Deposit or not?

[Benton]

I've been trying to stick to one set of rules when it comes to my customer base (no exceptions). Would you require a deposit on every install above a certain dollar limit? If so, what is your dollar limit?

 

[Little Bill]

I've been trying to stick to one set of rules when it comes to my customer base (no exceptions). Would you require a deposit on every install above a certain dollar limit? If so, what is your dollar limit?

Probably not every install, it would depend on the customer.

However, if the amount was in the $2000 and above range I would probably require (ask) of all customers.

I almost learned the hard way a few months ago as I let a GC get in too deep with me and had trouble collecting from him.

If the amount is going to be much over $500.00 I would certainly require it from an unknown customer. Also a contract.

Edit: I'm basically talking about if the materials were a big chunk of the total.

 

[Dennis Alwon]

I have never gotten money up front. IMO, unless you have to special order equipment before you can start the job then it would not be appropriate to ask for money down. I realize some do it but I haven't ever done it and fortunately I have lost much less than 500 dollars in all my years in business.

 

[Sierrasparky]

be careful in CA you cannot take any money uptfron for speacial order items.
You may take a deposit of 10 % no more than 1000.00 whichever is less

 

[Fulthrotl]

be careful in CA you cannot take any money uptfron for speacial order items.
You may take a deposit of 10 % no more than 1000.00 whichever is less

depends on the customer. i've got customers that are 100% cash up front.
four, actually. two physicians, a property management company, and a church.

and cash up front means cash. no checks. not permitted under calif. biz
and professional code? not a problem. get someone else to do your stuff.

one of the physicians bounced a check for less than $2k on me... twice.
stuff like that.

CA state professional code notwithstanding, oftentimes around here, in residential
anyway, it's become common to split the invoice, half at the start, and half at
the end.

and the people doing it aren't worried about the laws, 'cause they aren't licensed
in the first place.

 

[ptonsparky]

If I had to collect a deposit for every $500 project, I would get less done than I do now. Occasionally I will ask for payment upon delivery of items to location, not often. I have been bit pretty hard a couple times though.

 

[Daja7]

I never get a deposit for residential work except generator installs (we do a lot of them)
we get 20% on a generator contract. Totally refundable if the customer changes their mind. We only keep mony if we have started the job and then the back out. and only for the amount we have in it. Other work in the 10 years I have been doing this I have only been stiffed once for $300.00 and it was a church. We get paid when job is done.

 

[Rewire]

I get a 50% deposit on all work. Our state allows this amount although some states may limit the amount. Getting a deposit helps us to keep a positive cash flow and limits the amount on financing we carry. Anybody who has been in business has had a customer stiff them and we are no acception so getting a deposit limits our loss potential.

 

[cowboyjwc]

I always got a check for material, once I had dropped it off, and it stayed on site, not in my truck or my garage, because now it belonged to the customer. I then usually wouldn't take a draw until final, depending on the size of the job. This way if I got cheated, I only got cheated out of my time.

 

[growler]

I always got a check for material, once I had dropped it off, and it stayed on site, not in my truck or my garage, because now it belonged to the customer. I then usually wouldn't take a draw until final, depending on the size of the job. This way if I got cheated, I only got cheated out of my time.

I do the same thing and I don't think of it as getting money up-front because they are only paying for materials that has been received.

As far as getting a draw for labor it depends on how long the job will last. If the rough is finished and inspected and it going to be few weeks before it's time for trim out then I'm getting a check for the rough. If I think there is going to be any problem getting paid I'm getting a check at rough inspection.

I had a job go bankrupt on me about 15 years ago and the subs were offered about 50% . If I hadn't been collecting as I went it could have been serious but as things turned out I only lost about a grand on add ons and I could cover that.

 

[Daja7]

I only do resi service work so my jobs rarely last more than two days. i collect at end. never had a problem. however the very few new const jobs that i have done is an entirely different story.

deposit up front that normally covers the mat. rough in draw at 65% 90% on trim out with final 10 after final inspection.

Generator 20% deposit. 90% on install and remaining 10 at start up.
Service stuff is never high dollar amount so it is never an issue with me or customer.
Never get final inspection until paid in full.

 

[wbsteve]

If the job is over $2000 I get 30% the day we start then its 40% after rough in and the renaming 30% and any extras at the end. Under $2000 its payment upon completion.

 

[220/221]

be careful in CA you cannot take any money uptfron for speacial order items.
You may take a deposit of 10 % no more than 1000.00 whichever is less

If this is true, it is...... insane. I am supposed to fund your project? I'm a contractor, not a bank.

50% here, with exceptions.

 

[curt swartz]

If this is true, it is...... insane. I am supposed to fund your project? I'm a contractor, not a bank.

50% here, with exceptions.

