Holding My Cards Close

[97catintenn]

Who said anything about giving them your account number when you cashed the check? You're simply cashing a check drawn on one of their accounts. You are not required to have an account to do that. You walk away ....

.... right back into line, where you deposit simple cash into your account. There's no link between the check cashed and the cash you put into your account. Money has no earmarks, as they say.

I agree. Some banks charge a small fee for cashing checks when you don't have an account with them, but I guess that's just a small price for insurance on the cash.

 

[cadpoint]

now, the next lesson.... when you get a check under these circumstances......

drive to the branch it's drawn on, and convert it immediately to a cashiers check made payable to the
same payee... have them draw the check fee out of the check amount.

do NOT just deposit it in your account.

you aren't paid till the check clears. if they won't issue a cashiers check, there aren't sufficient funds to issue it...

Hey, why not just have that written into the orginial contract; IE for final check to be made into a casher's check?

 

[kwired]

We have never done business with this company before. They keep telling me "we are a $150 million company. Of course, we'll pay."

How much their budget contains does not gurantee you will get paid.

Small industrial plant I work for has main offices in another State. All the bills are paid out of main office. The management at local office is good about staying on corporate behinds about getting local vendors paid, but without that they have gotten way behind in past. Same company doesn't like to pay their ingredient suppliers - then they ask local management when they are going to get an order filled - with which they have to reply - when you pay our supplier so they will ship more ingredient we will be more than happy to fill the order, until then we have nothing to make the product with. When owner of this company does come to the local plant he drives $80K+ cars and has enough expensive jewelry on that I could probably retire on the price that was paid for it. Some people have money partly because they don't part with it until they absolutely have to.

 

[norcal]

How much their budget contains does not gurantee you will get paid.

Small industrial plant I work for has main offices in another State. All the bills are paid out of main office. The management at local office is good about staying on corporate behinds about getting local vendors paid, but without that they have gotten way behind in past. Same company doesn't like to pay their ingredient suppliers - then they ask local management when they are going to get an order filled - with which they have to reply - when you pay our supplier so they will ship more ingredient we will be more than happy to fill the order, until then we have nothing to make the product with. When owner of this company does come to the local plant he drives $80K+ cars and has enough expensive jewelry on that I could probably retire on the price that was paid for it. Some people have money partly because they don't part with it until they absolutely have to.

That statement is the truth.

 

[Fulthrotl]

How much their budget contains does not gurantee you will get paid.

Small industrial plant I work for has main offices in another State. All the bills are paid out of main office. The management at local office is good about staying on corporate behinds about getting local vendors paid, but without that they have gotten way behind in past. Same company doesn't like to pay their ingredient suppliers - then they ask local management when they are going to get an order filled - with which they have to reply - when you pay our supplier so they will ship more ingredient we will be more than happy to fill the order, until then we have nothing to make the product with. When owner of this company does come to the local plant he drives $80K+ cars and has enough expensive jewelry on that I could probably retire on the price that was paid for it. Some people have money partly because they don't part with it until they absolutely have to.

sometimes, they don't even part with it then.... ;-)

i had a food packing plant that needed some process controls, and task lighting.....

so i do the "new vendor" dance, the binders, w-9, yada yada yada.... then we get to the
ugly sordid topic of money.... turns out the company is owned by another, which is owned
by....

so, my "point of contact" with the people who are gonna pay for the $30k worth of ocal they need to move
a hummus line...... is......

a cellphone, with a country code of 44, england..... at least it wasn't country code 234, which is nigeria
now, hurry up and get started, we have the plans all drawn out on this here bar napkin.....

well, i'll get right to it...... just as soon as that cashiers check from lagos shows up.....

 

[GerryB]

no bad debt

no bad debt

??? from what I understood/understand....it's a write-off for an electrical supplier if he gets stiffed, but as a contractor, if you get stiffed your beat. ??? I'm guessing this was work to be done by a contractor for you, not
you contracting and getting duped.

Hope I never get stiffed for big donuts and have to find out.....................

I have a buddy that designs and installs fire training systems, did you know you can enter into a contract, I believe it was Iran...Irac.....,his company found out the hard way, and I think they let the guy go who put the package together,...
but, you HAVE to finish a project even if you did not receive one red cent..... they were + 100k into it with no payments, and by law.....they had to finish the job.

