Understanding personal guarantees in construction credit

A personal guarantee, a legal commitment where an individual pledges to cover the business's debts if the loan defaults, has become a significant tool in the credit industry. By facilitating lending and financial transactions, it provides additional assurance to creditors.Most notably in construction credit, personal guarantees have become part of ...
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Improve collections forecasting for cash flow stability

More credit managers are improving cash flow forecasting, a technique for estimating a business's future cash movements. However, this wouldn't be possible without collections forecasting.Why it matters: Understanding and improving collections forecasting is key as it enables businesses to maintain financial stability without resorting to external ...
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Tackle mechanic’s lien laws in Texas

In construction, the mechanic's lien is an important legal instrument protecting laborers and suppliers. Without it, contractors and subcontractors lose legal protection, resulting in significant losses.From the labyrinth of statutory requirements to the pitfalls of strict deadlines, we'll explore why Texas stands out as one of the most challenging...
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The basics of lien waivers: four types and when to use them

A lien waiver is a legal document that relinquishes a party's right to claim a lien on a property or asset. It is commonly used in construction projects, where subcontractors or suppliers may have a right to place a lien on the property to secure payment for their services or materials. By signing a lien waiver, these parties agree to waive their r...
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AI is revolutionizing the construction industry

Artificial intelligence (AI) has arrived in the construction industry, promising to revolutionize it. From preconstruction to site safety, the construction industry is using more AI technology to facilitate the various stages of the construction process.Why it matters: As we delve into this new era of construction technology, it's important to comp...
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Make customers more comfortable with technology through education

The adoption of new technology is no longer a choice but a necessity for staying competitive in business. Despite the undeniable benefits these advancements bring, getting customers comfortable with change remains a significant challenge.Why it matters: The key to shifting customers' mindset to embrace change lies in trust and clear communication w...
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Construction industry outlook is cloudy for 2024

Rising labor costs, new environmental regulations and a mixed outlook on construction volume present significant challenges to the industry. However, declining fuel costs and controlled inflation offer some relief.Why it matters: By staying informed about these trends and challenges, credit managers can make informed decisions.Rising labor costs an...
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CMI: Recession-like conditions persist

NACM's February Credit Managers' Index (CMI) remains stubbornly close to contraction territory despite improving 1.3 points to 52.4. "We did not fall into formal recession in 2023 and we might not in 2024, but for many credit managers, it's as if a recession is well underway," said NACM Economist Amy Crews Cutts, Ph.D., CBE.The index for favorable ...
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Performance bonds mitigate risk on public projects

Contractors are prohibited from filing mechanic's liens on public projects like highways, schools or fire stations, as this would lead to public real estate foreclosure. Instead, they are offered alternative security in a performance bond as a guarantee against the failure of the other party to meet the contract obligations.Why it matters: Understa...
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Arbitration of Construction Disputes: Benefits and Drawbacks

Arbitration is an alternative dispute-resolution process that uses a neutral third party to make a binding decision. Disputes are inevitable in any business or partnership, but most do not expect future litigation against the other party. However, in the construction industry, the average value of disputes in North America increased by 42% in 2023,...
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Tax Package Hits Snag in Senate

After a brief respite of bipartisanship in January, the border security and foreign aid package is officially dead in the water, and the Senate's busy legislative calendar has effectively stalled the bipartisan tax package that the House passed last week. In other words, everything is back to normal in D.C.On Wednesday, Jan. 31, the House passed, b...
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Mastering Construction Contracts

Construction contracts are the foundation of building projects, defining terms, responsibilities and expectations for all involved. They protect both contractors and clients by detailing project scope, timelines, costs and quality standards of a project. However, misunderstandings in contracts can lead to project delays, financial losses and legal ...
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Minimizing Extreme Weather Impacts in Construction Credit

The construction industry is directly impacted by weather conditions—heavy rain, snowstorms and dangerous heat temperatures can cause issues such as improper concrete curing and foundation pouring, for example. These can lead to prolonged delays resulting in project timeline disruptions, increased costs and ultimately impact the ability for credito...
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Bankruptcy Surge in 2023: Impact and Outlook

Total bankruptcy filings increased 18% year-over-year in 2023—likely due to high interest rates, maturing business loans and inflation. Chapter 11 bankruptcies increased 72% year-over-year and Subchapter V filings rose 45%, according to a report from Epiq. "While representing a substantial year-over-year increase, total bankruptcy filings remain lo...
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Housing Starts Surge: Material Suppliers Prepare for Increased Demand

Housing starts rose to a 1-½-year high at 14.8% in November. According to a mid-December report from the U.S. Department of Commerce, permits for future construction of single-family housing in November increased to the highest level since May 2022.A drop in mortgage rates in mid-December could provide a further boost to housing starts in the comin...
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New Law Requires Business Ownership Transparency

The Anti-Money Laundering Act of 2020 (AMLA) established the Corporate Transparency Act (CTA), which requires FinCEN to establish and maintain a national registry of beneficial owners of entities that are considered to be reporting companies. Information collected pursuant to the CTA will be stored in a private database, according to the American B...
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How Often Should You Review Customer Credit Limits?

Credit management is a risky business. Every credit decision is directly influenced by ever-changing micro- and macro-economic factors. To better mitigate risk, credit professionals must be proactive in their credit limit assessments for new and existing customers. According to a recent eNews poll, most credit professionals review existing customer...
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Democrats Stuck Defending Poorly-Timed Basel III Proposed Regulations

It is unclear what Chairman Sherrod Brown hoped to achieve when he convened a hearing with the eight CEOs of the largest banking institutions in the U.S. on Wednesday, Dec. 6. What he got wasn't hard to predict—a well-choreographed lobbying campaign against the proposed Basel III 'Endgame' regulations that are set to be finalized next year. While C...
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Iowa Liens: Master Mechanic's for All Projects

A mechanic's lien is a tool to secure payment across all states. However, each state has adopted their own unique set of rules or statutes which must be followed to preserve and protect rights. Nearly 10 years ago, statute laws in Iowa changed, developing a registry for filing preliminary notices on residential projects.Changes in the statute have ...
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Equipment Rental Company May Lose Lien Rights in Pennsylvania

In the intricate world of construction and property development, the mechanic's lien serves as an essential legal tool, safeguarding the interests of those who contribute labor or materials to a project. The absence of such a tool is a loss of legal protection for contractors, subcontractors and suppliers ultimately leading to larger losses for all...
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