The Owners' Manual Newsletter | Issue 23 | Winter 2022

1 Calling the client to inquire as to the status of payment and getting a date certain. 2 Holding, as leverage, deliverables that the client needs until we are paid. 3 Stopping work and/or not attending a hearing or meeting until we are paid. 4 Sending a letter from the Accounting Department 5 Sending a letter from the Legal Department 6 Sending the receivable to a collections agency to have them try to collect – note that the collections agency takes a 30% cut. 7 Putting a mechanic’s lien on the property where we did the work. This ties up the property in the event that there is a sale or a refinancing and gets us paid before either of those events can take place.

Legal Tip BL’S AR PROCESS You’ve heard the term “AR.” Perhaps you’ve heard that your Director, your Executive Director or your PM needs to attend an AR meeting with Kathy Devito from Accounting and needs a status update. What is AR and why is it important? AR stands for Accounts Receivable. A receivable is money that is owed to BL by a client. A more formal definition is the following, “… the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers. Accounts receivable are listed on the balance sheet as a current asset. “ More on the balance sheet part below. When we contract with a client, our payment terms specify that all invoices are due to be paid no later than thirty days after the date of the invoice. Many clients pay on time. But some do not. For those that do not, we have to employ multiple strategies. Now, back to the balance sheet. When a receivable is deemed uncollectible, we need to remove the asset from our balance sheet. This is a direct expense to the business and reduces our income and profitability. In addition, BL undergoes several financial and bank audits each year. Large amounts of AR outstanding over a certain amount of time, including those eventually deemed uncollectible, can negatively affect these audits, unfavorably impact our cash balances and increase our business risk profile. Bottom line We did the work, we should be paid for it. PM’s should actively work to collect their receivables and use Accounting and Legal as a resource when needed. These strategies may involve