Collecting money

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gadfly56

Senior Member
Location
New Jersey
Occupation
Professional Engineer, Fire & Life Safety
:) They are still reasonable, just not that reasonable. Close to 40 years ago. Not that I hold a grudge.

OK, not much. :roll: Or as I like to tell people, "I'm Irish. We can carry a grudge like it had handles."
 

Hacks

Member
Location
NJ
When I started my company I took the advice of a man on another electrical forum. I never work for a GC, I only do service work (with the occasional renovation for existing customers), and I collect on the spot (which is spelled on on all estimates, which they sign before work starts).

There is no excuse not to pay. If they say that they don't have their checkbook, I tell them I take CC. If they say that they don't have a CC, I tell them that I take cash and I'll wait on their couch while they run to the bank.
 

K8MHZ

Senior Member
Location
Michigan. It's a beautiful peninsula, I've looked
Occupation
Electrician
This is the very reason I no longer own a business. I would rather be an employee.

I used to own a small business doing specialized electrical work on vehicles. I worked mostly on limos, sport cars, luxury cars, heavy equipment, boats, RV's and some stuff for passenger vehicles.

When we went to war with Iraq the first time, my sales plummeted and I had to close my business. I was holding a half dozen cars 'ransom' (customers had not paid bill) when I closed and was owed hundreds of dollars. I figured they would be in to pay the bills and pick up their vehicles.

They didn't. I lost my money and they lost their cars. Just a few months prior to that, I had more work than I could do and very little problem with unpaid bills.
 

kwired

Electron manager
Location
NE Nebraska
As to never getting paid, that's what liens are for. Supply houses may offer assistance in that situation. Certain kinds of customers result in greater chance of having to do a lien.
liens are no guarantee you will get paid but you should still file them at times. Had a lien on a customer one time - they went bankrupt. At least in this situation with you being on the records with your lien you will receive bankruptcy court documents and will know who all the creditors were and who got paid how much. But in my case it was very apparent that the attorneys and bankers were getting all available assets and everyone else was plain out of luck.

If I spend a day remodeling someone's basement and do not pull a permit should I still take him to small claims court or will the AHJ somehow be notified?
Why should the AHJ want to get involved in business matters between you and the owner when their responsibility is to make sure the installation complies with codes, I don't know of any that double as a collection agency.
 

haskindm

Senior Member
Location
Maryland
That was what I hated most about being in business. You had to have the lowest bid in 3 states to get the job and then at the end you can't get paid. Remember it is not a question of "if you will be screwed" it is just a matter of "when" and "how bad". It will usually be your best and/or biggest customer that gets you. I had one that declared company bankruptcy owing me over $30,000. To protect me he signed a personal note for the debt that he owed me and I was working with his lawyer to get payments. He then went to a different lawyer and also declared personal bankruptcy, which meant that neither I nor his original lawyer got paid. This is part of the need for PROFIT that many new electricians don't understand. They look at what the electricians for whom they work charge for the job and compare it to what they are being paid to do the work and think the profit margins are huge, not realizing how often their boss may not get paid for a job, or have the job cost much more than expected. Many time the employees make more than the boss. I am glad I am no longer self employed in this field and recommend that anyone consider it carefully before taking the plunge. It is better to lose a bid than to have to pay for the privilege of doing the work...
 
Location
NE (9.06 miles @5.9 Degrees from Winged Horses)
Occupation
EC - retired
That was what I hated most about being in business. You had to have the lowest bid in 3 states to get the job and then at the end you can't get paid. Remember it is not a question of "if you will be screwed" it is just a matter of "when" and "how bad". It will usually be your best and/or biggest customer that gets you. I had one that declared company bankruptcy owing me over $30,000. To protect me he signed a personal note for the debt that he owed me and I was working with his lawyer to get payments. He then went to a different lawyer and also declared personal bankruptcy, which meant that neither I nor his original lawyer got paid. This is part of the need for PROFIT that many new electricians don't understand. They look at what the electricians for whom they work charge for the job and compare it to what they are being paid to do the work and think the profit margins are huge, not realizing how often their boss may not get paid for a job, or have the job cost much more than expected. Many time the employees make more than the boss. I am glad I am no longer self employed in this field and recommend that anyone consider it carefully before taking the plunge. It is better to lose a bid than to have to pay for the privilege of doing the work...

Strikes home. My company is profitable at the moment and has been for several years. We all got raises this year, but the 1st checks I signed had my #1 taking home more than me...AGAIN!
 

