deposit reduction

[ItsHot]

good point

good point

I always get a deposit, enough to cover at least material costs. My thinking is if I get stiffed on the job at least I can still pay the supply house and I won't get a lean put against my house or something. Most supply houses I deal with want to get paid in 30 days and I don't want credit issues because of a customers possible financial problems. If a supply house shuts you off over one job, it is going to inhibit your ability to do other jobs.

This has been mentioned in other post! Why should the contractor have to pay for the materials. Why do so many customers act as they are doing us a favor to do work for them?

 

[satcom]

Ditto Dennis, we have never recieved any deposit money up front. I would never pay anyone money up front for work they had not performed, especially 50%.
We do mostly medium size projects. We have to go by work performed or materials stored on site for our payments. If paments start to run late we can notify the bonding company or the owner and thins usually get fixed. This is always the way things have been in this type of work.
With a home owner you have a different type of situation. Some may pay a percentage down. Personally I would not because I have seen nd heard of too many cases where the person takes the deposit and never comes back to work.

I think it's great, some of you guys live in Disney land, where everyone is the perfect customer. But out in the real world, it does not work that way, good thing you don't live in the North east, and need a roof replaced, they want 50% or more of a huge sum, before they drop off anything, remember the dumpster guys will not drop off a dumpster without a deposit. Must be nice to live in dream land.

I was wone of those dreamers when I started out, and I still have the bank debt to pay off from dead beat not so dreamey customers.

 

[Dennis Alwon]

I was wone of those dreamers when I started out, and I still have the bank debt to pay off from dead beat not so dreamey customers.

It's not dream land. It is learning how to pick and choose your customers. I have been in business for 30 years and I have less than $200.00 in debts that I did not collect. That customer went bankrupt and called me and told me to come by and take some frozen fish before the collectors came and took everything. I know many others who have lost money so it is not the area -- we have crooks here also.

I think I told this story before that when I first started I had a potential client who called me to wire his new home. I was hungry for a new construction work. When he said he would supply the materials my appetite suddenly went away. I knew he owned a restaurant so I said "If I bring a steak into your restaurant will you cook it for me?" He said "what do you mean?" I told him I think he knows what I meant and to get someone else.

This guy has screwed a lot of people of money over the years.

Back to the OP---If someone wanted 50% down to work in my house they would have to leave their spouse and kids as collateral. This may not work either depending on how much they likes their family.:grin:

 

[celtic]

When did EC's become SLA's?

 

[ceknight]

When did EC's become SLA's?

I'd like to assume you wouldn't order pizza more than once from a shop that made you pay before they'd even consider baking and delivering it. But you seem to favor a model where the customers should do exactly that...?

 

[celtic]

I'd like to assume you wouldn't order pizza more than once from a shop that made you pay before they'd even consider baking and delivering it. But you seem to favor a model where the customers should do exactly that...?

Ever been to MickeyD's....bought a car...a house...etc.


At what point do you become a banker and not an EC?

 

[mdshunk]

Even at McDonald's you need to pay at the first window before you can pull up to the second window to get your food.

 

[growler]

I have never asked for a deposit before the job and I would be reluctant to pay a deposit before any work is done. It is not done around here.

I will admit that a job costing $2130 total I'm probably not going to ask for anything up front either. If I think it's real risky ( house has a for sale sign in front) I will want everything up front but I don't get many of those.

If the job only cost $2130 I shouldn't be there over two times before I'm ready for the rough inspection and it's time to collect. At that time ( probably some delay from rough to trim) it's good to collect the bulk of the total which could be from $1500 to $1800 with the rest due at final.

If the job is going to be finished in a week or two then I only bill for total ( dealing directly with the homeowner).

On the other hand if the job is bigger and you are working for a GC then it's better to get all you can as soon as you can. In this state GC's are a dime a dozen and many of them will run out on you if you give them a chance.

 

[Rewire]

If you stay in business long enough you will get stiffed by someone,we do alot of small remodels for many different customers as well as contractors so the odds go up for us. I want money the day the job starts normally 25% this does not me3an I wont get stiffed it just means I got something I was owed a final payment of 1500$ and the homeowner stiffed me still waiting for a resolution a year later.

 

[peter d]

I'd like to assume you wouldn't order pizza more than once from a shop that made you pay before they'd even consider baking and delivering it. But you seem to favor a model where the customers should do exactly that...?

Pizzas cost $10 retail, much less for the ingredients and labor. Most electrical work costs a lot more than $10.

Besides, you have to pay them first before they'll bring it to the counter. Or the delivery driver has to pay the shop for it before they'll send it out. Either way, they get their money up front.

 

[Krim]

If the customer is concerned about you not starting the job after he pays, like some homowners are. Agree to the 500 deposit but make the rough payment 1000.00 and meet him in the middle.

This is the same thought I'd had about the situation and sounds like a more reasonable / realistic solution .
Carl

 

[pgordon]

Sometimes We will buy the whole job,(materials) and deliver it to the job site, then recqustion for the materials pluse 20%. Just try and get the state to give you a deposit on a job, Then its progress drawing time.

