BY GREG POWELL President of Viking Capital
When Clients Hold
PAYMENT HOSTAGE
O
ne of, if not the, most common complaint we hear from pool builders is that they keep running into borrowers who will not sign the completion certificate because “punch list items” are not satisfactorily complete. This is a common issue for builders who accept unfavorable stage funded loans because often the money the customers are refusing to release far exceed the value of those items. The simplest way to fix this is to work with a lending source that primarily gives cash directly to the borrower. This essentially makes it the same as if they were paying you cash. You
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follow your draws, make changes as necessary, and never have something ridiculous like a 25% final draw waiting on an umbrella stand that’s on backorder. First of all, a 25% final draw is unacceptable. With the rising costs and prices in today’s market, that can easily be $25,000. Multiply that by how many you could have out there at any given time and the cash flow can really be held up. You shouldn’t have to choose between offering financing and paying your bills on time. As the President of Viking Capital, I can tell you that it’s not uncommon for us to speak with
POOL MAGAZINE - VOL 2, ISSUE 3
builders that have several hundred thousand dollars out waiting to be collected. The 25% final draw is a problem even if they do pay so working with a source that limits that draw to 10% lowers your exposure immediately. Next, make sure your lending partner has your back. At Viking Capital, we view this as our role as your financing partner. A knowledgeable, well-trained operations director can have a conversation with the customer for you. It’s very important that you know you can lean on your lending partner to help. A call from the lender (vs the builder) can usually solve this quickly.
