Hi Thea,
Can you send preliminary notice for projects on American Indian reservations? I have heard horror stories and I’m not sure how to safely sell on tribal land.
— I got nothing, do I?
Dear Nothing,
You can send as many as you like. Send them to your heart’s content. But Notices of Intent (prelims) on tribal lands have absolutely no legal teeth. Conversation-starting wallpaper and a false sense of security, but that’s it. Have you heard of Tribal Sovereign Immunity? Congress enacted this sovereign authority to protect tribes from state and federal laws. That authority extends to tribal courts, which handle matters relating to Indian affairs.
Since this is not a new challenge and tribes are aware of it, ways to sell comfortably have evolved. Tribal entities sometimes work with banks to be the facilitator of payments, acting as a de facto project manager, other times the tribal entities will require a general contractor to post a bond for the projects or they will post one themselves, but not always.
Channel your inner five-year-old and ask questions. Open-ended questions, not the yep and nope variety. Get specific. The devil is in the details in this transaction. The more information you can gather, the easier it is to make the best decision for your company.
1. Start with your customer. Are you selling directly to the tribe or to a customer who is doing work on a tribal project?
2. Pull a credit report on whoever you’re selling to.
3. Google the tribal entity. How have previous projects gone?
4. If your customer is contracted with the tribal entity, ask to see the contract.
5. What is the project? What is the timeline?
6. How much credit is needed from your company for the project?
7. What are the terms on the project? Are extended terms requested?
8. Who is issuing payment on the project? Is there a third party check issuer?
Once you have this information, you can make an informed assessment. Depending on the dollar amount, the timeline, the scope of project, and your customers’ ability to pay (in the event something goes awry, this will be important), you can lay out the risk/reward with your team and make the business decision.
Going into the opportunity understanding both the reward (we get the sale and get paid) and the risk (if something goes wrong we have no lien rights, a suit has to be brought in tribal court if you are direct with the tribe or the account.) Either way, you are waiting for your money.
The thing that freaks credit people out about selling tribal projects is our utter lack of options and perceived ability to protect and collect. All our usual “go to” moves are shut down. But, we sometimes extend credit to people who can’t afford a candy bar, let alone the credit line we gave them. Yet we do it. Is it because we have options? Or believe we do? Sure we can “lien ‘em and sue ‘em,” doesn’t mean we’ll get paid. It’s the perception!
If your perception is your reality, then it’s all about options. You may not have the usual, but you have some. Ask if the tribe will waive their right to sovereignty. They may laugh, or they may not know if they can, but it’s worth the ask. How about a percentage down? How someone responds to a request can be an indication of how they will be to work with. How willing are they to work with you? Credit operates in some vast open plains. Don’t let fear run you off the reservation.
