pay schedule

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puckman

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ridgewood, n.j.
can some of you tell me how you arrange your payments from builders or the average guy ? i have a job roughly about $ 21,000.00 from a builder from my town and would like an idea how to arrange payments from him. its for a 2 family house. thanks for the help.
 
puckman said:
can some of you tell me how you arrange your payments from builders or the average guy ? i have a job roughly about $ 21,000.00 from a builder from my town and would like an idea how to arrange payments from him. its for a 2 family house. thanks for the help.
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If you know the builder and he has a good reputation then it would be 60% at rough in, bal. due at final. If you have never had any dealings with him, or get that "bad" feeling about dealing with him then it would be 30% to start, 30% at rough in, bal at final.
 
try to front load job so you are never out more than the amount you have worked, for example, in the following, if the builder goes belly up at the end, you are out the 5%, but hopefully that is less than 1/3 of your profit.

30% downpayment (when you show up to start rough)
35% rough in inspection
30% final inspection
5% punchout completed
 
nakulak said:
5% punchout completed
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I would never volunteer that term unless they had me over a barrel for some reason. I have things structured so that the final payment is due upon "substantial completion". Some guys are skilled at never giving you that last few percent. They'll have you doing punchout until you're mad and move on without that last few percent.
 
mdshunk said:
I would never volunteer that term unless they had me over a barrel for some reason. I have things structured so that the final payment is due upon "substantial completion". Some guys are skilled at never giving you that last few percent. They'll have you doing punchout until you're mad and move on without that last few percent.
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Could you lay that out to what we've read so far, 30,30,40 ?
40,40, final inspection = substational completion ? I'm sorry I don't understand where that term is appliable ?
 
mdshunk said:
I would never volunteer that term unless they had me over a barrel for some reason. I have things structured so that the final payment is due upon "substantial completion".
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Yes, that's the best and with a clause for a substantial interest charge if the payment is late.

I consider substantial completion to be at the time of final inspection. There may be punch-out left but the job is complete.
 
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cadpoint said:
Could you lay that out to what we've read so far, 30,30,40 ?
40,40, final inspection = substational completion ? I'm sorry I don't understand where that term is appliable ?
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50 down, 40 at ruff inspection, 10 at substantial completion (not final inspection). The automation, audio, and HVAC guys can sometimes hose up the final electrical inspection. At final inspection would work, however, most of the time.

Sometimes 30 down, 20 at service, 40 at ruff, 10 at substantial completion.

I am not a bank.
 
I use various schemes, depending on the customer and the job itself.

If it's a regular residential customer who pay on time, I typically go 50% at end of rough (pass inspection), 50% at final.

If they have a hard time keeping up with paying me, then I'll 'introduce' a down-payment requirement. Then I may go 10% due with signed contract, 50% at rough, and 40% at trim.

I generally tie the payments to passed inspections in resi work. This eliminates the squabbles over whether I'm 'done'. I usually have the bill for my work out in the truck when I meet the inspector. As soon as I get the official okee-dokee, I hand the bill to the builder.

Small commercial jobs are done about the same way. If it's less than a week for either phase (rough/trim), then I bill it the same was as resi.

Larger commercial jobs are handled on an individual basis. For instance, if the job requires a large cash outlay at the start of the job (say, for the switchgear, panels, light fixtures, etc.), then I will bill on a two-week schedule based on the work performed instead of a percentage. This keeps me from 'loaning' the GC tons of money. If the GC doesn't like my payment plans, they can find someone else to do the work. If they agree, and start to fall behind paying me, then work comes to a stop.

Some resi jobs I handle just like large commercial jobs. Let's say someone calls me up to wire their house. He tells me he's the homeowner, and is buidling the house himself. He's the GC, in effect. This is a big red flag for me. Most likely, he's not experienced, so the job will take longer. Instead of roughing in one week, then returning a month later for trim, I'm faced with scattering out my work over several months, possibly a year or more. This not only increases the price, but also the number of invoices.
 
Thanks, Mark !
OK, so via you contracts, handing over the Bill at each point only triggers, a delay of payment from 30, 45 to 60 days, how do ya'll handle that ?
I can't see the contractor writing the check on the spot. Is this worded
to be required next business day the GC's check is to be avaiable ?
 
Had a customer that we had a yearly contract with called and wanted to know if they could pay 100% within 30 days of the contract signing. AWWWWWWWWWWWWWWW Well that's a BIG YES. Within a week of signing the contract the check was there, it was 3 months before we performed the first of 4 site visits for service.
 
One week turnaround after billing or work stops - Two weeks and lien filed - They agree with my terms before job starts or I walk - Seems to work - keep getting more work from the same builders
 
mdshunk said:
50 down, 40 at ruff inspection, 10 at substantial completion (not final inspection). The automation, audio, and HVAC guys can sometimes hose up the final electrical inspection. At final inspection would work, however, most of the time.

I am not a bank.
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That's generally the terms that I get.

I try to cover all of the rough in material and part of the labor as a downpayment.
As mdshunk says....I am not a bank.