My accountant told me there is no bad debt. You wrote off your material, and your time is not a deduction, at least for me as sole prop. LLC

 

[kwired]

My accountant told me there is no bad debt. You wrote off your material, and your time is not a deduction, at least for me as sole prop. LLC

It all depends on your accounting methods not what type of organization you are.

Cash based accounting methods you have no expenses until you actually pay for things. You also have no income until you are actually paid. If you were never paid you never had income to lose (for accounting purposes), if you paid your expenses but recieved no income for a job you already have a net loss in the books for that job. If you do get paid three years later, you will have a profit with no current expense at that time.

With cash based accounting your accounts receivable and accounts payable are not income and expenses they are just a method of tracking potential income and expenses that you expect to happen.

You can not write off something you did not have.

With accrual accounting methods you generated income at the time you invoiced the customer for the amount of invoice whether they paid you or not. If at some time later you decide you are not going to get paid you can create a transaction that effectively writes off the amount you did not get paid. In this case you did record income but never did recieve it - the later adjustment is just that - an adjustment. It is not a break of any kind, just an adjustment to make things correct again. If sometime after you wrote off that account you do get paid you have to generate a new sales transaction and treat it as new income.

 

[Fulthrotl]

It all depends on your accounting methods not what type of organization you are.

Cash based accounting methods you have no expenses until you actually pay for things. You also have no income until you are actually paid.

yep. and when it turns out a year later, i had an account balance at a wholesale house, and their
accounting department sends me a check to zero that account, then it counts as TAXABLE income,
even tho it's money i had overpaid, and was simply my money being returned to me.

i deducted all the money i spent there at the time i had spent it, so it just evens out a tax benefit
i had gotten last year, with a little more tax liablility for this year.

now, if i go to court and SUE someone and get a judgement against them, and cannot collect it
as they go out of business or flee to pago pago, or whatever, i can deduct that court award that
is uncollectable.

but just not getting paid is not a deduction for a bad debt, on a cash accrual system, and putting
down bad debts on buisness taxes with cash accrual, flags your return for "personal attention".

 

[petersonra]

I learn some interesting things here.

I will point out one thing though.

A few years ago, the federal banking authorities changed the rules on how long checks float between banks to cut down on check kiting. Most times any local check only floats for one business day now. You don't have to worry all that much about it being returned a week or two later, unless there is something wrong with the check itself (i.e.-NSF is not supposed to take more than one business day to become apparent).

There are also rules put into place that require banks to cancel accounts of people who write bad checks on a regular basis and most banks won't even let you open an account if you have a history of bad checks.

It does not prevent all the shenanigans that creditors engage in, but compared to a few decades ago, there are a lot fewer bad checks written these days.

If it really bothers you, there are check guaranteers that for a smallish fee will guarantee a check that you cannot easily cash at a local bank branch. A lot of retailers used to use them but since some of the new rules and practices came into being most of the larger retailers just self guarantee since the risks have become much lower these days.

For someone getting a $30k check though, that is a big risk.

 

[readydave8]

NSF checks been taking 2 weeks or longer to get back to me.

 

[petersonra]

NSF checks been taking 2 weeks or longer to get back to me.

note I said "local" checks are one business day. I forget what the rule is for checks from outside the local area but it is only a few days. it may well take a while longer for it to get mailed to you and such but you should be able to go online and see if it went NSF a lot faster than a few weeks.

 

[kwired]

Electronic methods used today speeds up the transaction process for most instances - even for checks.
Physically making a deposit is the slow method, lots of retailers (and others) somehow submit their received checks electronically instead of physically taking them to the bank. I don't process enough checks to make it worth even checking into (I think).

 

[petersonra]

Electronic methods used today speeds up the transaction process for most instances - even for checks.
Physically making a deposit is the slow method, lots of retailers (and others) somehow submit their received checks electronically instead of physically taking them to the bank. I don't process enough checks to make it worth even checking into (I think).

most checks are scanned by the receiving bank and then destroyed. computers analyze the scan and send that data forward.

large retailers have a similar deal going on.

you have to pay extra if you want the paper checks back, if you bank even has that option.

 

[magictolight.com]

Why did you continue working when you didn't get your 25%? When you let that slip, they looked at you as a push over and now they're taking what they can get. Sounds like you need to write more specific payment terms in the future.

