A healthy flow of cash is important to contractors, even when there’s not a global pandemic. But now that the spread of the coronavirus has resulted in mandatory project shutdowns in many states, a trade workforce that is scared to show up and skittish owners that have halted or stalled developments, there are steps financial experts say contractors and subcontractors need to take right now to protect their money and maximize cash.

Collect money due

The first order of business for contractors, said Scott Wolfe, CEO at Levelset, is to collect outstanding invoices.

f the customer is slow to pay, Wolfe said, contractors should seriously consider securing accounts receivable with a lien. Granted, there are contractors with great client relationships, and if payments haven’t slowed down, they might not feel comfortable taking what some in the industry view as a drastic measure. But, he added, “If there’s a chink in the armor, you want to get your lien filed because you need to be in a position to be paid in a very uncertain environment.”

In some states like Iowa, liens are paid according to the order in which they are filed, so don’t delay the filing if you think you could have trouble collecting money due, Wolfe said.

Nevertheless, some states have an extensive list of notice requirements that must be met before a contractor can file a valid mechanics lien, and firms that have not taken these steps might find themselves out of luck and without the money owed to them. Moving forward, contractors should ensure that they follow the notice requirements in the project’s home state so that they have lien rights in the future, experts say.

Contact lenders

For contractors that maintain a line of credit, it’s time to speak to lenders and reassure them, as long as they can do so honestly, experts agree.

“We all know the conundrum right now is that lenders are getting jittery, and [they] are going to be more concerned about financing cash flow and projects because there’s really no transparency on how long this [pandemic] could go,” said Nick Giacoumakis, president and founder of New England Investment & Retirement Group Inc.

However, he said, contractors with good, traditional bank relationships should make sure that their lenders will be able to extend existing credit lines in order to prevent an interruption in their ability to meet their financial obligations.

Contractors that expect to draw down on existing facilities, said Carl Oliveri, partner and construction practice leader at New York City accounting and consulting firm Grassi & Co., should also talk to their bankers to ensure that those credit limits won’t be reduced. “[Make sure] that your bank is still going to be a strategic partner through this [pandemic],” he said.