Collecting money

[Atxrl1983]

I have been talking to a few people who have Masters licenses and have had their own business in the past. They all tell me it is the way to go if I want to be my own boss and make good money. I have had my masters for about 6 months. I work for a national electrical company as one-line foremen. The one thing they all tell me is collecting the money for the work I do will be the hardest thing. Why is that? What can be done to prevent contractors from not paying? One master told me he got screwed by $10,000 for a job he did and the contractor went bankrupt and never paid him. What would be the way to prevent this? Can contracts be made? Can payments be by monthly do you don't wait until the end to collect? Any advise would be appreciated. Thanks

 

[petersonra]

There are all kinds of things you can try. None of them will do you all that much good if the GC goes bust unless there is some kind of bond involved.

Anyone who is in business where they are essentially loaning money to their customers will eventually get burned.

You can do things to reduce your risk but often these things require some cooperation from your customer and they may not be willing to go along.

 

[Fulthrotl]

I have been talking to a few people who have Masters licenses and have had their own business in the past. They all tell me it is the way to go if I want to be my own boss and make good money. I have had my masters for about 6 months. I work for a national electrical company as one-line foremen. The one thing they all tell me is collecting the money for the work I do will be the hardest thing. Why is that? What can be done to prevent contractors from not paying? One master told me he got screwed by $10,000 for a job he did and the contractor went bankrupt and never paid him. What would be the way to prevent this? Can contracts be made? Can payments be by monthly do you don't wait until the end to collect? Any advise would be appreciated. Thanks

a contract can be anything the parties want it to be, the Mann Act notwithstanding.
that being said, contracts are often pretty one sided. with you as the sub, it won't be on your side....

i tend to avoid general contractors, at least in the past, but that has changed recently for me.
i'm currently doing lighting certifications, and there is a severe shortage of people with the necessary
credential to issue the certification.

so my attitude with general contractors regarding this service goes like this:

'i'm not gonna file a prelim, and i don't need a purchase order. i'll come and certify your building for a
flat fee, and if you don't pay me, i won't answer the phone the next time you call, and you can find out
how bad this can REALLY get, when you see what the other guys charge...."

i've done a bunch this way, and the check shows up within a week or so.

so, your best security is not to be the prettiest girl at the dance, it's to be the only girl at the dance.

the best way to get paid is to have an ethical, honest working relationship with honest people.
i haven't signed a contract with anyone in three years, but i've got customers that are awesome.
took a long time to find them, too.

going in blind with GC's? i'd consider your best bet holding their favorite child ransom till the check clears.

 

[GrayHair]

. . .holding their favorite child ransom till the check clears.

Wish I'd thought of that 40 years ago! :dunce:

 

[electricalist]

Im not positive but i was told that some companies have jobs seperated at the supply house and if the customer doesnt pay the supply house can go after the customer...

 

[gadfly56]

There are a few things you can do. I hate to say, "Assume everyone is out to screw you," but...

Don't risk more than you can afford to lose. One boss I had related the story of how he'd done some work for a new golf course and they called in all the subs to tell them that the owner went bust and they weren't getting paid, or only cents on the dollar. Bob didn't have that much in the game and didn't get hurt hardly at all, but the landscaping contractor was a start up, and he'd put every penny he had into the project. Apparently there hadn't been much if anything in the way of progress payments. That landscaper broke down right in the meeting. He was ruined, and hardly out of the gate as a businessman. Funny thing, the principals in the golf course somehow held onto ownership and opened with hardly a hitch. Go figure.

If you're working for a GC, nail down your payment terms. Things will be different if it's a quick in-an-out versus a multi-month project, but get a schedule of payments vs. work complete. Don't let them back-load the schedule, or you'll be hostage to their every whim. BE SURE TO DO YOUR DRAWS ON TIME! If you miss the deadline, you can delay your payment for 30 days minimum. Find out everything you can about AIA contracts because that's likely what they'll throw at you. If you've dotted all the i's and crossed all the t's and payments are not coming on time, tell the GC politely but firmly you won't be going back to the job site until he's current on his account. Be sure you've removed all your tools and equipment before you do this. I'd say take any uninstalled materials, but only if you haven't billed for them yet. Make sure you know who the true owner is, and file a lien on the project. Be very careful here as requirements vary from jurisdiction to jurisdiction and if you do it wrong, you can lose your lien rights.

You're starting out small, so don't try and wire the Freedom Tower next month. Don't be tempted to cut your price in half just to get a job, you'll only look desperate and people see that right away, but dropping 10-15% might be worth it if you have a chance to build a real relationship with a customer.

I'd intended to add a couple more, but it's late here and this post is pretty long already. Others probably have keener observations, so pay attention!!

