the payment funnel: create a funnel to get paid often and early
DESCRIPTION
In order to get paid every time, you need to influence your customers to prioritize your accounts above everyone else’s. This can be accomplished and managed by placing all credit accounts into a “payment funnel” that provides a step-by-step process to handle accounts as they age, and influence other parties to make payments. This presentation explores the payment funnel, it's success, and how your company can leverage a payment funnel to manage its receivables.TRANSCRIPT
THE PAYMENT FUNNEL
Every Wednesday1pm CSTSignup At:zlien.us/z-web
Construction Credit Knowledge
PAY WHEN PAIDPAY IF PAID
JOINT CHECK AGREEMENTSBANKRUPTCIES
DELAY DISPUTES & DAMAGESWORKMANSHIP DISPUTES
CHANGE ORDERSSCOPE OF WORK ISSUES
CODE INSPECTION VIOLATIONSPREVAILING WAGES
There are a lot of reasons why
getting paid is tough in your industry
Every time you can’t collect a $10,000 Debt
Your company needs a lot of money just to break even and offset that loss: !
10% NET: $100k5% NET: $500k1% NET: $1m
Time Flies
10DAYS
Time Flies
30DAYS
Time Flies
60DAYS
Time Flies
90+DAYS
Your A/R Report Gets Really Long & Debts Slip Away...SO WHAT HAPPENS?
WHAT can you DO to create an
ORGANIZED & REPEATABLE
System to GET PAID?
You Need A Payment Funnel
!1.Start of Furnishing To A Project: Send
preliminary notice to protect mechanics lien rights
2.After Account in Default for some period of time: Send a notice of intent to lien
3.If payment not received X days after NOI sent: File a mechanics lien
4.If mechanics lien not paid within Y days: Send to collections / attorney
5.If mechanics lien not paid within Z months: File a foreclosure / collection suit
What’s a Payment Funnel?
Payment Funnel
Protect Mechanics Lien & Bond Claim Rights On All Projects At The Start By Sending Preliminary Notices
Payment Funnel
Smart CompaniesAlways SendPreliminary NoticesBecause they prioritize your invoices above others.
Payment Funnel
Protect Mechanics Lien & Bond Claim Rights On All Projects At The Start
GCs and Owners Track Who Does And Does Not Send Notices
Payment Funnel
30 Days Overdue Send Notice of Intent
Protect Mechanics Lien & Bond Claim Rights On All Projects At The Start
Payment Funnel
What If...50% Of Your Trouble AccountsWOULD PAY YOU
Within just 20 DaysIf you just sent ONE really, really inexpensive DOCUMENT?
Payment Funnel
30 Days Overdue Send Notice of Intent
Protect Mechanics Lien & Bond Claim Rights On All Projects At The Start
The Notice Of Intent To Lien
Payment Funnel
30 Days Overdue Send Notice of Intent
“X” Days Overdue File Mechanics Lien
Protect Mechanics Lien & Bond Claim Rights On All Projects At The Start
Two Factors to Consider in Determining When to file a Mechanics Lien:
!1: Company Policy (How long was given in the Notice of Intent? What do you want your A/R
report to look like?) !
2: The statutory deadline in the project state. All states have a deadline by which a
Mechanics Lien must be filed - Don’t miss it!
Why Mechanics Liens Rule
View This Other Presentation To Learn Why Mechanics Liens Work To Get You Paid!Or Articles Here:Why Lien
Mechanics Liens are the MOST EFFECTIVE tool to get paid in the construction industry.
Payment Funnel
30 Days Overdue Send Notice of Intent
75 Days Overdue File Mechanics Lien
File Foreclosure Lawsuit Before State Deadline
Protect Mechanics Lien & Bond Claim Rights On All Projects At The Start
Payment Funnel
5% Or Less Of Projects Need
2.5% Or Less Of Projects Need
< 1% of ProjectsOr Less Need
100% Of Projects Need
Payment Funnel
50 Accounts
25 Accounts
9 Or Fewer Accounts
1000 Accounts
1 Account = $10,000
$10,000,000 Of Accounts 90k Uncollected (in Litigation)
= 0.9% Uncollected Percentage
And Even That May Be Collected Through Litigation
Payment FunnelClient Example
Bad Debt Write Offs:
2010:!
2011:!
2012:
.035%
.067%.012%
ThyssenKrupp’s A/R FunnelPercentage Outstanding New Installation Line of Business
Since August 2013 without zlien timely notices !
At 30 Days: 56%At 60 Days: 24% At 90 Days: 14% At 120 Days: 5% At 180 Days: N/A
ThyssenKrupp’s A/R FunnelPercentage Outstanding
with zlien New Installation Line of Business
Since August 2013 zlien notices timely sent !
At 30 Days: 46%At 60 Days: 15% At 90 Days: 3% At 120 Days: 0% At 180 Days: N/A
ThyssenKrupp A/R Funnel Analysis
When we examined ThyssenKrupp’s accounts receivable performance since August 2013, the difference was staggering. If the above A/R funnels hold up, had 100% of the new installation receivables touched the zlien notice process during this same period, At the end of the 90-day period TKE would have collected $17,563,899.59 more; and all money collected would have been collected more quickly. !For projects on which zlien was actually used properly (notices sent prior to due date), by
90 days TKE had recovered an additional $3,341.68 for every dollar spent with zlien*.
