Perspectives

The best collection strategy starts before the first invoice is sent.

When an account becomes past due, it’s natural to focus on collections. But in the construction industry, many of the strongest collection tools-such as mechanic’s liens and payment bond claims-are either preserved or lost long before payment ever becomes an issue.

The decisions made during the credit approval process can have a significant impact on your ability to recover payment later. Asking a few key questions upfront can help protect your rights, reduce risk, and strengthen your position if a dispute arises.

Here are five questions every credit professional should ask before extending credit on a construction project.

Is this a Public or Private Project?

This is one of the most important questions you can ask because it determines which legal remedies may be available if payment problems arise.

On many private projects, qualified contractors, subcontractors, and suppliers may have mechanic’s lien rights, subject to state law and applicable notice requirements.

On public projects, mechanic’s liens generally are not available. Instead, payment may be secured through a statutory payment bond, which comes with its own notice requirements and deadlines.

Knowing the project type from the beginning allows your credit team to preserve the appropriate rights before critical deadlines pass.

Where is the Project Located?

Construction law is governed by state law, and no two states treat lien and bond rights exactly the same.

Deadlines, notice requirements, eligible claimants, and filing procedures can vary significantly depending on where the project is located.

If your company supplies projects in multiple states, relying on a “one-size-fits-all” process can create an unnecessary risk. Understanding the governing state’s requirements early allows your team to track the correct deadlines from day one.

Where Does Your Customer Fit in the Contracting Chain?

Understanding who hired your customer-and who owns the project-can be just as important as understanding who owes you money.

Questions to ask include:

• Is your customer the general contractor?
• Are they a subcontractor?
• Are they a lower-tier subcontractor?
• Are you supplying materials directly to another supplier?

Your position within the contracting chain may affect whether lien rights or bond rights are available and what notices may be required to preserve them. When extending credit, gathering this information up front is often much easier than trying to reconstruct it months later.

Are Lien or Bond Rights Available?

Not every construction project gives rise to the same legal remedies.

Depending on the project and your role, you may have access to:

• Mechanic’s lien rights
• Payment bond claims
• Other statutory remedies available under applicable law

Understanding which remedies may be available allows your organization to make informed credit decisions, and if necessary, involve legal counsel before important rights expire.

Have You Started Tracking Your Deadlines?

One of the most common reasons companies lose valuable collection rights isn’t because they had a weak claim-it’s because a deadline was missed. 

As soon as credit is approved, establish a system to track key dates, such ask:

• First furnishing of labor or materials
• Required preliminary notices
• Last furnishing date
• Lien or bond claim deadlines
• Applicable lawsuit deadlines

Waiting until an invoice reaches 60 or 90 days past due may leave little time to preserve your legal options. A well-maintained calendar can be just as valuable as a well-written contract. 

Proactive Credit Management Creates Stronger Collections

Credit professionals aren’t expected to know every nuance of construction law. However, understanding the right questions to ask before extending credit can help preserve valuable rights that may significantly improve collection outcomes if payment issues arise.

By identifying the project type, confirming the project location, understanding the contracting chain, evaluating available remedies, and tracking deadlines from the outset, your credit department is better positioned to protect both receivables and cash flow.

The strongest collection strategies begin long before an account becomes delinquent. 

How Wagner, Falconer & Judd Can Help?

Construction collections often require quick action and careful attention to statutory deadlines. Our attorneys work with credit departments, suppliers, distributors, and lenders to help preserve lien and bond rights, evaluate collection options, and develop practical strategies for recovering outstanding balances.

Whether you’re extending credit on a new project or addressing a past-due account, proactive legal guidance can help protect the remedies available to your business.

The best collection strategy starts before the first invoice is sent. 

If your business doesn’t currently offer a retirement savings plan, there’s another employment compliance requirement to add to your radar.

The Minnesota Secure Choice Retirement Program (“Secure Choice”) is now open for employer registration. Begining in 2026, many Minnesota employers need to either register for the program or certify that they’re exempt.

The good news? While employers have responsibilities under the program, they are not responsible for funding employee retirement accounts or managing investments. 