I must be lucky as I've never been "burned" by a GC or owner.
It ain't hard if you don't let yourself get behind.

steve
 
muckusmc said:
For Resi,
Deposit 30%
Upon Service installed (not energized) 20%
Upon rough 40%
Upon final 10% + any extras
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I notice your in New Jersey, The board claimed the reason for bonding was to make it possible for us to be paid before final inspection, the bond assured any proper completion for the consumer, then someone out in space had permit place cards printed with the statement do not pay in full until final inspection, that should apply to non licensed or non bonded contractors only, a licensed and bonded contractors should take legal action on the issue, if the board does not resolve the bonding issue, and return the ability to collect final payment on job completion, not final inspection.

The consumers are protected, with bonded licensed ans insured contractors, the problem is with the non licensed, non bonded, non insured contractors, typical New Jersey lawmakers, go after the ligit legal guys, they are an easy to deal with, the illegal ones, taking the consumers for a ride, take time and money to find, heck just fine, and hit the good guys with fees.
 
Typical project is either 50/50 or 40/40/20. We have a contractor that builds rather large homes and there is up to 5 or 6 draws because things get so drug out that you will sit on your money for a long time waiting on the "normal order of things." he is a great GC to work for and in those circunstances has made it clear to send a draw when we feel the need to cover material and labor to a certain point.

I agree with Mark, and have learned the hard way, not to allow any final draw to be after punch lists. Most of the time you will lose out on some of the money owed. I like all money owed by CO and if have enything left it is either extras or I will work for "free" (basicly, we have already been paid for the work we are doing) to wrap things up.
 
Wow. I am really surprised to learn you guys are demanding, and getting, money down, especially from a GC prior to starting work.

Although I haven't hired much done on a resi level in my life, I have never been asked for money down nor would I agree to pay it if I were. I would find a different contractor.

That goes for plumbing, concrete, siding, roofing, gutters whatever.

Asking for 50% down would send a big red flag to me telling me the contractor isn't credit worthy and is a risk to me, the man about spend his hard earned cash on you.

I understand the "I am not a bank" mentality but still, why would you need to be? Let the supply house be the bank. You get the same price if you pay within 30 days, minimum maybe longer, and maybe a 1 or 2% discount if you pay within 10 days depending on how credit worthy you are and what supply house you're dealing with.

I don't know if box stores offer these terms as I try not to deal with them preferring real supply houses instead. Yes, they can be competitive with the box stores and the support is waaaaaay better.

Learn something new every day.

BTW - I don't mean to imply those of you who are demanding money down are not credit worthy. I am just surprised that this policy is so prevalent. I know for sure if I got a $1,000,000+ commercial/industrial/healthcare electrical project and asked the GC for 50% down, or any amount down, they would probably hang up the phone and immediately dial the next bidder.
 
bbaumer said:
Wow. I am really surprised to learn you guys are demanding, and getting, money down, especially from a GC prior to starting work.

Although I haven't hired much done on a resi level in my life, I have never been asked for money down nor would I agree to pay it if I were. I would find a different contractor.

That goes for plumbing, concrete, siding, roofing, gutters whatever.

Asking for 50% down would send a big red flag to me telling me the contractor isn't credit worthy and is a risk to me, the man about spend his hard earned cash on you.

I understand the "I am not a bank" mentality but still, why would you need to be? Let the supply house be the bank. You get the same price if you pay within 30 days, minimum maybe longer, and maybe a 1 or 2% discount if you pay within 10 days depending on how credit worthy you are and what supply house you're dealing with.

I don't know if box stores offer these terms as I try not to deal with them preferring real supply houses instead. Yes, they can be competitive with the box stores and the support is waaaaaay better.

Learn something new every day.

BTW - I don't mean to imply those of you who are demanding money down are not credit worthy. I am just surprised that this policy is so prevalent. I know for sure if I got a $1,000,000+ commercial/industrial/healthcare electrical project and asked the GC for 50% down, or any amount down, they would probably hang up the phone and immediately dial the next bidder.
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Also your supply house is not a bank.

"I am just surprised that this policy is so prevalent."

You may even be more suprised to learn how many subs demand payment from GC's at the end of the day, or they will not return to the job the next day.

"Asking for 50% down would send a big red flag to me telling me the contractor isn't credit worthy and is a risk to me,"

That is the line some GC's and homepwners use, to try to shame you into caving from good business practice of getting a down dayment, and many new guys just starting out in contracting, fall for the pitch, and make the costley mistake of not getting a down payment.

Just as a note, many companies ask for payment in advance, either a bank check, or credit card, before starting any work.

One of the biggest problems in many of the trades, is a failure to check the customers credit before accepting the work.
 
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We don't get money down on commercial jobs. But that doesn't mean you can't front load the job so that you minimize your exposure, hopefully by the time the job is over 50% complete
 
bbaumer,
Just out of curiosity, as a PE, do you get a deposit for your work? I realize that you may only work for architects, but I know alot a architects and engineers, and everyone of them want a deposit before they even start work - SO WHY SHOULDN'T WE????
muckusmc
 
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