deposit reduction

[jrannis]

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.

I dont know if I would start a normal job without a deposit. If you are doing small 5k or 10k jobs you dont have much risk I guess.

 

[tyha]

put it this way. here in north carolina business isn't done that way. it isn't about the different projects or types of customers. Its just for whatever reason in different parts of the country business is handled differently. we have had this discussion on many levels in the past with the same outcome. If you were to come to nc and ask for deposits on your work you wouldn't stay in business long because you wouldn't have any customers and maybe if we were to go to the north east and do all this work and just bill progressively than i really dont know what would happen. I am used to swinging several thousand dollars every month and (sometimes a few months with slow pays) but i feel that I am well compensated for doing it.

 

[macmikeman]

put it this way. here in north carolina business isn't done that way. it isn't about the different projects or types of customers. Its just for whatever reason in different parts of the country business is handled differently. we have had this discussion on many levels in the past with the same outcome. If you were to come to nc and ask for deposits on your work you wouldn't stay in business long because you wouldn't have any customers and maybe if we were to go to the north east and do all this work and just bill progressively than i really dont know what would happen. I am used to swinging several thousand dollars every month and (sometimes a few months with slow pays) but i feel that I am well compensated for doing it.

That is probably because North Carolina (notice the caps on mine ) is close to Murphy Village in the next state down. http://fraudtech.bizland.com/travelers.htm

 

[brian john]

We have the opposite problem every year we have customers that need work completed by year end, usually due to scheduling issues this is not possible.
Like a two month job they we are awarded the second week in December. Then they ask, well can you at least bill me so it makes it into this years budget.


NOW LET ME SEE you want to prepay?......HMMMMMM I might be able to do that. One customer asked if we minded if they held 10% retainer, AHHHHH no problem.

 

[dduffee260]

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 guess that is the advantage I have for working with people like Mickey and Minnie Mouse and you doing work for Tony Soprano. It's a beautiful ting !!!

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[satcom]

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 guess that is the advantage I have for working with people like Mickey and Minnie Mouse and you doing work for Tony Soprano. It's a beautiful ting !!!

When you go to a fast food place in your area, do they give you the food then ask you to pay after the food is consumed, or do they demand payment before they give you the food?

This issue is a two way thing, there are contractors that will rip off customers, and leave them with a mess, and there are contractors that provide good services, and they need to protect their business, by using standard contract practices and terms.


fix quote

 

[charlie tuna]

i agree with i-wire--there's no right answer. it hinges on many things -- area is one of them, there are areas that people are more honorable than others. another issue is how bad you need the work -- if your sittin at home with no work it might be worth the gamble, and you'll be out of your wife's hair!! another thing is profit margin-- if their $500. to be made that might make it worth your while, but for $50. it isn't worth the worry alone!!

gut feeling just didn't work for me -- every time i got screwed -- it was always-ALWAYS--when i least expected it and when i went the extra mile to help someone out. one thing i did do -- when i had a "nickel dimer" or people who scrutinize everything on a bill, i always increased their next bill's profit margin! something my previous boss taught me -- he used to call it "aggravation costs".......

remember, we are "contractors" and there are many people who just don't trust "contractors" --- others have given us a bad reputation by screwing these people --- these people may just be trying to protect themselves from a previous "contractor" deal???

 

[aline]

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...

What would happen if I ordered a burger, ate it and then left without paying for it?

What would happen if I went to the grocery store loaded up my cart and left without paying for it?

What would happen if I filled up my car at the gas station and then refused to pay?

The police would be called and you would be arrested for theft or shoplifting.

After I install my materials for a customer and he doesn't pay I can't call the police and have him arrested for theft.

When I purchase a car from a dealership I get the car but not the title unless I've paid for it in full. If I don't make the payments the car gets reposessed. I don't actually own the car until I've made the final payment. Same thing when I buy a house. The car dealership and the bank have something of value they can reposess in the event you don't pay.

When I install materials they then become the customer's materials whether I've been paid or not. I cannot reposess these materials and even if I could, a lot of what I've put into a job is in labor. How do you reposess labor?

I recently completed two jobs that were $2500 each. In both cases I wanted a $500 deposit before starting the work. In both cases the customer balked about the deposit. One was some dedicated circuits for a pizza company and the other a residential service upgrade. They seemed like nice trustworhty individuals. The residential customer used to work at the same industrial plant that I used to work at and we knew each other. Against my better judgement I waived the deposit requirement. Three months later I have not been paid a dime from either one.

I would love to be able to rip the electrical service off the guys house and reposess my materials but It's illegal to do so. Once the materials are installed they become the customers. We're not allowed to touch the power companies overhead drop or meter. I once cut a meter seal in the middle of the night, called the power company the next day and told them I had cut the seal and that they would need to put a new one on.

They reamed my up and down, threatened me with a hefty fine and threatened to have my licensed revoked.

