However, there is recent conversation in the media and out in the blog-o-sphere that the economy’s impact on construction has increased the amount of mechanic’s liens filed by contractors.

The Pacific Business News source in St. Louis, for example, has a story on a construction attorney in Missouri who says that he filed twice as many liens in 2008 as he did in 2007.

A similar article appears in the Virginia Lawyers Weekly, which reports that construction litigation in general is increasing in the current economy, with increased claims for construction delays, defects and problems with collections.

It seems that the business journals are full of stories about construction projects being slammed with liens, like the story here and here.

As the new year approaches, what will we see in the construction industry that is predicted to remain pretty stagnet?

One thing is for sure, regardless of whether lien filings increase, decrease or stay the same, with the current credit crunch and economic woes, it’s more important than ever to file liens on claims you do have, and to do it timely and properly.

As one of its resources, the website has re-published an article written by Lloyd N. Shields, one of New Orleans’ premiere construction attorneys.   The article, titled Mechanics Liens and Construction Bonds under Louisiana Law, offers a good discussion of Louisiana’s sometimes peculiar lien laws.

When doing work in a particular state – like Louisiana – it never hurts to spend time reviewing the overall lien laws in your area.   Understanding and following lien laws is important for your company to avoid bad collection situations, and is increasingly important in this penny-pinching economy.

It would be a prudent start to the new year to spend some time getting familiar with the lien laws in Louisiana.  You can read some basic information about Louisiana lien laws at the Construction Lien Blog here.   The allbusiness.com article is also a good resource.

Also, be sure to check out the Construction Industry Center at AllBusiness.Com.

Good collection procedures, therefore, begin before you are owed any amount of money; they begin at the time of contracting.

“An ounce of prevention is worth a pound of cure” rings true for those seeking to avoid a high receivables account. Starting with a good contract and following through with smart project management can help keep your uncollected accounts low.

Common contract provisions that may help avoid a collection scenario is discussed in a related blog post at:

Getting “Too Deep”
The worst collection problems are usually the most avoidable. Frequently, a construction company will continue dumping materials and resources into a project without compensation.

It’s important to reject the urge to perform your services upon a “promise” to pay. These promises are all too common between contractors, and in most cases, are all too empty as well.

Learn to notice cues from your prime contractors or customers that money is tight, and react by demanding exactly what you’re entitled to: payment. You may fear that the paying party will seek someone else to perform the work, but not only are they likely contractually restricted from doing this, but the substituted company will certainly expect payment as well.

Being Unprepared for a Non-Paying Customer
The longer an account goes unpaid, the less likely you’ll ever collect. One of the biggest mistakes you can make when faced with an overdue account, therefore, is to delay your attempts to collect.

It’s easy to put off attempts to collect when you’re not prepared. However, with a collection procedure in place, you can start collecting easily and automatically as soon as an account becomes overdue.

Collection procedures will keep you proactive, consistent and more successful at collecting on unpaid accounts.

Disorganization
Finally, the most common and avoidable collections mistake is being disorganized, and specifically being incapable to prove what you are owed.

As soon as an account goes into collections, it will go into dispute. The paying party will disagree with the amount of work performed, the quality of the work, its scope, the project’s change orders, etc.

In construction as you likely know, there’s no such thing as a perfect project, and so it’s not difficult for an adversary in collections to dispute the quality of your work because of paint chips or n incorrect doorknob.

Organization and a detailed record of the work you performed will help you avoid these time-consuming and expensive arguments. If you have photographs, time-sheets, job logs, etc., you’ll have the evidence necessary to combat these arguments and keep your overdue account from turning into a settled account.