How much of a deposit do i ask for?

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zappy

zappy

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CA.
I heard there's a law that says 10% or $1000.00 which ever is less.Is this true?Thank you for your help.
 
So is there a % you use?Say parts and labor is $5000 what would you ask for as a deposit?
 
zappy said:
I heard there's a law that says 10% or $1000.00 which ever is less.Is this true?Thank you for your help.
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I guess when the customer pays the 10% and never comes up with the balance, the state make up the difference?
 
EC's from NC check me but I think it may be illegal around here to ask for a deposit unless there is certain non returnable equipment or some sort of special condition. I do know for a fact that all the guys that get in trouble and go before the board have a certain part of their sentence stating that they are not to invoice until a certain portion of the work is complete and inspected.
 
I wonder how the flat rate guys get along in California? CA does have a rule that you can't get more than 10% down, but most flat rate systems require that the tech has a check in hand before he starts the work. Maybe they just have them sign on the dotted line, instead, then get them to pay immediately after the work is done?
 
zappy said:
So is there a % you use?Say parts and labor is $5000 what would you ask for as a deposit?
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A common method would $1500 down, $1500 after rough, $1500 after final, and $500 after CO/punchlist. Otherwise, you could use $2000/$2000/$1000.

It's important to avoid getting to the point where they owe you more in money than you owe them in work, if you catch my drift. You always want them to want you to come back.
 
For me it depends on the size of the job. With new houses I get a third at the start, a third at rough in inspect, and the final third pluss change orders at final inspection. That final can be tough because you can be in a place where they owe you more money than you owe them work.
 
We just had 3 roofing contractors stop by with estimates, they all wanted 50% down, and balance on day of completion.

But considering your in the electrical contracting business 2% down and the rest if you can get it might be best.
 
On small to medium jobs (less than $10,000 ) I get 50% down when all of the material is placed on the job. I have never had a customer question this. The jobs around here that I really like are schools. The school board sets up a joint account with the suppliers of your choice and deduct what you purchase from your price. This way they get tax exempt status and you are assured that your material will be paid for in a timely manner.
 
We have been fortunate it appears. For the past couple of years, doing mostly new construction, we have been able to get:

60% completion of rough
30% completion of finish (installation/termination of devices)
10% completion of final (CO/punch/inspection)
 
I would bill 100% at the time of completion. Assuming this is not a project that will be strung out for months. If it's a new house - 60% at rough and 40% at final. Then I would give 30 days to pay. I know a number of members disagree with this method, but it is the standard around here. And actually it has its benefits as well. Established companies have no problem carry the cost, while little start-up compaines can't, so they don't make it.
 
50% or dont do it at all!!

50% or dont do it at all!!

Gentelmen, If we all take the same attitude and stick to it then we will set the precident on deposits.

I will take nothing less than 50% up front...anything less and they are not for real!! If they stiff me for any of the rest...I start pulling meters. This has worked well for me in the last 4 yrs.
 
tyha said:
EC's from NC check me but I think it may be illegal around here to ask for a deposit unless there is certain non returnable equipment or some sort of special condition. I do know for a fact that all the guys that get in trouble and go before the board have a certain part of their sentence stating that they are not to invoice until a certain portion of the work is complete and inspected.
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That is a fast way out of biz!! No way would I ever go for that, law or not. In Tenant build out situations... the GC gets 90%up front!

One of the biggest points of the deposit is to see if you are really doing biz together in the first place...not willing to deposit..means not willing to pay either!!
 
twenty five years in business and never asked for a deposit? only got stuck a couple of times,but on small jobs? my chance i guess! like trust in both directions--although i did tie a chain around a 2" raceway holding fiber optic cables carrying "ALL" telephone communications to South and Central America and the other end of the chain to a service van threatening to remove the raceway i installed for their fiber! they sent me the $30,000. check the same afternoon. The name of the customer was "MCI" ! a sizable customer, but one i didn't need when they were six months past due and sending a message that they would pay my bill when they felt like it!! those customers i do not need! "MCI" i believe is no longer in business!
 
mdshunk said:
I wonder how the flat rate guys get along in California? CA does have a rule that you can't get more than 10% down, but most flat rate systems require that the tech has a check in hand before he starts the work. Maybe they just have them sign on the dotted line, instead, then get them to pay immediately after the work is done?
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You're right in CA.there is a law 10% or $1000 business & profession code#7159 unless your a big company like home depot.
 
zappy said:
You're right in CA.there is a law 10% or $1000 business & profession code#7159 unless your a big company like home depot.
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"unless your a big company like home depot"

If that is so then, the scales of justice do not balance, and the law would not stand a chance if tested. Sounds like the EC's in Cal are asleep at the switch.

The state is assuming all contractors are crooks, and making laws to punish them before they are proven guilty, wow!
 
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