 

[satcom]

This is the same thought I'd had about the situation and sounds like a more reasonable / realistic solution .
Carl

All Nonsense, there is no need, for him to reduce the down payment, he is in New Jersey, where electrical contractors are licensed, and bonded, should he fail to complete any job, he would have his license pulled by the board, and face excessive fines, and penalties.

 

[iwire]

IMO this subject has no right answer, situations are different for different jobs.

When I hired a contractor to do my roof he wanted 1/3 down, 1/3 at the 50% done point and the final 1/3 when I was satisfied.

Considering he did not know me, and I did not know him it seemed like a fair arraignment for both of us.

I hired a mason and gave him about 1/4 to get started, the balance on complition....it was a only couple of days work.

I would never pay a contractor in full or more then 50% up front no mater what license they hold.

 

[iwire]

he is in New Jersey, where electrical contractors are licensed, and bonded, should he fail to complete any job, he would have his license pulled by the board, and face excessive fines, and penalties.

So no one ever gets ripped off by contrators in NJ?

Companies do not go out of business?

I find that hard to believe....nothing against NJ in particular....just the human race in general.

 

[ceknight]

Ever been to MickeyD's....bought a car...a house...etc.

Those are all transactions where you get the goods at the end of the transaction.

Have you ever gone to McDonald's, had them ask for money and tell you to show up tomorrow and they'll give you your DeathBurger at Window 2? Have you ever bought a car from a dealership that told you to pay cash now, and they'll show up in your driveway with the car next week? Have you bought any houses where you signed all the papers and had to pay cash for it a week before you get the house keys? If you want your counterexamples to be relevant, you need to make them analogous...

My general point is that the materials don't belong to the customer until you're at least on site with them and prepared to let them assume ownership. I don't expect a customer to pay for materials before I've installed them. What happens to those materials before then is a risk I take as a businessperson -- the customer does eventually pay for that risk, it's passed along as markup. But between the shop and the customer's building it's my risk.

Expecting a customer to absolve you of the legitimate up-front risks of running a business is, to me, outlandish. But then I don't share the profits I reap from taking those risks with my customers, either.

I'll only add one more thing: What is the difference, in principle, between (a) showing up at a job, getting a check before you unload the van, and then starting work, and (b) showing up at a job, starting work, and getting a check at the end of the day? Would you consider one to be non-banking, and the other to be banking? Either way you're on site with an un-cashed check, only in one case it's a "deposit" and in the other it's a "progress payment." You've still charged the goods on your shop account, and you haven't got the money in the bank yet.

I see the only real difference as one of perception -- in one case the customer perceives you as either (or both) needing money and not trusting them, in the other the customer perceives you as trusting them and operating a business that isn't hand-to-mouth. That's how I see it, and it's my business model to form lasting, trusting relationships with my customers. I especially don't want them perceiving me as needy.

Your mileage may certainly vary.

 

[480sparky]

IMO this subject has no right answer, situations are different for different jobs.

When I hired a contractor to do my roof he wanted 1/3 down, 1/3 at the 50% done point and the final 1/3 when I was satisfied.

Considering he did not know me, and I did not know him it seemed like a fair arraignment for both of us.

I hired a mason and gave him about 1/4 to get started, the balance on complition....it was a only couple of days work.

I would never pay a contractor in full or more then 50% up front no mater what license they hold.

So, in effect, you had a 'meeting of the minds' in those cases, and your agreements were turned into contracts. You both understood, and agreed to, the terms of that contract.

If the OP has a contract with the HO, then both parties should follow it. If the HO wants to change it, he must do so in writing, and the OP must agree to it. Nothing wrong with changing, but, like all the afternoon TV judges like to say, "Get it in writing."

 

[satcom]

IMO this subject has no right answer, situations are different for different jobs.

When I hired a contractor to do my roof he wanted 1/3 down, 1/3 at the 50% done point and the final 1/3 when I was satisfied.

Considering he did not know me, and I did not know him it seemed like a fair arraignment for both of us.

I hired a mason and gave him about 1/4 to get started, the balance on complition....it was a only couple of days work.

I would never pay a contractor in full or more then 50% up front no mater what license they hold.

It is different for different jobs, material heavy jobs, may require a larger deposit, a risky credit wise customer may also require a larger deposit.

 

[satcom]

So, in effect, you had a 'meeting of the minds' in those cases, and your agreements were turned into contracts. You both understood, and agreed to, the terms of that contract.

If the OP has a contract with the HO, then both parties should follow it. If the HO wants to change it, he must do so in writing, and the OP must agree to it. Nothing wrong with changing, but, like all the afternoon TV judges like to say, "Get it in writing."

Exactly! I assume the OP must of seen a need for a larger down payment.

 

[jrannis]

I have never asked for a deposit before the job and I would be reluctant to pay a deposit before any work is done. It is not done around here.

Not everybody lives in a nice place like Chapel Hill.

I would tell them that its against company policy.