What is Top-of-Chain or High-Tier?

Cash flow, as applied to the construction industry, refers to the net amount of money moving in and out of a construction business within a defined period of time. This includes income from clients, loan repayments, supplier payments, salaries, and overhead costs. Crucially, understanding cash flow is vital for a construction firm as it helps in making strategic decisions for sustainable growth. It can be used to assess the liquidity and overall financial health of a business. With an active construction project, cash flow can be unpredictable due to unexpected expenses, delayed payments, or cost overruns, requiring diligent cash flow management.

Business Interruption Insurance, specific to the construction industry, is a critical coverage type that helps cover the loss of income suffered by a construction business when its operations are halted due to an unforeseen disaster, such as fires, floods, or other significant damages. This insurance can compensate for expenses like paying staff, renting alternative spaces, and even projected profit loss. For instance, if a storm damages a construction site, delaying work, the insurance will provide funds till normal operations can resume. It assists in ensuring the business continues surviving financially during the restoration period, adding a safety net for unpredictable circumstances. Given the nature of the construction industry, which is fraught with various perils, this insurance is of utmost importance.

A notice of intent to lien (NOI)—sometimes called an intent notice or notice of non-payment—is a legal document that serves as a final warning from a subcontractor or supplier to the property owner, developer, or general contractor (GC) indicating their intent to file a mechanic’s lien against the property in the event of non-payment.

The purpose of an NOI is two-fold: First, it protects the subcontractor’s or supplier's rights to establish a legal claim against the property, allowing them to file a lien—or pursue legal action—if the outstanding payment is not made within a specific time frame. Second, it motivates the responsible party (i.e., property owner, developer, or GC) to settle the outstanding payment(s). This is because once a mechanic’s lien is filed, the property owner can’t sell or refinance the property until the debt is settled.

Currently, NOIs are only legally required in nine states:

• Arkansas (10 days before filing lien)
• Colorado (10 days before filing lien)
• Connecticut (Within 90 day lien period)
• Louisiana (material suppliers on residential projects 10 days before filing lien)
• Missouri (10 days before filing lien)
• North Dakota (15 days before filing lien)
• Pennsylvania (30 days before filing lien)
• Wisconsin (30 days before filing lien)
• Wyoming (10 days before filing lien)

However, regardless of state requirements, sending NOIs can be a beneficial and inexpensive step that increases subcontractors’ chances of getting paid (ideally without actually having to file a lien). Note that subcontractors must first submit a pre-lien (or preliminary) notice before submitting an NOI. Making both of these a standard part of accounting processes for past-due payments can improve A/R collection processes—and get payments in the door faster.

Along this vein, Siteline empowers subcontractors by providing visibility into outstanding payments across all projects, alerting them when it's time to pursue overdue balances—or issue an NOI for the most persistent cases.

To experience how Siteline can help your subcontracting business proactively manage payment processes, leverage NOIs when necessary, and accelerate cash flow, book a personalized demo today.