Taking a Mesaured Approach in Business

One unusual aspect of the current situation is that the construction industry has been considered essential and many businesses and individuals within construction have not had an interruption in business. Further, the Texas Department of Transportation has taken advantage of the reduced traffic on the roads and has advanced projects by calling for additional and faster work beyond the original specifications of various projects. This has been very good for those working on TXDOT projects and has increased some revenues. However, we urge our clients to move forward measuredly, deliberately, and with foresight.

We believe that the true economic impact of COVID-19 is still coming. We caution our clients not to approach business opportunities with a “feast or famine” mentality. Do not over-extend credit, and do not over-extend bidding or workforce pledges beyond what your business would normally do in an effort to “make up” or “get ahead” for lost time and work. We anticipate that in 2021, many of the contractors and subcontractors who are now furiously accepting as much work as possible, overextending their companies and resources, will experience financial difficulties that may severely hamper business. Overextended businesses will not be able to fully honor contracts, and lawsuits will ensue with additional devastating financial consequences. Material providers who overextend credit and fail to timely collect will be faced with attempting collections from bankrupt businesses. Companies who fail to file liens timely and properly will be unable to collect on debt.

We advise that each business take the proper protective measures. Materials providers should be proactive in collection and not allow for continued purchases/rentals to be made when past balances have not been paid as owed and agreed. Businesses should ensure that all work pursed and accepted can be performed within the existing resources of the company.

If you have any questions, please contact our office.