 

[Canton]

a contract can be anything the parties want it to be, the Mann Act notwithstanding.
that being said, contracts are often pretty one sided. with you as the sub, it won't be on your side....

i tend to avoid general contractors, at least in the past, but that has changed recently for me.
i'm currently doing lighting certifications, and there is a severe shortage of people with the necessary
credential to issue the certification.

so my attitude with general contractors regarding this service goes like this:

'i'm not gonna file a prelim, and i don't need a purchase order. i'll come and certify your building for a
flat fee, and if you don't pay me, i won't answer the phone the next time you call, and you can find out
how bad this can REALLY get, when you see what the other guys charge...."

i've done a bunch this way, and the check shows up within a week or so.

so, your best security is not to be the prettiest girl at the dance, it's to be the only girl at the dance.

the best way to get paid is to have an ethical, honest working relationship with honest people.
i haven't signed a contract with anyone in three years, but i've got customers that are awesome.
took a long time to find them, too.

going in blind with GC's? i'd consider your best bet holding their favorite child ransom till the check clears.

ha..lol.ha..........:lol:............I know!........I hate most GC I meet.

 

[Electric-Light]

I have been talking to a few people who have Masters licenses and have had their own business in the past. They all tell me it is the way to go if I want to be my own boss and make good money. I have had my masters for about 6 months. I work for a national electrical company as one-line foremen. The one thing they all tell me is collecting the money for the work I do will be the hardest thing. Why is that? What can be done to prevent contractors from not paying?

GCs are kinda useless.

Bi*ch and demand politely. Remind them of their contract portion of the contractor with a polite email.

Hi sir, fine Monday morning to you and thank you for the opportunity to work with you. I have not received the payment and I talked to (whomever the hell you're supposed to report to) about it already, but I have not been paid yet and I have a family to support and I have been reporting to work on time every day. When can I come by the business office so we can sort this out?

Truly Yours,
Atxrl1983

Wait about two days. If no money or response, send a reminder, copy the boss' boss if there is one, so there is no "I wasn't aware that your boss wasn't staying on top of his payments".

Evidence of failure to pay gets judgments awarded, so they see someone gathering evidence as someone they can't BS as much. If you have to sue, email becomes the most important evidence.

One master told me he got screwed by $10,000 for a job he did and the contractor went bankrupt and never paid him. What would be the way to prevent this? Can contracts be made? Can payments be by monthly do you don't wait until the end to collect? Any advise would be appreciated. Thanks

 

[ptonsparky]

Several reasons to not get paid. The hardest for me at one time was to get the billing out in a timely manner. I was to busy working.
I don't do much that requires contract work but the last one did require a simple letter from a lawyer to collect the balance owed.
I had one particularly bad year when I took it in the shorts for about $23,000.
The one that still PMO the most is the guy that pleaded for me to work on something, on Sunday, then refused to pay the $20.

 

[YourElectricianOC]

Your approach should vary based on your customer. For residential, make sure they know up front that you aren't leaving on that last day without a check in your hand. Do progress payments often, and don't let balances accrue. A contract just means that whoever has the more expensive lawyer is probably going to get their way. Vette your customers. You'd be amazed at how easy it is to get out of a "bulletproof" contract just by showing up in court and sayinh "I didn't understand what I was signing for".

For large corporate companies, you need a strong contract, and build into your bids enough margin so that one out of however many that manages to slip out of it doesn't sting so bad. Charge more than you think is fair. And you still won't be charging enough. Be very specific about the terms of progress payments, and make sure that whatever the terms are, you're getting a check often and the balances due are always relatively low to the total job cost. If they're gonna stiff you, let it be for $2,000 instead of $20,000

Avoid GC's like the plague. I can count on one hand the number of guys I'll sub out to and will probably always be able to count them on one hand.

 

[jmellc]

Among all the problems I had leading to my demise, this was not a major one. But I saw 2 previous bosses burned in several ways.

1st boss took on a big job with a GC that had been using us and was generally OK, paid within 30 days, though usually last day. The big job got messy; it was sort of a build it by the owner's whims, lots of trial & error. We bought a lot of expensive materials & had a lot at stake. We billed each week as usual, for materials and labor. Then the GC kept coming up with excuses not to pay. He hadn't gotten paid by customer, he needed further accounting from us; how much for this corner, how much for that loft, etc. Owner talked with customer. He said he had told GC, no payments til 100% completion. We had not heard that before. We eventually got our $ in bits & pieces but it took about 6 or 8 months. Boss decided than that any time he brought materials to a job, he would get payment or return them. I convinced him to get deposits too, if at all possible. He had tried to avoid that but started doing it some and that helped.

2nd boss got burned by an apt complex that called us for some emergency night work. I did the work and left bill with maintenance man, who assured me they would send a check next day. They didn't and we called. They said they needed our W9 and insurance info. We faxed it. They said later they did not receive it. Turned out they had burned a long line of contractors. We eventually got paid after talking to their home office in Atlanta several times. Boss & I decided on similar future jobs, I would give a price and demand payment in advance, check or credit card. That's the time you really have any leverage, when they need the work done. You can't legally remove the work afterward, though I threatened that customer I would do so.

