Any money down?

[sjaniga]

We have only been in business for a year now and a lot of our work is residential new homes, $10,000.00 or less, so far with most of the generals we cant get any money to start because the generals dont have it until work has started. Now that we are starting to quote more of the larger prjects, $30,000.00 and up with large contracting firms, is it normal to ask for a percentage due at contract signing, with multible billings throughout the project, as to not get caught behind the eight ball?

[templdl]

This is the way I look at it:
It depends upon a number of things. Your market and what the competition is doing as well as your relationship with the contractor.
Does the contractor need to provide you with a deposit or a down payment if your competitors don't require it? Is your pricing attractive enough for them to agree to your payment terms? Is the quality of work and service of great enough on value for them to want to agree to your payment terms?
The contractor often times will do anything that they can get away with. If they can get you to foot the cost of material and labor until they get paid then the money comes out of your pocket. One would at least expect to get a deposit for the cost of the material which you are installing in the construction project where all that they would owe you is for labor. Depending upon the duration of the job you could agree to certain bench marks for progressive payments for work in progress.

[bphgravity]

On smaller jobs at roughly below $5,000, I contract payment of 70% of total at the completion of the "rough-in" and the remaining 30% and any change-orders at completion of "final" inspection. On jobs that exceed $5,000, I contract payment of 10% before start of work, 60% at "rough-in" completion, the remainder at "final". This has seemed to work best for me and builders, developers, and GC's have never really had a problem with my policy. Like you, I don't want to eat so much material costs on long and expensive jobs.

[roger deas]

Just a question, do any of you do jobs that require AIA billing. (AIA Document G703)

If so, you would put a line item in your schedule of values to cover mobilization and bond. This can be billed immediately. As far as materials, on this type of project, materials can not be billed for until stored on site, or in say a warehouse with proof of insurance, or installed on the project.

Many architects will require proof of the materials being invoiced (you don't have to show them the invoiced amount) from your supplier before they will approve a pay app.

There is still ways you can "front load" a job and never be behind the 8 ball.

Roger

[ March 27, 2003, 12:54 PM: Message edited by: roger deas ]

[spyder]

I have never asked for it, but I have heard of other contractors asking for 5% to bind a contract.

[rich000]

I work with a GC who has a good payment history, so I am flexible with my terms with them.

However, typically

30% due upon acceptance of proposal
30% due after approved rough-in inspection
30% due after approved final inspection
10% due after final punchout

[larryl]

Originally posted by sjaniga:
We have only been in business for a year now and a lot of our work is residential new homes, $10,000.00 or less, so far with most of the generals we cant get any money to start because the generals dont have it until work has started. Now that we are starting to quote more of the larger prjects, $30,000.00 and up with large contracting firms, is it normal to ask for a percentage due at contract signing, with multible billings throughout the project, as to not get caught behind the eight ball?

[larryl]

IM SEEING SOME VERY GOOD ADVISE HERE,
I'V BEEN DOING THE SELF EMPLOYED THING ON AND OFF FOR MANY YEARS,
YOU AND YOUR FAMILY DESERVE TO BE ABLE TO SLEEP AT NIGHT,
I WOULD'NT DRILL A HOLE OR BANG UP A BOX WITHOUT A DEPOSIT!!!

WHEN THE GC TELLS YOU HE CANT GIVE YOU A DEPOSIT,"HE'S LYING" PLEASE DO YOUR FAMILY AND YOUR EMPLOYES A FAVOR AND DRIVE AWAY,"BETTER YET RUN"
HE WANTS TO KEEP AS MUCH MONEY IN HIS ACCOUNT AS POSSIBLE.
IT'S CALLED,
"INTREST"
I DID A HOUSE MANY YEARS AGO AND THE BUILDER WAS KILLED IN A CAR ACCIDEDT,THESE THING DO HAPPEN,
I WOULD HAVE BEEN SCREWED WITHOUT THAT DEPOSIT,
GET A 1/3 TO START!!! OR SOMETHING!!
BE THE MAN!!!!
GET YOUR $$$$!!!
GOOD LUCK,
LARRY

[larryl]

IM SEEING SOME VERY GOOD ADVISE HERE,
I'V BEEN DOING THE SELF EMPLOYED THING ON AND OFF FOR MANY YEARS,
YOU AND YOUR FAMILY DESERVE TO BE ABLE TO SLEEP AT NIGHT,
I WOULD'NT DRILL A HOLE OR BANG UP A BOX WITHOUT A DEPOSIT!!!

WHEN THE GC TELLS YOU HE CANT GIVE YOU A DEPOSIT,"HE'S LYING" PLEASE DO YOUR FAMILY AND YOUR EMPLOYES A FAVOR AND DRIVE AWAY,"BETTER YET RUN"
HE WANTS TO KEEP AS MUCH MONEY IN HIS ACCOUNT AS POSSIBLE.
IT'S CALLED,
"INTREST"
I DID A HOUSE MANY YEARS AGO AND THE BUILDER WAS KILLED IN A CAR ACCIDEDT,THESE THING DO HAPPEN,
I WOULD HAVE BEEN SCREWED WITHOUT THAT DEPOSIT,
GET A 1/3 TO START!!! OR SOMETHING!!
BE THE MAN!!!!
GET YOUR $$$$!!!
GOOD LUCK,
LARRY

[correiaelectric]

If you are just starting out you may want to look into invoice factoring it is great if you work with a reputable general contractor, The factoring company pays you up to 75% of your invoice many times overnight and they wait the 30 or 60 days for your GC to pay the bill once they get paid they send you the remaining 30% minus there typical 2-4% fee. They set up your account regardless of your credit they are only interested in your customers credit for which they check and approve before hand and when they find them credit worthy once they never check again and pay you within 24 hours. I built my company coming from a bad divorce with no money to a multi million dollar energy and electrical contracting firm thanks to the program. The great thing is you only factor invoices you feel you need to get the money in for such as making payroll or paying off materials and think about it you get that 1-4 % back by paying your material bills quicker and receiving their early payment discount. The fact that they check your customer out also helps to protect you from bad GC's