� *Actual and Total ROI cannot be determined with specificity until debt amount to be written off is calculated for each funnel. Nevertheless, the speed of 1recovery still has an ROI value, which would be consistent with this calculation.
Payment Funnel ResultsClient Example
Projects Outside of zlien Payment Funnel
Projects Within zlien Payment Funnel
ThyssenKrupp’s A/R FunnelPercentage Outstanding New Installation Line of Business
Since August 2013 without zlien timely notices !
At 30 Days: 56%At 60 Days: 24% At 90 Days: 14% At 120 Days: 5% At 180 Days: N/A
ThyssenKrupp’s A/R FunnelPercentage Outstanding
with zlien New Installation Line of Business
Since August 2013 zlien notices timely sent !
At 30 Days: 46%At 60 Days: 15% At 90 Days: 3% At 120 Days: 0% At 180 Days: N/A
ThyssenKrupp A/R Funnel Analysis
When we examined ThyssenKrupp’s accounts receivable performance since August 2013, the difference was staggering. If the above A/R funnels hold up, had 100% of the new installation receivables touched the zlien notice process during this same period, At the end of the 90-day period TKE would have collected $17,563,899.59 more; and all money collected would have been collected more quickly. !For projects on which zlien was actually used properly (notices sent prior to due date), by
90 days TKE had recovered an additional $3,341.68 for every dollar spent with zlien*.
� *Actual and Total ROI cannot be determined with specificity until debt amount to be written off is calculated for each funnel. Nevertheless, the speed of 1recovery still has an ROI value, which would be consistent with this calculation.
ThyssenKrupp’s A/R FunnelPercentage Outstanding New Installation Line of Business
Since August 2013 without zlien timely notices !
At 30 Days: 56%At 60 Days: 24% At 90 Days: 14% At 120 Days: 5% At 180 Days: N/A
ThyssenKrupp’s A/R FunnelPercentage Outstanding
with zlien New Installation Line of Business
Since August 2013 zlien notices timely sent !
At 30 Days: 46%At 60 Days: 15% At 90 Days: 3% At 120 Days: 0% At 180 Days: N/A
ThyssenKrupp A/R Funnel Analysis
When we examined ThyssenKrupp’s accounts receivable performance since August 2013, the difference was staggering. If the above A/R funnels hold up, had 100% of the new installation receivables touched the zlien notice process during this same period, At the end of the 90-day period TKE would have collected $17,563,899.59 more; and all money collected would have been collected more quickly. !For projects on which zlien was actually used properly (notices sent prior to due date), by
90 days TKE had recovered an additional $3,341.68 for every dollar spent with zlien*.
� *Actual and Total ROI cannot be determined with specificity until debt amount to be written off is calculated for each funnel. Nevertheless, the speed of 1recovery still has an ROI value, which would be consistent with this calculation.
ThyssenKrupp’s A/R FunnelPercentage Outstanding New Installation Line of Business
Since August 2013 without zlien timely notices !
At 30 Days: 56%At 60 Days: 24% At 90 Days: 14% At 120 Days: 5% At 180 Days: N/A
ThyssenKrupp’s A/R FunnelPercentage Outstanding
with zlien New Installation Line of Business
Since August 2013 zlien notices timely sent !
At 30 Days: 46%At 60 Days: 15% At 90 Days: 3% At 120 Days: 0% At 180 Days: N/A
ThyssenKrupp A/R Funnel Analysis
When we examined ThyssenKrupp’s accounts receivable performance since August 2013, the difference was staggering. If the above A/R funnels hold up, had 100% of the new installation receivables touched the zlien notice process during this same period, At the end of the 90-day period TKE would have collected $17,563,899.59 more; and all money collected would have been collected more quickly. !For projects on which zlien was actually used properly (notices sent prior to due date), by
90 days TKE had recovered an additional $3,341.68 for every dollar spent with zlien*.
� *Actual and Total ROI cannot be determined with specificity until debt amount to be written off is calculated for each funnel. Nevertheless, the speed of 1recovery still has an ROI value, which would be consistent with this calculation.
ThyssenKrupp’s A/R FunnelPercentage Outstanding New Installation Line of Business
Since August 2013 without zlien timely notices !
At 30 Days: 56%At 60 Days: 24% At 90 Days: 14% At 120 Days: 5% At 180 Days: N/A
ThyssenKrupp’s A/R FunnelPercentage Outstanding
with zlien New Installation Line of Business
Since August 2013 zlien notices timely sent !
At 30 Days: 46%At 60 Days: 15% At 90 Days: 3% At 120 Days: 0% At 180 Days: N/A
ThyssenKrupp A/R Funnel Analysis
When we examined ThyssenKrupp’s accounts receivable performance since August 2013, the difference was staggering. If the above A/R funnels hold up, had 100% of the new installation receivables touched the zlien notice process during this same period, At the end of the 90-day period TKE would have collected $17,563,899.59 more; and all money collected would have been collected more quickly. !For projects on which zlien was actually used properly (notices sent prior to due date), by
90 days TKE had recovered an additional $3,341.68 for every dollar spent with zlien*.
� *Actual and Total ROI cannot be determined with specificity until debt amount to be written off is calculated for each funnel. Nevertheless, the speed of 1recovery still has an ROI value, which would be consistent with this calculation.
RESULT: Lower DSOs, Less Bad Debt
Learn More About Setting Up Your Payment Funnel
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