2nd boss had similar experience when and out of town GC called us to do last minute work at a cafe being built. Needed different lights to pass Health Dept inspection. I did the work from about 10 PM to 3 AM. Gave him bill and his office in Houston was supposed to send a check. Never happened and we fought with them forever. Same solution; get check or credit card COD or in advance. An out of state party will rank you as LAST priority.

When I bid a few commercial jobs, several GC's told me no such thing as deposits so I pulled my bids. They said payments could take 30-60 days. No way I could survive that.

 

[electricalist]

The GC has one job and thats to stand between us and the customer and insist we give them any profit we could make.

 

[mgookin]

It depends on what kind of work you do and what kind of customers you have.

Doing service work is different than new construction is different than remodels is different than doing insurance company inspections, etc... Every one has a different kind of customer.

Doing work for Allstate is different than doing work for Johnny-Bo-Bob Uh-lettrick, LLC.

One way that always got me paid is saying the price is X but you get n% discount if you pay net 10 days. What you're effectively doing is the math so the discount comes out to your regular price and if they don't pay timely they pay a penalty; it's just not worded like that.

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.

 

[Electric-Light]

Among all the problems I had leading to my demise, this was not a major one. But I saw 2 previous bosses burned in several ways.

1st boss took on a big job with a GC that had been using us and was generally OK, paid within 30 days, though usually last day. The big job got messy; it was sort of a build it by the owner's whims, lots of trial & error. We bought a lot of expensive materials & had a lot at stake. We billed each week as usual, for materials and labor. Then the GC kept coming up with excuses not to pay. He hadn't gotten paid by customer, he needed further accounting from us; how much for this corner, how much for that loft, etc. Owner talked with customer. He said he had told GC, no payments til 100% completion. We had not heard that before. We eventually got our $ in bits & pieces but it took about 6 or 8 months. Boss decided than that any time he brought materials to a job, he would get payment or return them. I convinced him to get deposits too, if at all possible. He had tried to avoid that but started doing it some and that helped.

2nd boss got burned by an apt complex that called us for some emergency night work. I did the work and left bill with maintenance man, who assured me they would send a check next day. They didn't and we called. They said they needed our W9 and insurance info. We faxed it. They said later they did not receive it. Turned out they had burned a long line of contractors. We eventually got paid after talking to their home office in Atlanta several times. Boss & I decided on similar future jobs, I would give a price and demand payment in advance, check or credit card. That's the time you really have any leverage, when they need the work done. You can't legally remove the work afterward, though I threatened that customer I would do so.

2nd boss had similar experience when and out of town GC called us to do last minute work at a cafe being built. Needed different lights to pass Health Dept inspection. I did the work from about 10 PM to 3 AM. Gave him bill and his office in Houston was supposed to send a check. Never happened and we fought with them forever. Same solution; get check or credit card COD or in advance. An out of state party will rank you as LAST priority.

When I bid a few commercial jobs, several GC's told me no such thing as deposits so I pulled my bids. They said payments could take 30-60 days. No way I could survive that.

Don't take my comments as an insult, because it's not. I'm just repeating what I already suggested. The approach you need is "anything you say can and will be used against you and there's no question as to what you said".

here's what's going on. Trust me. Take my word for it. I said, you said, she said, he said, but, we would if, however but rather, because due to,

I call it planned stalling.

To avoid miscommunication as well as accidentally purposely misunderstanding things, stop calling. Start doing one liner texts. If they don't do text, email. You composed the above, so you have the ability to write. You can not remember everything, not even the things you said. If you end up having to talk on the phone, you write things down and follow up promptly by email. If you truly did misunderstand, be assured they will respond back saying where the misunderstanding was, not that "there was a misunderstanding".

If you left a note with the maintenance man, then you need to email the recipient. I left the note for you with your maintenance guy Johnny, please contact me about it. If you DO NOT make written trail, you can expect "my client says you allege something although he says he did not get the note"

Don't listen to excuses, but to email you "extenuating circumstances".

use CC, Fwd, attachments sensibly.

 

[readydave8]

As to never getting paid, that's what liens are for.

Liens helped me get paid a few times, other times didn't work. Customer can go bankrupt, or can bond around a lien.

 

[readydave8]

Most of my success and my failure stories are probably boring, but maybe not this one:

Working on a house where few or none of the subs got paid. HO's father-in-law was police chief. HO had GC locked up for fraud (receiving payments from HO and using the money to pay bills from other jobs) on a Friday night (supposed to be harder to make bail on weekends?)

It took a few years, but I eventually got all my money--in many small payments--from GC's probation dept.

But the other GC's that didn't pay me were evidently not breaking the same law.

 

[Ravenvalor]

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?

 

[gadfly56]

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?

IIRC, in NJ failure to file on work requiring a permit will negate your lien rights.

 

[mkgrady]

Several reasons to not get paid.
The one that still PMO the most is the guy that pleaded for me to work on something, on Sunday, then refused to pay the $20.

Do you have real reasonable rates or was that 40 years ago?!

 

[ptonsparky]

Do you have real reasonable rates or was that 40 years ago?!

They are still reasonable, just not that reasonable. Close to 40 years ago. Not that I hold a grudge.