I can lien the home of the residential customer but this doesn't mean I will get paid anytime soon.

I'm not sure what I can do about the pizza company other than take them to small claims court. They don't own the building but lease it instead.

So unlike a house or a car I don't have a title to anything and have nothing to reposess or foreclose on. Even if I could reposess my materials I can't reposess my labor.

If nothing else asking for a deposit and having a customer not willing to pay for it, is a good warning sign that the customer isn't going to pay for any of the job.

When I had my graphics put on my van I was required to pay a 50% deposit before they would begin the work.

Would you order a $15,000 generator without getting a deposit upfront? What happens when the generator shows up and the customer tells you he's changed his mind, doesn't want it and refuses to pay for it?

I know a lot of companies will not order anything for you without a deposit.

If you're a local contractor running around collecting deposits and not completing any work you're not going to be in business very long. The customer should be able to do a little research on the contractor he's hiring to see if he has had any complaints about him, how long he's been in business and if he's established in the area. The type of contractors that run around collecting deposits and never completing any work usually travel from state to state and don't have an established business in the area.

 

[dduffee260]

When you go to a fast food place in your area, do they give you the food then ask you to pay after the food is consumed, or do they demand payment before they give you the food?

I don't eat fast food, it is unhealthy. When I go to Texas Roadhouse and order a 12oz filet. They bring me my food first, then I order desert, they bring that too me also. Then they bring me the bill, I pay for it. If there is something wrong with the food when they bring it out, I ask for a manager, They make sure I am happy before they give me a bill. There is no excuse not to pay when they do that. If they asked me for a down payment on the food before they started cooking. I would leave the place.


fix quote

 

[satcom]

another issue is how bad you need the work -- if your sittin at home with no work it might be worth the gamble, and you'll be out of your wife's hair!!

That is one sure way to get in trouble, if you sitting at home with no work, you would be better off, out looking for profitable work, then changing your terms, or cutting your profit, however, this is exactly what some do, when things slow down, they react, thinking oh well at least i will have something, will you really gain by doing that, check your figures, and you will find, you usually loose money in the long term, by accepting work in a panic mode.

 

[aline]

I don't eat fast food, it is unhealthy. When I go to Texas Roadhouse and order a 12oz filet. They bring me my food first, then I order desert, they bring that too me also. Then they bring me the bill, I pay for it. If there is something wrong with the food when they bring it out, I ask for a manager, They make sure I am happy before they give me a bill. There is no excuse not to pay when they do that. If they asked me for a down payment on the food before they started cooking. I would leave the place.

What would happen if you ate all this food and then just got up and walked out without paying for it?

As a contractor I've done all the work, made sure the customer was happy and even had the customer comment on how pleased he was with the work but still didn't get paid. His excuse? He just doesn't have the money right now. I guess that's why he balked about the $500 deposit. He didn't have the money.

Try telling the Texas Roadhouse manager you just don't have the money right now after ordering and eating all that food.

 

[satcom]

If nothing else asking for a deposit and having a customer not willing to pay for it, is a good warning sign that the customer isn't going to pay for any of the job.

When I had my graphics put on my van I was required to pay a 50% deposit before they would begin the work.

Would you order a $15,000 generator without getting a deposit upfront? What happens when the generator shows up and the customer tells you he's changed his mind, doesn't want it and refuses to pay for it?

I know a lot of companies will not order anything for you without a deposit.

I do not expect someone that is not in business to grasp these practices, they have a one side vier of contracting at best.

 

[ceb]

put it this way. here in north carolina business isn't done that way. it isn't about the different projects or types of customers. Its just for whatever reason in different parts of the country business is handled differently. we have had this discussion on many levels in the past with the same outcome. If you were to come to nc and ask for deposits on your work you wouldn't stay in business long because you wouldn't have any customers and maybe if we were to go to the north east and do all this work and just bill progressively than i really dont know what would happen. I am used to swinging several thousand dollars every month and (sometimes a few months with slow pays) but i feel that I am well compensated for doing it.

Don't be too quick to make that statement. I require a deposit on my larger jobs, for example if I quote a new construction home my terms are 60% at rough in 40% at final plus addons, however when I quote the job their has not been any work started and I know that it will be up to 3 months before they are ready for the elect. to begin. That is when I have in the quote that due to ever changing wire price that I require a 20% deposit with in 30 days to buy the wire or the quote is void. I have been hurt by not requiring a small deposit to at least buy the wire at today's price only to have it increase by the start of the project.

 

[tyha]

im not trying to offend anyone or say what they are doing isn't the way to conduct business but I think that for one we are on different sides of the realm. We dont do residential. We consistantly do projects from $10,000 to $200,000. If I dont invoice $75,000 a month Im upside down. There are many reasons for this when it does happen. I would like to know if anyone on this forum ,that we have been going back and forth with, requires a deposit and does the volume we do. Now the case of the gen-set or other types of special equipment is different. I would require some sort of deposit on that as well.

