Payment by customer

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JJWalecka

Senior Member
Location
New England
Customer wants to give 75 percent after rough Inspection and the remainder after final.

I'm not a fan of paying for stock out of pocket.

How does everyone feel about that?
 

Coppersmith

Senior Member
Location
Tampa, FL, USA
Occupation
Electrical Contractor
I Normally ask for 30% upfront, 50% at rough inspection, and 20% after final inspection but I have been known to take less upfront if it's make or break on the deal. It does make me nervous though.
 

MAC702

Senior Member
Location
Clark County, NV
I do almost no work for people with whom I have no connection, so I don't have to worry about it much. All my work is repeat business and personal-referrals, or contacts I make as an active member of the Nevada Shooters Internet forum, a mostly trustworthy community.

I think people are much less likely to screw you over when it was a mutual contact that referred you.

But the size and expense of the job would dictate the answer, plus any Spidey Sense you get from the client. I wouldn't even do a pre-paid job for someone from which I got a bad Spidey Sense.
 

brantmacga

Señor Member
Location
Georgia
Occupation
Former Child
It should be noted as “Stored Materials” on your contract schedule of values, rough-in draw would then be listed as a progress payment.

You would bill stored materials before the job starts, once the contract is signed.

My custom residential stuff gets pretty high on contract value; I’ve started breaking out fixtures and gear just as we do on large commercial projects and billing them ahead of rough & trim.


Sent from my iPhone using Tapatalk
 

Cow

Senior Member
Location
Eastern Oregon
Occupation
Electrician
We don't ask for money up front, even on large projects. We do progress bill monthly.

For some residential customers that seem a little questionable, we will ask for 50% upfront. This is very rare though.
 

kwired

Electron manager
Location
NE Nebraska
Let the customer know that you require a certain percentage to get the job started.
Same here, I am not a lending institution.

How much I want upfront, depends on the project, some have high dollar amount of materials immediately some maybe a little later so it may vary from one job to the next. But if I am asking for $$ upfront, chances are there is materials it is associated with going to show up almost immediately afterwards. Progression of labor or even additional materials billings will follow on jobs that take some time to complete.
 

oldsparky52

Senior Member
Customer wants to give 75 percent after rough Inspection and the remainder after final.

I'm not a fan of paying for stock out of pocket.

How does everyone feel about that?

Could you get the customer to put the money in an escrow account with instructions on when it pays you (with the idea the customer cannot get to the money or change the payment schedule)? Would a bank do this?
 

JoeyD74

Senior Member
Location
Boston MA
Occupation
Electrical contractor
Customer wants to give 75 percent after rough Inspection and the remainder after final.

I'm not a fan of paying for stock out of pocket.

How does everyone feel about that?

Ask them why they don’t want to give you a deposit, if it’s a trust issue then tell them it’s a two way street, thanks for the offer to bid and walk away.
 

gadfly56

Senior Member
Location
New Jersey
Occupation
Professional Engineer, Fire & Life Safety
Could you get the customer to put the money in an escrow account with instructions on when it pays you (with the idea the customer cannot get to the money or change the payment schedule)? Would a bank do this?

I'm sure the bank doesn't do that for free, unless you're a really good customer.
 

Besoeker3

Senior Member
Location
UK
Occupation
Retired Electrical Engineer
The only thing I would add is to get the agreed terms in writing and signed by both parties.
We always did that in business.
More recently, on a personal basis,we sold a house for about quarter of a million bucks. At that level, you leave nothing on a verbal say so.
 

bkludecke

Senior Member
Location
Big Bear Lake, CA
Occupation
Retired Electrical Contractor
Here in CA there are very restrictive laws on down payments for home improvement contracts - 10% or $1000.00, whichever is less. Having said that, we have been doing this for over 41 years and almost never ask for money up front. We bill upon completion and acceptance of the project or project phase. Customers really appreciate that trust and we have rarely been stiffed. To those who see this as free financing, that may be true but all of those costs are just rolled into the overhead costs and end up getting paid anyway. It's just another type of business plan that works very well for us.
 

PaulMmn

Senior Member
Location
Union, KY, USA
Occupation
EIT - Engineer in Training, Lafayette College
Here in CA there are very restrictive laws on down payments for home improvement contracts - 10% or $1000.00, whichever is less. Having said that, we have been doing this for over 41 years and almost never ask for money up front. We bill upon completion and acceptance of the project or project phase. Customers really appreciate that trust and we have rarely been stiffed. To those who see this as free financing, that may be true but all of those costs are just rolled into the overhead costs and end up getting paid anyway. It's just another type of business plan that works very well for us.

After 41 years the company probably has a big enough nest egg that buying materials up front and billing after they're up and running isn't a big issue. For a smaller contractor, I'm assuming that money would be tighter.
 

bkludecke

Senior Member
Location
Big Bear Lake, CA
Occupation
Retired Electrical Contractor
In CA down payments on home improvement work are those payments received before any work is completed or any materials are delivered to the job-site. Once work has commenced and/or materials are delivered any payments can be requested but cannot exceed the value of the work completed. In other words, according to CA state law, the contractor can never get ahead of the homeowner financially. These laws are not always understood or adhered to but they are in place to protect the homeowner from unscrupulous contractors who would demand a large down payment and then abandon the job, leaving the homeowner hanging.
 

hbiss

EC, Westchester, New York NEC: 2014
Location
Hawthorne, New York NEC: 2014
Occupation
EC
These laws are not always understood or adhered to but they are in place to protect the homeowner from unscrupulous contractors who would demand a large down payment and then abandon the job, leaving the homeowner hanging.

What about the customer who leaves the contractor hanging for the final payment or cancels the job before it is completed?

Oh, I forgot. There are no dishonest customers in California. Only unscrupulous contractors. :sick:

-Hal
 
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