Here’s what employers should know.

What is Minnesota Secure Choice?

Secure Choice is a state-established automatic payroll deduction IRA program designed for employees who don’t have access to a workplace retirement plan. The program allows eligible employees to save for retirement through payroll deductions.

Employers are not required to make matching contributions, and there are no employer fees associated with the program. Employers may still experience some administrative costs related to payroll setup and ongoing administration.

Which Employers Are Covered?

Your business must participate if you:

• Have five or more employees, and
• Do not currently offer (or have not offered within the previous 12 months) a qualified retirement savings plan.

If you already offer a qualified retirement plan, you are generally exempt-but you must certify that exemption through the Minnesota Secure Choice portal.

Certain employees are excluded from the program, including:

• Government employees
• Employees who were under age 18 on December 31 of the previous calendar year
• Certain temporary or seasonal employees hired for 180 days or less

Registration Deadlines

Registration occurs in phases based on employer size. Employers should receive notice from Minnesota Secure Choice when it’s time to register.

Current deadlines include:

• Voluntary enrollment (any size covered employer) Deadline: March 30, 2026
• 100+ covered employees Deadline: June 30, 2026
• 50-99 covered employees Deadline: December 31, 2026
• 25-49 covered employees Deadline: June 30, 2027
• 10-24 covered employees Deadline: December 31, 2027
• 5-9 covered employees Deadline: June 30, 2028
• 4 or fewer employees Exempt

If your business has 100 or more covered employees, now is the time to confirm you’ve either registered or certified your exemption. Even if your deadline is later, it’s worth coordinating with your payroll provider now to avoid a last-minute scramble.

How Employee Contributions Work

Secure Choice is funded entirely through employee paryroll deductions.

Employer contributions are not permitted.

Unless an employee chooses a different option or opts out, payroll deductions:

• Begin at 5% of pay
• Increase automatically by 1% each year
• Cap at 8%

Employees may:

• Opt out
• Choose a different contribution percentage
• Stop contributions later, following the program procedures

Contributions generally go into a Roth IRA unless the employee elects a traditional IRA.

Employees are always fully vested in their accounts.

Employer Responsibilities

Although employers aren’t managing retirement investments, they are responsible for administering the program.

This includes:

• Registering or certifying an exemption
• Enrolling eligible employees
• Processing payroll deductions
• Maintaining employee and payroll information
• Keeping records up to date

What Happens if an Employer Doesn’t Comply?

Minnesota law includes penalties for employers who fail to meet their obligations.

After the applicable warning period, employers that fail to enroll covered employees or begin required payroll deductions may face penalties beginning at $100 per covered employee, with higher penalties possible in later years.

Employers should pay particular attention to withheld employee contributions.

If payroll deductions are taken from employee paychecks but are not remitted on time, employers may be required to:

• Submit the withheld contributions
• Pay applicable interest

A willful and intentional failure to remit withheld contributions after demand may also result in misdemeanor penalties.

Getting Ready

When your registration window opens, you’ll need to:

• Register using your company’s EIN and Secure Choice Access Code
• Connect your payroll provider or upload payroll schedules
• Add banking information
• Upload eligible employee information

After registration:

• Minnesota Secure Choice communicates directly with employees during their 30-day election period.
• Employers then begin payroll deductions for participating employees.
• Employers continue submitting payroll contributions and maintaining employee records.

Don’t Wait Until Your Deadline

Like many new employment laws, Minnesota Secure Choice is designed to become part of your normal HR and payroll processes. Businesses that prepare early generally experience a smoother rollout.

Whether you’re determining if you’re covered, coordinating with your payroll provider, or simply making sure your compliance processes are current, it’s easier to address these questions before your registration deadline arrives.

WFJ’s Employment Law team and Compliance Center help employers stay ahead of changing workplace requirements so compliance becomes part of doing business-not a last-minute emergency. 

For most credit departments, Days Sales Outstanding (DSO) is one of the first metrics leadership looks at when evaluating accounts receivable performance.

And for good reason.

DSO provides a useful snapshot of how quickly a company converts sales into cash. But focusing soley on DSO can sometimes mask a much larger issue lurking beneath the surface: the true cost of slow-paying customers.

