Capitalizing a large Job

Status
Not open for further replies.
V

vilasman

Senior Member
Is it true in your expierence, that when you take on a large, bank financed job, that you as the electrician has to buy all the materials and pay all cost involved with doing that job until you get your rough-in inspection?

I was reading on one of the post that someone recommended that you stay away from credit and lines of credit.

Is it typical for E.C. to have enough money saved to float the rough-in phase of the job?
 
No, it is not true. Like most other things in life, contract terms, including payment schedule are negotiated. However you can expect that the GC pays out once a month. For example, you might have to have your invoice in to the GC by the 25th. They would bill the owner by the 1st, and you might be paid by the 25th of the next month. That is if you have a good GC. If not, you will be calling them on the 26th and they will say, that the person who signs the checks won't be in until next Tuesday. When next Tuesday comes around, they will tell you that they don't have your insurance information. When you get that to them, they will tell you your Request for Payment was not completed properly.

So let me rephrase the first sentence. No, you are not supposed to finance the job for more than 30 days or so, but in reality, you will.
 
romexking said:
No, it is not true. Like most other things in life, contract terms, including payment schedule are negotiated. However you can expect that the GC pays out once a month. For example, you might have to have your invoice in to the GC by the 25th. They would bill the owner by the 1st, and you might be paid by the 25th of the next month. That is if you have a good GC. If not, you will be calling them on the 26th and they will say, that the person who signs the checks won't be in until next Tuesday. When next Tuesday comes around, they will tell you that they don't have your insurance information. When you get that to them, they will tell you your Request for Payment was not completed properly.

So let me rephrase the first sentence. No, you are not supposed to finance the job for more than 30 days or so, but in reality, you will.
Click to expand...
Amen!! I will typically build-in interest/finance charges into a bid for general contractors that are slow payers. If it costs me the project I'll live with that. I cannot afford to be a bank for very long. If you need to use your line of credit or borrow money while waiting for payment or dig into your own money, you should expect the customer to handle those costs.
 
Well.... What I am hearing is.... there has been such a rash of contractors getting down payments on jobs, doing a little bit of work and running off with the money that, banks here, are demanding that the GC's and the subs have enough money to get to the rough-in inspection and then you get paid your first third and your 2nd third when you pass rough-in, a portion when you get your final and the last draw when certificate of final occupancy is granted.
Is that illegal or is it just a smoke screen that the GC is putting up?
 
vilasman said:
Is that illegal or is it just a smoke screen that the GC is putting up?
Click to expand...

That's anyone's guess...a good way to stop guessing and get to facts is to let us know where you are from/State you are talking about.
 
We do work, we do not get money up front. We start job accounts at the supply house for materials. We have sometimes over 50 projects going at once. When we get paid on a project, we pay that supply account. When we don't get paid, the supply house along with us file letters of intent to lein. If we do not receive soon, we lien the project. If it has a bond, we file on the bond. If there is no bond, we file a judgement. There is risk, you have to know how to protect yourself. Again, asking for money up front, I don't recall any large project that does that. We do mostly schools, hospitals, etc. If we do not get paid I go right to the top and insist on a joint check. Right now the GCs we work for are solid and we don't have to worry about it.
 
So Dduffee260 at some point you had to build up what I have termed as war chest. A combination of money and credit that you used to carry yourself, your pay roll and your supply accounts while you went through a job.

I guess you may not be doing fed Govt contracts, but from what i have heard they are notorious for taking forever to pay off.
 
We do alot of govt work. It does take upwards of 90 days to get paid. I don't know if I would call it a war chest. A small as it gets sometimes I don't think it would fund a 2 minute round between a fight of midgets.

Basically I look at every job as if it is imperative that it does not lose any money. There are times that I borrowed money, the trick is to remember that the money is borrowed, not yours to keep !! I know a few ec's who did work, then got say a $30,000 payment on a project, then went wround thinking they had $30,000 to spend. When in reality they had about $3,000 to spend. The profit margins are not 25% to 45% like alot of people think. On a fantastic project we made 20% and that was a home run kinda deal. On most we truly net about 7% and that is if we manage it right. Keep in mind this is after all insurance, fuel, electrical bills, rentals, uniforms, taxes, office supplies and the list goes on !!
 
vilasman said:
So Dduffee260 at some point you had to build up what I have termed as war chest. A combination of money and credit that you used to carry yourself, your pay roll and your supply accounts while you went through a job.

I guess you may not be doing fed Govt contracts, but from what i have heard they are notorious for taking forever to pay off.
Click to expand...

The federal construction projects I managed had a Prompt Payment Clause in accordance with the federal Prompt Payment Act. If they did not pay within 30 days they would pay interest and I didn't even have to ask for it, they would just add it to the payment.
 
Status
Not open for further replies.
Top