 

[emahler]

im not trying to offend anyone or say what they are doing isn't the way to conduct business but I think that for one we are on different sides of the realm. We dont do residential. We consistantly do projects from $10,000 to $200,000. If I dont invoice $75,000 a month Im upside down. There are many reasons for this when it does happen. I would like to know if anyone on this forum ,that we have been going back and forth with, requires a deposit and does the volume we do. Now the case of the gen-set or other types of special equipment is different. I would require some sort of deposit on that as well.

a little off topic, but interesting, is that up in NY/NJ area, you would need to bill nearly twice as much every month based on the # employees you have (upwards of $130k month) and thats not getting rich...just an observation...carry on

 

[tyha]

i know that to be true. The wages and cost of living are higher there. Right??Im saying I break even at 75K. meaning that I just will have enough from that to roll pay roll and misc cost for the following month without taking funds from somewhere they need to stay. The way I have always gauged our industry from my standpoint as a PM with other multi-million $ ec's and with my own company is 100k in sales per year average for every full time field position and 1 full time estimator per 10 field employees. project managers are somewhat arbituary because I , like some other ec's I know, manage most all of our work in one way or the other with maybe 1 full time salaried pm and a few really good meticulious foreman. Is this similar to NE or no. Im thinking no

 

[satcom]

i know that to be true. The wages and cost of living are higher there. Right??Im saying I break even at 75K. meaning that I just will have enough from that to roll pay roll and misc cost for the following month without taking funds from somewhere they need to stay. The way I have always gauged our industry from my standpoint as a PM with other multi-million $ ec's and with my own company is 100k in sales per year average for every full time field position and 1 full time estimator per 10 field employees. project managers are somewhat arbituary because I , like some other ec's I know, manage most all of our work in one way or the other with maybe 1 full time salaried pm and a few really good meticulious foreman. Is this similar to NE or no. Im thinking no

Your figures are way off from anything you would need here, a shop here just bit the dust last year, they had one estimator for 70 field employees.

 

[jrannis]

Typical small job with terms and payment schedule

In accordance with your request, ------- proposes to furnish all necessary labor, tools and material for a complete and operational electrical installation for the above referenced project per our site review along with the following listed qualifications:

1. Install new high-leg wire into existing riser conduit and terminate in existing line gutter
2. Install new three phase meter and new three phase distribution panel for East warehouse unit and connect into line gutter
3. Disconnect old single phase meter
4. Connect existing 100 amp panel to new service in meter room
5. Install new three phase 100 amp panel in warehouse, back to back with new three phase distribution panel located in meter room
6. Contractor level design drawings for permitting included
7. Fees from FP&L are specifically excluded. (none anticipated)
8. Permit, Processing, and any fees or penalties imposed by The City of Oakland Park associated with this project shall be the responsibility of the owner.
9. Patching, painting and restoration of landscaping or finished surfaces by others.
10. Any additional work required by the local building authority not specified in the above scope of work shall be the responsibility of the owner.(none anticipated)
11. Additions or changes to the above scope of work are considered separate from the initial project agreement. (none anticipated)

Terms: $800.00 at the commissioning of drawings and calculations, $1,100.00 when permit is issued and work scheduled 700.00 at the substantial completion of pipe, wiring and testing.
Our price including for the above mentioned project terms:
TWO THOUSAND SIX HUNDRED DOLLARS ………………..……………… $2,600.00

Approved and accepted:
The above prices, specifications and conditions are accepted. ----- is authorized to work as specified. Payments shall be made as outlined above. In the event of a lien or other legal measures are commended to secure payments on any portion of the contract sum, the prevailing party shall be entitled to receive all costs and reasonable attorney fees


X______________________________ ________________________________ ____/_______
Owner signature Printed name and title Date

Respectfully submitted,

-------

 

[iwire]

$800.00 at the commissioning of drawings and calculations, $1,100.00 when permit is issued and work scheduled

So you want better then 2/3s before anyone has turned a screw driver?

If I was the customer I would pass on that one.

700.00 at the substantial completion of pipe, wiring and testing.

I also would never pay in full until the job was 100% complete including inspections.

That is my view as a customer, I have never owned or run a business.

 

[jrannis]

So you want better then 2/3s before anyone has turned a screw driver?

If I was the customer I would pass on that one.



I also would never pay in full until the job was 100% complete including inspections.

That is my view as a customer, I have never owned or run a business.

I can offer banking services but it costs more than electrical work

Also,
Waiting for a final inspection can be fatal if the inspector nails them for something outside of the scope of work or if other factors outside of my control arise and delay the final inspection.
Also, the customer will have full use and operation of my work and materials while I am paying the bills.
I cant remember anyone trying to negoiate me off of my terms.

I look at it this way, I you want the work done, you set up some funds for us to work out of, when the work is completed and you have use of it and pay for it, then we can call for a final inspection.