Every overdue invoice carries a cost. While those costs may not always appear on a balance sheet, they impact cash flow, operational efficiency, profitablity, and ultimately a company’s ability to grow.

The most succesful credit and finance leaders understand that delinquency isn’t simply an accounts receivable problem-it’s a business problem.

The Cost of Carrying Delinquent Accounts

When a customer extends payment terms from 30 days to 60, 90, or even 120 days, many organizations view it as an inconvenience.

In reality, every additional day an invoice remains unpaid ties up working capital that could be used elsewhere.

That capital may have been intended to:

• Purchase inventory
• Fund expansion initiatives
• Invest in new equpiment
• Support payroll obligations
• Reduce borrowing needs
• Improve overall liquidity

The longer receivables remain outstanding, the longer your organization effectively finances your customer’s business operations.

Cash Flow Challenges Extend Beyond the Credit Department

Late payments don’t just affect accounts receivable metrics. They influence broader business decisions.

Organizations experiencing slower collections may find themselves:

• Drawing more heavily on lines of credit
• Delaying capital investments
• Reducing operational flexibility
• Increasing borrowing costs
• Facing greater cash flow uncertainty

For finance leaders, this creates a ripple effect throughout the organization.

A customer who pays 90 days later may appear manageable on paper. But when multiple customers follow the same pattern, the cumulative impact can strain even healthy businesses.

The challenge isn’t simply collecting money-it’s maintaining predictable cash flow.

The Administrative Cost Nobody Talks About

One of the most overlooked costs of delinquency is the amount of internal time spent managing overdue accounts.

Consider what happens when an account becomes seriously delinquent:

• Collection calls increase
• Follow-up emails multiply
• Payment promises must be tracked
• Documentation requests becomes more frequent
• Internal meetings consume additional resources
• Disputes require investigation and resolution

For many credit professionals, a small percentage of customers consumes a disproportionate amount of their time. And that time has value.

Every hour spent chasing an account that has little intention of paying is an hour that cannot be spent on:

• Credit analysis
• Risk management
• Customer relationship development
• Process improvements
• Strategic planning

Eventually, delinquent accounts begin creating operational costs that exceed the orginal value of the relationship.

When Slow Paying Customers Become Unprofitable Customers

Many businesses evaluate customer profitability based on sales volume and gross margin. But profitability calculations often fail to account for collection costs.

A customer generating significant revenue may appear valuable until you factor in:

• Repeated collection efforts
• Internal administrative expenses
• Increased borrowing costs
• Legal expenses
• Write-off risk
• Managemement time spent resolving disputes

At some point, a customer can become more expensive to service than they are worth.

The goal isn’t necesarily to stop doing business with challenging customers. Rather, it is to understand the true cost of maintaining those relationships and adjust your strategy accordingly.

The Cost of Waiting Too Long

One of the most common challenges we see is organizations delaying escalation in hope that an account will eventually resolve itself.

Sometimes it does. Often, it doesn’t.

The reality is that collection options tend to decrease as delinquency ages.

As time passes, businesses may face:

• Diminished leverage
• Lost documentation
• Expired lien rights
• Increased bankruptcy risk
• Reduced recovery opportunities
• Larger write-offs

Many companies view legal intervention as a last resort. In practice, strategic legal involvement often works best before an account reaches crisis status.

Legal Intervention is About More Than Litigation

There is a common misconception that involving an attorney automatically means filing a lawsuit. In reality, experienced commercial collections attorneys can often help businesses evaluate options, preserve rights, and create leverage before litigation becomes necessary.

Depending on the situation, legal involvement may include:

• Demand letters
• Contract analysis
• Review of guarantees and security interests
• Lien and bond claim evaluation
• Negotiation support
• Recovery strategy development

When viewed through that lens, the true cost of slow-paying customers becomes much easier to quantify. And once you understand that cost, you can make more informed decisions about when to continue internal collection efforts and when escalation makes business sense.

Simplify the Complex

Credit professionals play a critical role in protecting cash flow and managing business risk. But even the strongest internal collection processses have limits.