Fulthrotl

~Autocorrect is My Worst Enema.~
Why should the AHJ want to get involved in business matters between you and the owner when their
responsibility is to make sure the installation complies with codes, I don't know of any that double as a collection agency.

they don't. but.... if the permit is in your name, and the stamped drawings are in your
possession,along with the hard card, it's hard for the client to call for a final. and harder
to get it signed off. if that even needs to come to mind, you've erred rather badly on the
client selection process, IMHO. i've erred badly on that in the past, not lately however.

this entire thing comes back to client selection, and even then, with the best of clients,
sometimes stuff happens.

i'm wrapping a job now that's with a fellow that is tied for the best client award,
with the guy who referred me to him... both are unbelievable to work for, best working
relationships i've ever had. it's been a privilege and a gift to do this work.

i've got one single unpaid invoice, to a large law firm. today it is 500 days overdue exactly.
i keep it on the list, just for the gratitude attack it brings when i check bills. it was all of $50.

i've gotten a flood of new people contacting me about lighting certification and commissioning.
a lot of general contractors. all of them have sent checks promptly when invoiced. i don't worry
about them, at all.

my wife was talking to me about this the other night, and what has changed. it's not the customers,
it's me. i finally got past the fear of being cheated, and everything changed. it was for me, a hard
fear to let go of. i clung to it for years... every new customer, looking at them, wondering how hard
getting paid was going to be, this time.

the problem isn't them, out there. it's me, in here. one of the most difficult things i've ever attempted
is to sit quietly, and think.

without hurting myself.

the old adage "it's done unto you as you believe..." is either a blessing or a curse, depending on what
you point your brain at.
 

kwired

Electron manager
Location
NE Nebraska
they don't. but.... if the permit is in your name, and the stamped drawings are in your
possession,along with the hard card, it's hard for the client to call for a final. and harder
to get it signed off. if that even needs to come to mind, you've erred rather badly on the
client selection process, IMHO. i've erred badly on that in the past, not lately however.

different state different mentality I guess.

Here the state AHJ (which is predominant statewide, and there are not really that many local AHJ's except in the larger cities of this state) has no interest in participating in any bill collecting activity for the contractors it handles licensing for. I hope that never changes as that is not what they are about. The most they can do is state they approve or disapprove (along with reasons for disapproval the installation). If a client doesn't want to pay a contractor because they didn't pass inspection - that is between client and contractor, not the AHJ who's responsibility ended when they pass or fail the installation. I guess we don't really have a COA that gets issued here - especially on state inspected jobs - local AHJ's could be different, but they have other building codes and officials involved most times. When we file for a permit for new service here the serving utility company gets a notification from the AHJ that a permit was received - without it they are not supposed to energize a new service, but once they have that notification all it means is a permit was on file not that it was approved, AHJ can later order that service disconnected if the installation is deemed hazardous enough to justify disconnection ordered.

None of this has anything to do with whether the contractor was paid or if the customer was treated unfairly by the contractor or any other business operations dispute and should not be of any business of the AHJ, that is what attorneys are paid for.
 

Eh40

Member
Location
Connecticut
Money

Money

If you are in the business of loaning money to your customers, you will need to train and staff accordingly. Otherwise insist on money upfront, minimum, customer needs to buy parts with markup upfront, next divide labor payments into thirds, third up front, third on rough, balance on completion. Have change orders and have the paid 100% upfront. This will minimize giving your clients interest free loans, with no terms, at your expense. If you do not insist on this and detail this in all paperwork. There are many companies that get 100% parts and labor upfront.
Collections loses customers and creates expenses.
 

Electric-Light

Senior Member
If you are in the business of loaning money to your customers, you will need to train and staff accordingly. Otherwise insist on money upfront, minimum, customer needs to buy parts with markup upfront, next divide labor payments into thirds, third up front, third on rough, balance on completion. Have change orders and have the paid 100% upfront. This will minimize giving your clients interest free loans, with no terms, at your expense. If you do not insist on this and detail this in all paperwork. There are many companies that get 100% parts and labor upfront.
Collections loses customers and creates expenses.

You need to check what's acceptable under the law, aka check with your attorney familiar with the location you do business.
 

kwired

Electron manager
Location
NE Nebraska
You need to check what's acceptable under the law, aka check with your attorney familiar with the location you do business.
This has been brought up here a few times before that there are essentially consumer protection laws in some places that basically prohibit collecting funds before a product or service is delivered - especially when it comes to the construction trades. Sadly it comes from all those that shady contractors that have taken advantage of consumers. All kinds of other businesses collect money up front in some way. I am working on paying some of my regular monthly bills right now and has me thinking - I have phone bills due that is for next months service (plus additions from last month such as per call charges) my internet service providers bill is for next month, my satellite TV bill is for next month, my insurance premiums are for next month (or even for next six months for some policies) my electric bill is for last month's energy usage, but the regular recurring charges are for the next month. I recently had a dental procedure done - they gave me an estimate of charges on the first visit - and a discount was offered if paid a something like 5 days before the procedure was scheduled.

Most retail businesses you usually pay for items at the time you receive them, sometimes they do want at least some deposit for some special orders though.

I don't really have any point to make here other then other businesses collect for goods and services upfront all the time.

