deposit on commercial jobs

[Mike Lang]

DO any of you guys get deposits on commercial jobs? I have a GC that I'm working for that claims that I can't get any money up front for material. He says I'm small time and the big contractors don't even ask for money. I know that's BS (other than the fact that I am small time). On my previous commercial jobs I've recieved money at the start date without any crying. What have you guys experienced?

Everyone I ask from the other trades say they demand a deposit or they dont start the work. Am I off my rocker?

 

[mcclary's electrical]

You're not off your rocker, but you need to get out of the habit of asking for down payments. It really scares peolple off. Rough it in, he gets a draw, he pays you rough in, and everything goes smoothly

 

[Mike Lang]

You're not off your rocker, but you need to get out of the habit of asking for down payments. It really scares peolple off. Rough it in, he gets a draw, he pays you rough in, and everything goes smoothly

Yea I sort of agree although I'm scared also of not getting paid at all. I've been there too many times for only being in business for 13 months. What are you suggesting that I set up a payment after a certain amout of work is done? What about jobs where I have about 15K in material and maybe a week worth of work? By the time I send in the 1st invoice I'll be done. I'm really just trying to cover the material so I don't get burned.

 

[27hillcrest]

We get a down payment on every job. The contracts are written 50% down payment to schedule installation and 40% after rough in with a 10% retainer. I have never had any problem doing business this way. Our GC's all have contracts in place as well to do the work. I don't think I would feel to comfortable if they didn't have any contracts in place. I felt the way you do at one point but now we look more professional asking for a down payment. We've been in business 53 years.

 

[ty]

I have no problem asking for Job Deposits.
We don't always, it depends on the customer.
If it is an out-of-state contractor, then we will not even do the work unless they pay up front.

 

[George Stolz]

http://forums.mikeholt.com/showthread.php?t=112778

We have started requiring a deposit on most jobs.

 

[shepelec]

I always ask for a deposit on special order parts even with my regular accounts. You can eat a little labor if you have too but a 400A panel is a little tough to swallow.

 

[chris kennedy]

You can eat a little labor if you have too but a 400A panel is a little tough to swallow.

Or a 20k fixture package. We tend to do a bit more financing than most I would guess, but I figure thats why we stay busy.

As ty stated, the decision is customer based.

 

[jmellc]

DO any of you guys get deposits on commercial jobs? I have a GC that I'm working for that claims that I can't get any money up front for material. He says I'm small time and the big contractors don't even ask for money. I know that's BS (other than the fact that I am small time). On my previous commercial jobs I've recieved money at the start date without any crying. What have you guys experienced?

Everyone I ask from the other trades say they demand a deposit or they dont start the work. Am I off my rocker?

A former boss of mine was nearly bankrupted by not getting some $ up front. He'd done work awhile for a GC that had usually paid within 30 days. This 1 job got messy, was with a difficult customer who would only pay on 100% completion, etc, etc. Well, customer split hairs on some issues, GC split hairs on others and my boss had no hair left.
I've paid deposits to nearly everyone that ever did projects for me and I get some deposit from any job requiring a lot of material up front. If the GC balks at a deposit, he will likely balk at paying you later too. But, check him out with other subs and see what his track record is. If good, maybe do the rough in and final payments as someone else mentioned. But he's full of it saying no one gets deposits. Large and small co's get deposits all the time.

 

[cadpoint]

Add a clause for bulk materail orders, delieved to job, bill is released and client pay's; IE, order in, payment out!
Make it a product, or a the bulk delieviery to the job! Moneies due!

 

[dduffee260]

It depends on what size and type of job it is. On our projects we go by specs and the pay is on work performed or materials stored on site. About all you can do is front load the project to get ahead. We have to turn in a Schedule of Values to show our progress and payments.

Our projects are usually bonded and the worry about non payment is eased by the P&P bond. There is no way we can ask for money up front before we start a project for the projects we do. I have to agree it would be nice, but we have never had it happen on a project. We are building a new shop and we had to produce 25% down to start the building. There is one difference, our project is not bonded. There is more risk to a sub to take a loss without a bond.

I see alot of times when a contractor wants money up front and they pay the bills from the last project. Then when they run out on the existing project the GC is left to pay the tab.

About all you can do is work tight for the first month then get a payment and front load it with underground and site stuff. Mobilization, temp power and other front end parts of a project. That will give you the cushon to pay the bills when they come in.

 

[jmellc]

I have no problem asking for Job Deposits.
We don't always, it depends on the customer.
If it is an out-of-state contractor, then we will not even do the work unless they pay up front.

Amen to that too, friend. I had a boss burned by a firm in Texas. They called us for a night job, with morning deadline. I worked 10 pm to 4 am, gave him a bill and he promised HO would send us a check. What little my boss could talk with them, they kept asking for w9 forms. He faxed 2, then they stopped taking his calls.