Working with experienced commercial collections counsel can help organizations identify risks earlier, preserve recovery options, and improve collection outcomes before delinquent accounts become write-offs. Because knowing the cost of delinquency helps determine when it’s time to escalate.

At Wagner, Falconer & Judd, we help businesses simplify the complex through strategic commercial collections, creditor rights, and recovery solutions designed to protect what you’ve earned.

In California, compliance risk isn’t always about what you do-it’s about how your transactions are classified.

Most equipment dealers run tight, professional operations. You extend credit thoughtfully. You follow consistent processes.

So it can be surprising to learn that under California law, risk doesn’t always come from bad behavior-it can come from technical classification.

And that’s where things get complicated.

The Shift: From Behavior to Classification

Historically, commercial collecitons were judged by how you operated:

• Were communications professional?
• Were practices fair?
• Were disputes handled privately

Now, under California’s evolving rules, the question has shifted to:

“What type of debt is this-and who is involved?”

With the expansion of the Rosenthal Fair Debt Collections Practices Act into certian commerical debts, some business transactions can be evaluated under consumer-style rules-even if your process hasn’t changed at all.

Why This Matters for Equipment Dealers

If you sell equipment and extend payment terms, you’re likely dealing with:

• open-account credit
• Invoices with payment terms (Net 30, Net 60)
• Personal guarantees from business owners

The last point is where things can shift.

When a natural person (like a business owner) guarantees a debt, it can trigger a different legal framework-one that was originally designed for consumer protection, not commercial transactions.

Even if:

• Your communication is professional
• Your process is consistent
• Your intent is fair

You could still face liability if the debt is later classified differently.

The Good News-And the Catch

Recent updates clarified that trade credit is not considered “covered commercial debt.” That’s a big win for suppliers and dealers.

It confirms what businesses have always known: Extending credit for goods and services is part of commerce-not lending.

But here’s the key: That protection depends on proper classification.

If a transaction starts to look more like financing-or falls outside of standard trade credit-those protections may not apply.

Where Risk Actually Shows Up

The biggest misconception is that compliance risk comes from aggressive collection tactics. In reality, most risk comes from misalignment between your processes and the legal framework.

Examples include:

• Sending standard demand letters that don’t include required disclosures
• Reporting debt while a dispute is still under review
• Filing in a jurisdiction that doesn’t meet statutory requirements
• Using templates that haven’t been updated for new rules

None of these are “bad behavior”. But under a strict liability framework, they can still create exposure.

It’s Not About Changing Your Business-It’s About Aligning It

This isn’t about becoming more aggressive or more cautious.

It’s about making sure your:

• Credit structure
• Documentation
• Collection workflows
• Vendor relationships

…are aligned with how the law now evaluates certain transactions. Because once a debt is challenged, the question isn’t what you intended-it’s whether your process met the requirements.

A Growing Trend to Watch

California is the first state to expand consumer-style protections into parts of the commercial space like this-but it likely won’t be the last. That means this isn’t just a California issue. It’s a signal.

What Should Equipment Dealers Do Now?

You don’t need to overhaul your business-but you do need to understand where your risk lives.

Start by asking:

• Are our credit terms clearly structured as trade credit?
• Where are we using personal guarantees-and how  are those handled?
• Are our collection processes aligned with current requirements?
• Are our templates and vendors up to date?

How WFJ Helpls Simplify This

At Wagner, Falconer & Judd, we work with businesses every day to:

• Review credit and contract structures
• Align collection processes with current regulations
• Identify risks before they turn into disputes
• Support enforcement when issues aris

Because in today’s environment, the goal isn’t just to collect-it’s do do it confidently and correctly. 

Final Thought

The biggest takeaway?

You can be doing everything right-and still face risk if your processes don’t align with how the law sees the transaction. The good news is that once you understand where that line is, it becomes much easier to operate with confidence.

A busy construction season is great for revenue-but it can also put pressure on your cash flow if your collections process isn’t ready.

