How do you guarantee payment of services on small jobs?

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Good day all.
I'm a small (licensed and insured) part timer of low voltage equipment (PLC's, Fire Alarm, some mechanical). I live in Houston, TX, have a good full time job and do this to keep me out of trouble (use to be an outlaw in former life). We mainly attract inspections services, trouble calls, and some light upgrades/retrofit work, my question is: How do you make sure the client will pay? I deal with A LOT of foreign run business's (restaurants, parlors, strip mall type stuff usually not covered by a landlord), a lot of the owners can barely speak English so communication is not always easy, also their business culture might not be the same as ours here in America. I usually gauge an owner and make a decision on the spot if I will bill him later (net 30) or demand payment via credit card (iphone swipe thing) on the spot, but lately some have been missing when it comes time for payment.
How do you all protect yourself when it comes to this? This is a business friendly state and dragging a business owner to court to duke out a $500.00 dollar bill often takes 9-12 months. Is this just part of doing business?
 

Dennis Alwon

Moderator
Staff member
Location
Chapel Hill, NC
Occupation
Retired Electrical Contractor
I usually try and weed out the bad guys by talking to others at the supply house. I also try and feel them out-- I have gotten pretty good at finding the guys to avoid.

I would also let them know your terms of when you expect payment and you could get them to sign something. I have been very fortunate but it is almost impossible to avoid a loss altogether.
 

Canton

Senior Member
Location
Virginia
Occupation
Electrician
I usually try and weed out the bad guys by talking to others at the supply house. I also try and feel them out-- I have gotten pretty good at finding the guys to avoid.

I would also let them know your terms of when you expect payment and you could get them to sign something. I have been very fortunate but it is almost impossible to avoid a loss altogether.
demand payament on the spot at completion of work
 

GUNNING

Senior Member
Pre qualify the customer

Pre qualify the customer

demand payament on the spot at completion of work
Yea the only way is to "prequalify" the customers. Take a credit card and run it on square up. Have em sign a scope of work with anything outside of that will cost extra. If they balk, walk. Real estate salesmen do it all the time, they ask about financing etc. They want to politely know if they are wasting there time on shoppers. Taking a credit card is the same thing.

I've got a sign on my white board, go where the $ are,complete projects, No restaurants or service companies, and be reliable.

You will have to get the money up front with an agreement for the original scope of work signed by a principle owner. That is the only sure fire way to get paid. It is also a way to increase your profits by putting the proposal into a form that is palatable to the customer and profitable to you.
 

cadpoint

Senior Member
Location
Durham, NC
Don't be a Mark!

These people talk too...

Your not setting up a mail box there so don't expect mail, from there.

Be consistent. COD Cash Oppone Done! ;)
 
Thanks for the advice, I think putting a hold on a CC (like rental car companies do) may be the best bet for my applications. Unfortunately, I deal with lots of restaurants (hood suppression inspections), but I've learned to avoid bars and pre schools!
 
Location
Mesa
In this way i gurantee payment of services on these type of jobs

In this way i gurantee payment of services on these type of jobs

I totally agreed with you...this is a crtical part of business, often we met with these kind of peoples, but the best is to avoid these peoples, or clear the conditions at the begnining.
 

kwired

Electron manager
Location
NE Nebraska
Good day all.
I'm a small (licensed and insured) part timer of low voltage equipment (PLC's, Fire Alarm, some mechanical). I live in Houston, TX, have a good full time job and do this to keep me out of trouble (use to be an outlaw in former life). We mainly attract inspections services, trouble calls, and some light upgrades/retrofit work, my question is: How do you make sure the client will pay? I deal with A LOT of foreign run business's (restaurants, parlors, strip mall type stuff usually not covered by a landlord), a lot of the owners can barely speak English so communication is not always easy, also their business culture might not be the same as ours here in America. I usually gauge an owner and make a decision on the spot if I will bill him later (net 30) or demand payment via credit card (iphone swipe thing) on the spot, but lately some have been missing when it comes time for payment.
How do you all protect yourself when it comes to this? This is a business friendly state and dragging a business owner to court to duke out a $500.00 dollar bill often takes 9-12 months. Is this just part of doing business?

Some of the equipment you say you work on is easy to program a glitch into. When they complain about that problem (which for all they know is just a malfunction or other error) you can tell them once you receive payment for past due amounts you will gladly come out and look at their problem for no additional charge or if they want they can choose to pay someone else (or hang them out to dry as well) to figure out the problem.
 
