Financing for customers

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aelectricalman

aelectricalman

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Location
KY
Does anyone here offer financing for their customers? Recently I have had a couple of customers who have held out payment. I was debating ways to collect on this. I thought, what about financing. I can set it up through a finance company and take care of the paperwork for a small extra fee. Does anyone have any suggestion? Problems you have with financing? Drawbacks? Liabilities? Pending a credit check, is the money gauranteed? Does it usually cost me? Can I transfere that cost? Thanks
 
Re: Financing for customers

Best finance is:
1/3 before you start
1/3 after roughin
1/3 upon final inspection minus 10% of this for punchout.

If they do not agree with these terms, we don't do the work. If they want to finance the work, that is on them.

After that it's called a Lien. Which we do not hesitate to do because we have signed paperwork/contract by the owner.
 
Re: Financing for customers

Im very familiar with filing liens, however, I am hinting at financing as a pre qualification. I somewhat agree with your 1/3 policy however, I don't agree with the 1/3 up front. I don't ask for money upfront unless the job is over $10,000. I ask for 1/2 on rough and 1/2 on finish. As for doing work, I turn down some jobs because some people can't agree to my terms to pay upon completion. In these few cases I have, peoples loans from the bank are slow and yada yada yada. I just want a way to tell customers of jobs that dont require roughs and finishes, that my money is due upon completion, and so I dont have to turn your job down, here is financing to provide you.

[ May 21, 2005, 12:18 AM: Message edited by: aelectricalman ]
 
Re: Financing for customers

Originally posted by aelectricalman:
I don't agree with the 1/3 up front. I don't ask for money upfront unless the job is over $10,000. I ask for 1/2 on rough and 1/2 on finish.
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It's not financing you need it's a better payment schedule. Why would you NOT get money up front. That in itself can be a good prequalifier. If they don't want to give you money to start the work (you're buying materials for them) what makes you so sure they will be in any hurry to pay at all. Why not setup to take credit cards? Let them deal with the deadbeats.

I just want a way to tell customers of jobs that dont require roughs and finishes, that my money is due upon completion
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How about this. "My money is due upon completion". If you are doing a one or two day job, when you schedule it be clear the you will need a check on the day you finish. I don't imagine they can go to Wal Mart and load up a cart with stuff and then pass throught the checkout with a friendly wave and a "Just bill me".

[ May 21, 2005, 07:01 AM: Message edited by: electricmanscott ]
 
Re: Financing for customers

We bill 40x40x20

40% before we start
40% After ruff Inspection
20% At the final Inspection

If its a or two day job like a 600Amp service I charge 50% up front and 50% when we are done.

If we do anything under $2500 then payment is just do at time of completion.
 
Re: Financing for customers

you can probably make an arrangement with a local finance company to do what you want. they will often offer your customer no money down, no interest for 90 days, but than they hit them hard.

as i understand it, the contractor may not even have to give the finance company a cut on these type of deals. it's an inexpensive way of marketing for the finance company.

the important thing to you is that you get paid. I think any job that can be completed in a day should be due on completion, and anything over that requires progress payments with a hefty downpayment. that's what I would expect as a customer. as a customer, I would want a holdback (maybe 10 or 20%) until the final, which seems fair to both parties.
 
Re: Financing for customers

Most of our jobs are 50% down remainder upon completion.

As for financing--we used to have an arrangement with a bank where a customer could walk in and say XXXX Electric is doing my work, show contract amount and receive financing. Check was written to both of us. I think only a small handful of people ever took advantage of it.

We do take credit cards! Even though the cost is 2.5% to us, the single biggest advantage is we have our money now.
 
Re: Financing for customers

Just a quick note, Nextel is soon to offer a phone with a built in credit card swipe. I will be sure to take advantage of that tool.
 
Re: Financing for customers

Originally posted by coppertreeelectric:
Just a quick note, Nextel is soon to offer a phone with a built in credit card swipe. I will be sure to take advantage of that tool.
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That will be nice. As having been formerly employed by a company that took credit cards, calling the card company from the customer's house (as was their policy) to process the card manually took a great deal of time. Sometimes it would add 1/2 hr of non-billable time to the work.
 
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