And that is an excellent point. Fortunately we received full payment. Now we have another proposal with them and they are pressing me to redefine my terms. My terms- 25% up front, 25% when the service is complete 25% when the rough in is complete 15% when the lighting package is installed and remaining balance due when the FINAL INSPECTION IS COMPLETE (note: not the punch list) They look at my sell price, don't look at the terms and then think they can dictate the entire contract. I told them had the first project gone cleanly with payment history we may have considered that, but just like a bank, if you don't pay on time you get your credit restricted. BOY, HE DIDN'T LIKE THAT TO MUCH!!!! This company's MO is to load you up with so much contractual paper work, wait a week after receipt, then tell you its all wrong, in an effort to delay your payment, all the while trying to get you to lower your price. We won't be going there again!

Further more, I told him that if payment was not received on this new proposal with a next day check when the "benchmark" was completed it may cause a stoppage in work progress. He said, "So your threatening to hold the whole project hostage!" I said I expected them to follow my contract to the letter. These guys are unbelievable.

On top of that, he tells me he can send out two party checks for us and our vendors. I told him there was no way we were going down that road. So he says, "Then you will be able to get lien waivers for the material used on the job from your vendors before you get a check?" What he really was saying is "we will position ourselves to load you up with so much paperwork before you get a check, we will end up with the terms we wanted anyway!" Forget that. As far as I'm concerned all of our material will be coming out of stock.

I think I may be starting a collection of crazy people!

 

[Gac66610]

i'll sell you my collection .... CHEAP!

i wonder if you could put in contract that if payment not received within X time frame an X% will be added to that portion for every X amount of time its late
might be a deal breaker
you do good work, they know this and called you again, yeah i think its your terms they should respect it

 

[zbang]

i wonder if you could put in contract that if payment not received within X time frame an X% will be added to that portion for every X amount of time its late

Contracts/work agreements should always have an interest/penalty clause, usually something like 1.5%/month after 30 days past due. For a while, my contracts read "Due on receipt, interest of 1.5% per month may be added to balances unpaid after 30 days." or something like that.

 

[megloff11x]

My father told me of a mall developer renowned for stiffing the sub contractors. The electrical workers had the permit for temporary power and told him they would leave and the power company would cut the power unless they got paid. The power company guy confirmed this. They said he (the developer) was punching the walls after getting them a certified check. They were the only subs who got fully paid.

Why people kept doing business with this guy given his reputation was well known is beyond me. It's rather like asking why the same crooks get re-elected.

I guess you need to have something on them. Lawsuits just make the lawyers rich and you still don't collect in the end. It's a shame we have dishonesty but we have to be ready for it.

 

[growler]

It's a shame we have dishonesty but we have to be ready for it.

Sun Tzu in the "Art of War" explains that you should know how you are going to win the battle before the fighting starts.

Winning in business is being able to collect. The same rule applies. You should know how you are going to collect before putting in the first foot of wire.

 

[kwired]

How about installing shunt trip main breakers and a timer to control when it trips. When they get tired of resetting it they will call you wanting you to fix the problem. You can then tell them as soon as you get paid what is owed you will be happy to fix it.

Once you are paid all you have to do to fix it is disable the control for the shunt trip.

Just an idea. Most of the time inspectors or POCO don't care what your relationship with the customer is like, and are not going to get involved with financial problems. You need to have an electrical safety problem (usually pretty serious problem), or customer has to fail to pay electric bill in order to be disconnected against their will.

 

[magictolight.com]

We started a new project with this same contractor. This time around I rewrote the terms of their contract to say if payment was not received within 2 weeks of invoicing we reserved our right to stop progress on their job.

Guess what? No payment in 2 weeks. Repeated emails and phone calls with no answer. We walked off the job. They threatened legal action, kicking us off the job, but 2 days later we were the only sub who had a check. Just shows these companies will do whatever it takes to stick it to their subs but in the end if we have our ducks in order we can be on the winning end. We still have 2 more draws on this project and I suspect we will have to fight for them also, but I reserved the right to lien the job if payment is not received in two weeks.

In 7 years of business I have only fired one customer. This customer is the 2nd one that will be fired. No amount of money is worth the headaches of fighting like this. These companies do their business in the mud and drag everybody else into the mud with them.

I am done with these guys. YOU ARE FIRED!!!!!!!!!!!!!!!!