Some of the equipment you say you work on is easy to program a glitch into. When they complain about that problem (which for all they know is just a malfunction or other error) you can tell them once you receive payment for past due amounts you will gladly come out and look at their problem for no additional charge or if they want they can choose to pay someone else (or hang them out to dry as well) to figure out the problem.

Yeah! a "non payment" bit that will make VFD's spool up to 100's of hertz until paid!
 

kwired

Electron manager
Location
NE Nebraska
Yeah! a "non payment" bit that will make VFD's spool up to 100's of hertz until paid!

An example from another trade I once heard a story about (and from this site IIRC) was about a mason that when laying a fireplace flue, would lay a pane of glass somewhere in the middle of the flue - blocking air flow through the flue. When he was satisfied with payment he would drop a brick down the flue, breaking the glass, and everything was fine.

If a customer did not settle with him, they would one day call to complain about how the ventilation of that flue doesn't work. He could tell them they need to finish paying him for the installation and then he would gladly come out and take a look at the problem - no charge.

Once he was satisfied with payment - he came out - dropped a brick down the flue, broke the glass and it worked as it should.:cool:
 

mgookin

Senior Member
Location
Fort Myers, FL
One strategy to get timely payment which I've seen work is to price the job, then add x percent or dollars and give a discount for timely payment (completion of job, 10 days, 30 days, whatever) and then in the event you have to chase the money, at least you're getting something for chasing the money, assuming you eventually do get paid.
 

kwired

Electron manager
Location
NE Nebraska
One strategy to get timely payment which I've seen work is to price the job, then add x percent or dollars and give a discount for timely payment (completion of job, 10 days, 30 days, whatever) and then in the event you have to chase the money, at least you're getting something for chasing the money, assuming you eventually do get paid.
That last part is pretty important. There is a significant difference between some profit, less profit, or even break even, compared to taking a net loss.
 

iwire

Moderator
Staff member
Location
Massachusetts
The most effective and satisfying way.

r151092_538084.jpg
 

jmellc

Senior Member
Location
Durham, NC
Occupation
Facility Maintenance Tech. Licensed Electrician
I saw this issue in various ways for myself and 2 EC's I worked for. Tell customer when he calls that the work will be COD. If he demands a price up front, look over the work and give a price, covering all contingencies you can think of. If he adds to the job, add to the price.

If you get a night call by a maintenance tech who does not have the checkbook, tell him to call someone who can give you a credit card # on the phone. "The office will send a check tomorrow" turns into "we don't have your paperwork, even though you faxed it to us 3 times". BEFORE the job is the only time you have any leverage.

Tell them ahead you will charge for a service call at the least if they decide not to do the work. Some will call you time after time for quotes and never have you do the job.

If you get regulars who are honest and don't try to stiff you, you could relax with them a bit and try 30 day billing, etc. if it seems warranted.

Too many businesses go broke later on, have 1 manager overrule another, go out of business, etc. Then you wind up taking the loss. Your work is hard enough; don't be stiffed out of your money.
 

PetrosA

Senior Member
I wish I had an answer to this question, too. I've had customers stiff me for up to $2500 on a job, and that starts a landslide of consequences with the level of turnover a small company like mine has. Most recently, I have two customers not paying me a total of $1200. If it were just labor, it would be slightly easier to write it off. Most times though, there is at least 50% in materials that needs to go back to the supply house. That's where the problem starts to grow for me since I have to do many times the debt in new billing to make up for the loss.
 

mgookin

Senior Member
Location
Fort Myers, FL
I wish I had an answer to this question, too. I've had customers stiff me for up to $2500 on a job, and that starts a landslide of consequences with the level of turnover a small company like mine has. Most recently, I have two customers not paying me a total of $1200. If it were just labor, it would be slightly easier to write it off. Most times though, there is at least 50% in materials that needs to go back to the supply house. That's where the problem starts to grow for me since I have to do many times the debt in new billing to make up for the loss.

Supply houses will often assist with the lien process if you ask.
 

kwired

Electron manager
Location
NE Nebraska
Supply houses will often assist with the lien process if you ask.

Maybe on large jobs, I don't see them having much interest in playing banker with all those smaller projects - unless they are going to make additional profit from it, which then they are maybe crossing the line of needing to be legally in the banking business.
 

Besoeker

Senior Member
Location
UK
From one of the sales guys we had:
"You haven't made the sale until you get paid. Until then, it's a gift."
 
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