Maybe next time I want to go to a movie, amusement park, or other entertainment venue I should refuse to pay admission because I haven't received what I am paying for yet and see how well that works:bye:
 

Electric-Light

Senior Member
Someone who knows nothing about cars beyond that you pour gas into it and it makes the wheels turn can be an excellent salesman. A mechanic who knows every nuts and bolts on a car could be a horrible salesman.

Most retail businesses you usually pay for items at the time you receive them, sometimes they do want at least some deposit for some special orders though.

I don't really have any point to make here other then other businesses collect for goods and services upfront all the time.
While I'm no philosopher, we can relate traditions and cultural norms are not always in line with the law and legal requirements.

Restaurants do not usually collect upfront unless they're fast food or take-out order.

Pay upon order, then enjoy your meal. Yes, that's perfectly legal, but not a good business decision in our culture. It's also within the law to have a $1,400 restaurant bill and not leave a penny in tips no matter how socially wrong it is.

Retail stores customarily accept returns here with many big box stores allowing returns for 3-6 months after purchase. The law doesn't require them to allow returns AT ALL for customer change of mind but exercising that right wouldn't be a good business decision. They hate accepting returns as much as we feel tipping is an expense.
 

CT Tom

Member
Location
Connecticut USA
I had a client owed me the last 5% (~5.5k), plus a bunch of move in extras to the total tune of 12k. Promised to pay right up to the 90th day (can't file mechanic lien after 90 days here) and never responded or gave a half hearted "I'll pay you soon" response. I was in a bad spot due to contract issues and essentially was looking at a 12k loss.

Another trade on the job reached out to the Hartford Business Journal, and that started an expose article on the client. 4 months after the article was released, turned out she owed a ton of money to banks, towns, credit card companies, other trades... and she is well known in the CT banking industry.

I was contacted by the homeowner, and 3 weeks later I met with her. I had to fix a few "issues", issues that were created "after" she'd been living there for all this time.

Once done I was paid in full. The power of the press.
 
Location
NE (9.06 miles @5.9 Degrees from Winged Horses)
Occupation
EC - retired
A former employer did work for a Automotive repair shop. New building. The owner drug out payment. Ralph took one of the work trucks in for repair. Cash or check before it could leave the lot. Not sure if Ralph took any other vehicles there for repair, but I made sure I didn't darken the door.
 

Dennis Alwon

Moderator
Staff member
Location
Chapel Hill, NC
Occupation
Retired Electrical Contractor
I must say I have been very lucky in my career. I have weeded out the ones I suspect are going to be issues and I have gotten very good at picking up clues on customers. If I am suspicious at all I don't do the work. I got plenty to do with my builders and quite a few regular customers.
 

electricalist

Senior Member
Location
dallas tx
If it's a customer 1 on 1 I can read them well enough to keep me right side up. If it's a contractor it's not easy to read them I think because they negotiate with basic truths non of which they ultimately control. Those times my instincts are handicapped so I personalize as many questions as I can ....as if it's them who is responsible......" so you call in the inspections or when we're ready? So I can let the office know.....
That rattles sketchy people.
 
Location
NE (9.06 miles @5.9 Degrees from Winged Horses)
Occupation
EC - retired
Met with a new GC the other day. Major kitchen remodel. We walked through the project and I made my suggestions. Start tomorrow. OK, who gets the bill? Send it to me said the GC. Did you allow plenty? Yes, I gave her an allowance of $1500. Uh, the two guys I have for all day tomorrow will eat that up before the end of the day, just on demolition. The glazed look on his eyes made me suggest that he find someone else if he wanted. I had no problems with that. He did, and I said thank you.

Moral of the story. Ask questions.
 

Electric-Light

Senior Member
I had a client owed me the last 5% (~5.5k), plus a bunch of move in extras to the total tune of 12k. Promised to pay right up to the 90th day (can't file mechanic lien after 90 days here) and never responded or gave a half hearted "I'll pay you soon" response. I was in a bad spot due to contract issues and essentially was looking at a 12k loss.

Loss of revenue is not a "real" loss, _especially_ in slow times and you're a one man show when you wouldn't have earned the money during that time frame.
 

mshow1323

Member
Loss of revenue is not a "real" loss, _especially_ in slow times and you're a one man show when you wouldn't have earned the money during that time frame.

Sorry to break it to you, but sacrificing my free and family time is worth money, and that in itself constitutes a "real" loss, whether in slow times or not. Please don't pretend to know what my time is worth to me.
 

kwired

Electron manager
Location
NE Nebraska
Sorry to break it to you, but sacrificing my free and family time is worth money, and that in itself constitutes a "real" loss, whether in slow times or not. Please don't pretend to know what my time is worth to me.
Whether it is called a loss or just a lack of funds is a technicality, but it feels the same either way to not have money one was expecting in the pocket:happyyes:
 
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