When demand increases, so does risk. New customers are onboarded quickly. Terms get negotiated on the fly. Follow-ups become inconsistent as teams focus on delivering work. The result? More invoices, and more uncertainty around when you’ll be paid.

The best time to address collections risk isn’t after accounts become overdue. It’s before the work begins.

What to Review Before Things Get Busy

Your Contracts

Your contract is your first line of defense.

Are your payment terms:

• Clear and easy to understand?
• Enforceable if something goes wrong?
• Consistent across customers?

Vague or inconsistent terms can create confusion-and limit your ability to act if payment is delayed.

Your Credit Approval Process

During busy season, it’s easy to prioritize speed over process. But not every customer carries the same level of risk.

Ask yourself:

• Are you evaluating new customers before extending credit?
• Do you have defined limits or requirements?
• Are exceptions being documented-or made informally?

A strong upfront process can prevent issues later.

Your Internal Collections Workflow

Even strong contracts can fall short without consistent follow-up.

Consider:

• Who is responsible for collections?
• When do follow-ups begin?
• What happens if an account becomes overdue?

If your process depends on “who has time,” it may not hold up during your busiest months.

Lien & UCC Strategies

For many industries, timing matters.

Tools like liens and UCC filings can:

• Strengthen your position
• Improve recovery options
• Provide leverage in disputes

But these tools are often time-sensitive and must be set up early to be effective.

Why Being Busy Creates Risk

Growth can expose gaps that aren’t noticeable during slower periods:

• Inconsisten terms across accounts
• Delayed or missed follow-ups
• Informal agreements made to move faster
• Missed deadlines tied to legal protections

These small gaps can add up quickly-especially when dealing with high volumes or high-dollar accounts.

If You’re Experiencing…

• Rapid growth and onboarding new customers quickly
• Inconsistent payment terms across accounts
• Limited time to review agreements
• Increasing receivables with unclear timelines

Wagner, Falconer, and Judd Can Help With…

• Standardizing contracts and payment terms
• Strengthening your collections framework
• Identifying gaps in your current process
• Building proactive strategy before issues occur

A successful season isn’t just about how much work you bring in-it’s about how effectively you turn that work into cash flow. A strong foundation now can help you move through your busiest months with more clarity, consistency, and confidence. 

In construction equipment industry, deals move quickly-but when payments don’t, the consequences can be significant. Whether you’re financing equipment, extending payment terms, or leasing inventory, protecting your interest is critical.

One of the most effective (and often underutilized) tools available to heavy equipment dealers is the Uniform Commercial Code (UCC) filing.

Here’s what you need to know-and how to use it to your advantage.

What is a UCC Filing?

A UCC filing (commonly a UCC-1 Financing Statement) is a legal notice filed with the state that establishes our security interest in a debtor’s personal property.

In simpler terms: it tells the world, “We have a legal claim to this equipment until it’s paid for.”

For heavy equipment dealers, this often applies to:

• Excavators, loaders, cranes, and other machinery
• Inventory sold on credit
• Equipment financed through dealer-arranged terms

Why UCC Filings Matter for Equipment Dealers

Without a UCC filing, you may be treated as an unsecured creditor if a customer defaults or files for bankruptcy.

With a properly filed UCC:

• You establish priority rights over other creditors
• You improve your ability to recover or repossess equipment
• You gain leverage in collections and negotiations
• You reduce overall financial exposure

In high-value equipment transactions, that protection can make the difference between recovery and loss.

How the UCC Filing Process Works

While the process is straightforward, precision matters.

Create a Security Agreement

Before filing, you must have a signed agreement granting you a security interest in the equipment.

This agreement should clearly identify:

• The debtor (customer)
• The secured party (your business)
• The collateral (equipment)

Prepare the UCC-1 Financing Statement

This document is filed with the Secretary of State (typically where the debtor is located).

It includes:

• Legal name of the debtor (accuracy is critical)
• Secured party information
• Description of the collateral

File with the Appropriate State

Most filings are completed online and processed quickly.

One filed, your interest becomes public record, putting other creditors on notice.

Maintain & Monitor the Filing

UCC filings typically last 5 years and must be renewed if the obligation remains outstanding.

