How does it benefit me?
A notice of furnishing is a letter sent on your behalf letting your customer, general contractor and owner know that you are working/providing goods and services on site and that you expect payment in accordance with the terms of your contract. Notice of Furnishing is also known as a Pre-Lien.
Sending a Notice of Furnishing establishes communication that benefits everyone. There are no surprises to the owner of the property – they know which contractors are involved in their project and can manage their cash-flow properly and better manage their relationship with the general contractor. The general contractor is made aware of your involvement (you could be a sub of a sub-contractor and may not know who you are or that you part of the project). Your customer (if different than the GC) will know you are managing your accounts correctly and you are demonstrating attention to detail and you are providing your goods/services as agreed and you expect them to do the same.
What does Notice of Furnishing (Pre-Lien) do?
Who – Send the notice to your customer! Depending on the type of Notice of Furnishing you wish to send, notice can be sent to the property owner(s) of the project and the General Contractor.
What – The notice will outline the work provided, state the amount owing (if any), request bonding and project financing information, and remind of your rights (lien, collections, legal, etc.) in the event of non-payment. The notice is a reminder to your customer and those involved in the project that you expect your account to be managed properly and paid on time.
When – Send the Notice of Furnishing at any time during the lifecycle of the project. Send before a project starting, during your supply of work and materials to a project, or send the notice after your work has finished as a way to finalize your account.
Where – It is recommended to send the Notice of Furnishing on a per project basis. By sending notice to each of your projects you can gather all important information (project financing, bond info, etc.) about your specific job. You are also able to ensure notice is sent to the appropriate parties involved on a specific project.
Why – Using the Notice of Furnishing will help promote prompt payment of current and future invoices. Let your customer know that work is occurring, you expect payment, & reserve your right to take action if payment is not received. You are simply conducting good business.
The notice is a non-threatening way to let your customer and those involved know that you are a professional and manage your receivables effectively and you expect the same in return. If your account is already past-due, a Demand Letter (Notice of Intent to Lien) may be a better alternative as it is a more serious letter outlining your intent to lien if payment is not received on your account.The benefit to using a lien filing agent to send all of your notices is that all communications are going out on the lien agent’s letterhead. This is a subtle way of letting everyone know that you have the systems in place to manage and protect your cash flow.