Suppliers Need to Send Notices to Owners to Help Eliminate Bad Debt

Since 1994, Georgia’s Lien Laws have required Notices to Owners to be sent by material suppliers and sub-contractors, and we began supplying these notices on construction projects throughout the state.  In fact, we have provided thousands of such notices.  Although we haven’t kept statistical data on the results, we know from our clients that sending Notices to Owners (“NTOs”) almost eliminate bad debt.  Of course this makes sense:  a supplier informs a general contractor and the owner of the construction project that supplies are being delivered thereby making them track the payment down the line to the supplier.  (Needless to say, if the project owner fails in doing this, then the supplier or subcontractor has preserved the right to file a materialmen’s lien or make a payment bond claim.)  Viola–you get paid.

In fact, for many of our clients, using NTOs to prevent bad debt has been so useful, that they send out NTOs even when they are not required!

When a credit manager thinks about this, it makes sense:  for a small fee and a little bit of work they increase their recovery significantly and do not need to put in man hours to collect from the non-payers.  Preparing and sending out NTOs is pretty simple in Georgia, yet they can save a heartache.  An NTO tells the general contractor or the project owner that the supplier is serious about protecting its interests, it also provides the general contractor or the project owner with the information necessary to make sure the supplier gets paid.

We would like to hear from other credit managers about their results.