Ongoing management is key:

• Amend filings if details change
• Continue filings for long-term financing
• Terminate filings once paid in full

Common Mistakes to Avoid

Even small errors can undermine your protection.

Watch for:

• Incorrect debtor names (a leading cause of invalid filings)
• Vague or incomplete collateral descriptions
• Filing in the wrong state
• Failing to renew before expiration
• Not tying the filing a valid security agreement

How UCC Filings Strengthen Your Business Strategy

For heavy equipment dealers, UCC filings are more than a legal formality-they’re a risk management tool.

When used strategically, they can:

• Support more flexible financing options for customers
• Protect margins on high-value equipment
• Strengthen your position in the event of default
• Create consistency across your credit and collections process

How WFJ Can Help

UCC filings are powerful-but only when done correctly and consistently.

At Wagner, Falconer & Judd, we help heavy equipment dealers:

• Draft enforceable security agreements
• Ensure accurate and compliant UCC fiings
• Develop standardized credit and documentation processes
• Support collections, repossession, and enforcement if issues arise

We simplify the complex-so you can focus on running your business with confidence.

If your handbook hasn’t been updated in 2+ years…you’ll want to keep reading. 

Most businesses have an employee handbook.

But far fewer have a handbook that actually reflects current law, aligns with how their workplace operates today, and protects them when issues arise.

An outdated handbook doesn’t just sit on a shelf-it creates risk. And in employment law, small oversights can become expensive problems.

Let’s talk about the gaps we commonly see.

The “We Haven’t Touched It In Years” Problem

Employment laws change. Frequently.

Minimum wage requirements adjust.

Leave laws expand.

Remote work raises new compliance questions.

Harassment standards evolve.

If your handbook was reviewed more than two years ago, there’s a strong change it no longer reflects current legal requirements or best practices.

And when policies conflict with the law-or with how your company actually operates-that inconsistency can be used against you.

The Copy-and-Paste Handbook

Templates can be helpful starting points. But many businesses rely on generic, one-size-fits-all policies that don’t account for:

• State specific employment laws
• Industry-specific risks
• Multi-state workforce compliance
• Remote or hybrid teams
• Unique compensation structures

A handbook should reflect your business-not just employment law in general.

Policies that Sound Good-But Create Risk

We often see policies that unintentionally create legal exposure, including:

• Overly broad “at-will” disclaimers that contradict other language
• PTO policies that don’t align with state payout requirements
• Discipline policies missing updated reporting procedures
• Harassment policies missing updated reporting procedures
• Social media or technology policies that conflict with employee rights

Even well-intentioned language can create confusion if it’s unclear, inconsistent, or outdated.

The Disconnect Between Policy and Practice

One of the biggest compliance risks isn’t what’s written-it’s what’s practiced.

If your handbook says one thing but managers routinely do another, that inconsistently can undermine your defense is an employment dispute.

Your handbook should:

• Reflect how your business actually operates
• Provide clear manager guidance
• Align with training and onboarding processes
• Be consistently applied

A handbook is not just a document. It’s a framework for workplace expectations.

Why Regular Updates Matter

An updated handbook helps businesses:

• Reduce risk of wage and hour claims
• Strengthen defenses in wrongful termination disputes
• Clarify expectations around leave and accommodations
• Support consistent performance management
• Improve internal culture and communication

Proactive compliance is almost always more cost-effective than reactive litigation.

Signs It’s Time for a Handbook Review

You should consider a review if:

• It’s been more than two years since the last update
• Your company has grown significantly
• You’ve added remote employees
• You operate in multiple states
• You’ve experienced a recent employment dispute
• Laws have recently changed in your state

If any of these apply, it’s worth taking a closer look.

How Wagner, Falconer & Judd Supports Employers

At WFJ, we work with businesses to review, revise, and draft employee handbooks that align with current law and real-world operations.

Our goal isn’t to create unnecessary complexity-it’s to create clarity. Clear policies. Clear expectations. Clear compliance. 

An employee handbook should protect your business, support your team, and evolve as your company grows.

If yours hasn’t been updated in 2+ years, it may be time for a review.