthens the payment process, even when all the parties are already in agreement. Imagine all the time wasted while waiting for the customer to send an invoice, waiting for days to receive it, and then waiting some more to request a lien waiver.
Fortunately, you can now do these at once, with just a few clicks on your computer. You can ask your customer to send an invoice and a lien waiver at the same time by doing so electronically. This dramatically cuts the time spent waiting for waivers to be exchanged and signed, speeding up the payment process, and letting you be more productive with your time.
Another way to keep the handling of lien waivers error-free is to attach the necessary project documents to the waiver request, whether it’s for a payment application or an invoice. This keeps all the involved parties informed, say for example, what specific project the waiver is for, the amount to pay, or the payment deadline.
Another benefit of attaching project documents to the lien waivers is that all concerned parties have a record of the document, which they could then move to a secure online server, or have it printed for notarization.
This also keeps everyone on track of the project’s timeline of events, keeping them informed or at least giving them away to look back at important events like sending notices, partial payments, and more.
No matter how big or small a construction company, it is essential to have dedicated personnel working on construction lien waivers. Whether it’s conditional or unconditional lien waivers, someone should take ownership of managing the whole process, as well as be an expert in all the tools and technology used in exchanging them.
If you have a project management platform for this, they should know all the features related to lien waivers. They should also know how to store them on a local or online database so that retrieving them in the future would be hassle-free.
The key is to give that person enough time to be familiar with the process and master all the tools and applications. After all, you’re doing all this to make handling lien waivers more efficient and error-free. You don’t want to expose your company to financial risks because of human error.
Looking at the five tips mentioned above, it’s easy to see how vital technology’s role is in handling construction lien waivers. Tech improves the relationship between the parties involved in a construction project, as it helps reduce any risks.
If you are interested in even more technology-related articles and information from us here at Bit Rebels, then we have a lot to choose from.
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