It is true and I agree with it. I would never give a contractor a large sum of money for doing nothing. Once the project starts then progress payment can me made. The idea is to keep the payments inline with the amount of work done.

To me someone asking for a large amount of money upfront is a flag that they are behind thier bills and want my money to pay for other projects. There is no real expence incured by the contractor at the time the contract is signed so what I'm I paying for?

I never ask for deposits. I have only have had trouble collecting a few times in the 29 years I have been in business and it has always been the final payments so a deposit would not have helped.

 

[satcom]

It is true and I agree with it. I would never give a contractor a large sum of money for doing nothing. Once the project starts then progress payment can me made. The idea is to keep the payments inline with the amount of work done.

To me someone asking for a large amount of money upfront is a flag that they are behind thier bills and want my money to pay for other projects. There is no real expence incured by the contractor at the time the contract is signed so what I'm I paying for?

I never ask for deposits. I have only have had trouble collecting a few times in the 29 years I have been in business and it has always been the final payments so a deposit would not have helped.

You are not in the banking business, the cost of inventory, and cash is high, overhead and operating expenses are also high, unless you go to your jobs uninsured, and with a bike, and no tools or equipment, you should have all the expenses every contractor has.

Some contractors operate for years, and never check to see if they are making a profit, most of us are in business to make both a good income and a nice profit, and also provide health insurance and retirement build up.

20% on signed contract and 30% additional the day we start work, if the job is material heavy we will also ask for progress payments, usually paid to a third party bank and pand pad to us on completion, every job has a signed contract, and deposit.

Often you may get a GC that will hand you the line, everyone waits to get paid, when you hear that line run don't walk away.

 

[hbiss]

be careful in CA you cannot take any money uptfron for speacial order items.
You may take a deposit of 10 % no more than 1000.00 whichever is less

It is true and I agree with it. I would never give a contractor a large sum of money for doing nothing. Once the project starts then progress payment can me made. The idea is to keep the payments inline with the amount of work done.

To me someone asking for a large amount of money upfront is a flag that they are behind thier bills and want my money to pay for other projects. There is no real expence incured by the contractor at the time the contract is signed so what I'm I paying for?

I never ask for deposits. I have only have had trouble collecting a few times in the 29 years I have been in business and it has always been the final payments so a deposit would not have helped.

I believe that only applies to resi work. In many other jurisdictions any deposit from resi customers must be held in an escrow account until the material is delivered/work is completed.

-Hal

 

[mrtom]

Alot of my work is service calls and troubleshooting so it is payment in full upon completion for those jobs. When I do new construction or remodels......25% deposit, 25% after all piping complete (yes in Chicago residential is piped!), 25% after all wire pulled (after drywall installed), and 25% balance upon completion and inspection. Works good for me and keeps money coming in while spending money on the material....plus it is an incentive to hurry up and get the job done LOL.

 

[220/221]

It is true and I agree with it. I would never give a contractor a large sum of money for doing nothing.

I would never give a homeowner a large sum of money for doing nothing.


And, doing nothing? There is easily an hours work in a simple estimate.

I drove to your job site, talked with you about your needs and provided informed professional suggestions. Then, from my office, I wrote up a proposal, had someone put it in the system and emailed you a copy. I might have even spent some time on the phone or on site with a POCO rep. Then, if you hired me, I purchased your materials and scheduled the crew. That is not doing nothing.

You want me to do some work? Give me a deposit and I will get the materials and put you on the schedule.


I'm never behind on bills and I generally collect a deposit.

I collect a sizable deposit simply to help protect my interests. If I did a service change and the customer didn't pay me, I'd be out $2-3K. It would cost me at least hundreds more to TRY and collect it. If a bankruptcy were involved, I'd see nothing. With a 50% deposit, I will at least get something.

The 10% deposit wouldn't come close to covering materials on anything but a service call type job.
Hell, sometimes it wouldn't even cover the permit fees.

 

[Rewire]

early in business I would not collect a deposit and actually billed every job after completion even small service calls. Cash flow was always a struggle . At one point web had over 30 thousand dollars in ARs but only 800.00 in the bank. that is when we made some major changers in how we operated. We started to collect for service calls when the were done and began to collect a 50% deposit on bid jobs. Being able to accept CC made a huge difference also. Now cash flow is no longer an issue.

 

[PetrosA]

From talking to some guys from California, I know there are ways around the no down payment law. There have to be, otherwise large custom orders would never be fulfilled (think a whole house of custom sized high end windows and doors or a resi customer who wants 10s or hundreds of thousands of dollars worth of designer LED lighting or any other special order, non-returnable items). These are situations where the special order price tag could easily be well over the credit limit of a given contractor or beyond the contractor's ability to pay should they get stuck with the order.