Paid if paid? Words that will haunt contractors now more than ever.
Maybe you didn’t take the time to read the fine print. Maybe the lure of ‘partnering’ with that national facilities maintenance aggregator was just too much to pass up. Or maybe you just couldn’t imagine ever doing good, quality work and not getting paid. Whatever your reasoning may be, if the wording “paid if paid” or “paid if and when paid” are in your service agreement, you may soon find yourself in a very challenging and undesirable position.
Let’s start by discussing the commercial building services companies out there that have genuinely good intentions and make reasonable efforts to pay their subcontractors on a timely basis. Just because they have this language in their contract doesn’t mean they 100% abided by it. Until now. The days and months to come are going to offer them the opportunity to show you just what kind of ‘partner’ they really are. Through no fault of their own, their clients’ businesses are suffering significantly and have potentially even closed indefinitely. At a minimum, a meaningful percentage of receivables are not going to come in as scheduled. What’s worse is that this will impact a lot of payments for services rendered before COVID-19 and stay at home orders were even a public concern. Trying to collect on open invoices from January or 2019? Good luck. Is that company that hired you going to reach into their pockets and make you whole or is the loss of time and money on you until further notice?
As concerning as that may sound, there is a far more deceitful group of operators out there who have zero intention of ever paying you a dime until they are paid in full (or longer). No matter the business climate, this is an intentional part of their platform. The contracts stipulated payment terms actually lead with bold and blatant language outlining their lack of financial responsibility. From there they can go on to limit lien rights and even demand mandatory retentions for unspecified periods of time regardless of signed work orders demonstrating work as acceptable and completed by their client. They make no bones about it, they intend to have no skin in the game or accountability to you. You are not just their contractor, you are also their bank.
At UmbrellaOne, we find this approach unconscionable. Our obligation to pay our service partners has nothing to do with our responsibility to ourselves to collect from our clients. If services are accepted and deemed 100% finished by the customer, end of story. We always boil it down to the neighborhood pizzeria. They pay for the flour when it’s delivered, not after they bake a pie and collect it from the customer. We’re no different. The state of our economy will make this a difficult effort for our company, but similar to when we have had to deal with client bankruptcies in the past, it is a priority and we don’t look for excuses to change course. We are well-positioned to navigate and weather this storm to the benefit of our clients, our valued service partners and all the team members of UmbrellaOne.