Same thing with apt buildings. We had a maintenance mgr call for a night repair in city nearby. Did job, left bill with him. We got jerked around for 3 months on that. Turns out they had burned every contractor in their city and were starting on our's. Anything similar in future, I will get cash in advance, no check.

 

[brantmacga]

its the banks job to finance the project, not yours. get a down payment. especially right now. so many GC's are not paying on time . . .

 

[jdsmith]

I'm a customer and it's something we negotiate with our contractors according to the particular scope, amount of custom material, and schedule. We will pay upfront to cover upfront costs if requested. Some contractors are willing to finance a few hundred thousand or more in non-returnable material and/or labor with no problem because they know they will be paid within 30 days when they invoice. If you don't have a collections problem it doesn't really matter which way you do it - if you have to finance the material you just have to include the carrying costs in your bid.

 

[jmellc]

I have no problem asking for Job Deposits.
We don't always, it depends on the customer.
If it is an out-of-state contractor, then we will not even do the work unless they pay up front.

Amen to that too, friend. I had a boss burned by a firm in Texas. They called us for a night job, with morning deadline. I worked 10 pm to 4 am, gave him a bill and he promised HO would send us a check. What little my boss could talk with them, they kept asking for w9 forms. He faxed 2, then they stopped taking his calls.

Same thing with apt buildings. We had a maintenance mgr call for a night repair in city nearby. Did job, left bill with him. We got jerked around for 3 months on that. Turns out they had burned every contractor in their city and were starting on our's. Anything similar in future, I will get cash in advance, no check.

 

[Kdog76]

I'm a customer and it's something we negotiate with our contractors according to the particular scope, amount of custom material, and schedule. We will pay upfront to cover upfront costs if requested. Some contractors are willing to finance a few hundred thousand or more in non-returnable material and/or labor with no problem because they know they will be paid within 30 days when they invoice. If you don't have a collections problem it doesn't really matter which way you do it - if you have to finance the material you just have to include the carrying costs in your bid.

Finance $100,000? A few $100,000? Because "you know you will get paid?"

Even if I did have a collections problem (which I don't) I get a little sceptical at about $1,000 or more. You tell me, how do "know" you will get paid in 30 days? And "they've paid every other time" and a "we got a good working relationship with the customer" is not knowing the future.

I've thought ( and bought into ) both of those self-made lies.

Truth is, nobody knows they will get paid in the future. Not for certain. It may be a 99.99% sure, and that's fine, I'd even take the bet. But it is NOT "knowing" you will get paid.

What level can you handle? I'm a small shop. I would let the customer cover any costs up and over several thousand.

On the other hand my father, a service tech who worked on ( and whose company sold) million dollar packaging machines told me his company wouldn't get too upset on a no-pay account unless they were 90+ days out after selling the machine. (and these would be at least several hundered thousand dollar machines.)

A no-pay situation they would sometimes have problems even getting these machines back, seeing a lot were sold out of the country.

Not paid on a few machines, maybe a half million dollars out, no sweat. My dad said they would just cut them off from the service dept ( free service & tech support was somewhat included in the sell & most machines needed some adjustments after install as this was a high speed packaging machine with a LOT of interworking parts moving at very high speeds.) Wanna take $1,000,000 hit?

All depends what level you are at, unless your last name is Trump :grin:.

 

[Mike Lang]

On residential jobs I normally dont have a problem, just when I work for scum bag builders. New residential construction I usually get 1/3 up front or within the first few days. Then another 1/3 at rough inspection and the final payment at the end. It's just these commercial jobs that are making me a little nervous. ALthough like I said most so far I've never had a problem, even though I'm still pretty new. It's just recently that I've worked for one that wont pay until the end and now just this week they said they want me to sign a lien release form. That sounds like they have bad intentions to me.

Thanks for your input guys. I knew I wasn't out of line for asking, and like some of you said I think it's necessary in this economy. I just found out today that a billion dollar home builder / developer in my state is going out of business.

 

[Sparky555]

If the project is run through a title company and my company is listed for the amount of the contract waiting until rough for the first payment is fine. Without the title company I'd go for all the materials and half the labor in advance, the other half of the labor at rough and the profit at final.

 

[hardworkingstiff]

I request a deposit (actually, I just put it in my proposal as a matter of fact, like doesn't everyone do it?) on any job over $10,000. Usually 25%.

In 2008, this saved me. I had a deposit and was stuck holding material on a job that stopped because the developer ran out of money and couldn't get any more financing. The GC didn't have any money. I paid my suppliers (my deal with my suppliers has nothing to do with my deal with the GC). I was owed $26K for 7 months and I was thinking I was going to have to pay restocking fees to break even. Yes, 40% restocking fees on the materials (non stock items) and when I told the GC they would be out the deposit and the materials, well, I finally did get my money.

Get the deposit.

 

[milehiwire]

Is there a ROFLMAO emoticon here?

Definition of an electrical contractor:

Banker


Oh how apropos, the coyotes are howling right outside my window.