Payment Schedule On Commercial Job

[CRS]

What do you typically out there in the commercial realm for payouts on commercial jobs? Can I sort of dictate what I get up front within reason?
Thanks

 

[cdslotz]

In the commercial world, there is no "up front" money. You submit your bill based on a schedule of values setup for that job, and draws are based on your percentage complete of each value, and usually 10% is withheld on top of that.
That's typical of large projects. That's why large commercial jobs are done by EC's that have the financial means to last until the first check comes in.
Small commercial jobs or tenant finish jobs where shyster GC's are plentiful, I would definitely ask for up front money. If you don't, you will be screwed.

 

[satcom]

In the commercial world, there is no "up front" money. You submit your bill based on a schedule of values setup for that job, and draws are based on your percentage complete of each value, and usually 10% is withheld on top of that.
That's typical of large projects. That's why large commercial jobs are done by EC's that have the financial means to last until the first check comes in.
Small commercial jobs or tenant finish jobs where shyster GC's are plentiful, I would definitely ask for up front money. If you don't, you will be screwed.

"In the commercial world, there is no "up front" money."

Not in my world, we get a deposit on all contracts, now if your working for some company that presents you with terms, it's up to you to set your terms and either agree, or walk away, many EC's buckel under to the companies terms. Some of these same companies pay 45 and 60 days after completion, your not in the banking business, and your not a selling commodity, your offering a contract with your terms.

Oh, if I ask them to pay a deposit, they will get someone else, my outlook on that is be my guest.

"That's why large commercial jobs are done by EC's that have the financial means to last until the first check comes in."

Not last until the first check comes in because you have a deposit on your contract, but have the financial ability to bring the job to completion.

Contractors working without a down payment, and good financial means, are the ones going bust, and taking their vendors down with them.

 

[frogneck77]

You should always demand money up front, It might be the only money youre guaranteed on a job. In commercial, especially leased spaces, mechanics leins are worthless, so get what you can up front, and dont ever finish the job without being payed at least 75% of the contract price. I learned this after being burned for 25K, along with the plumber and HVAC contractor (edit)


Edit; Removed specific city and client info.

 

[thinfool]

schedule of values setup for that job

I learned this from a GC as to how to get money as early as possible, sometimes before you have done little or nothing more than set a temporary service.

Schedule of Values

Mobilization $ 5000.00
Lighting 12,470.00
Conduit 11,532.00
etc xx,xxx.xx
etc xx,xxx.xx
etc xx,xxx.xx

You may be able to bill 100% for Mobilization right after you get a signed contract. It may not be a lot, but it is part of that all-important 'cash flow'.

 

[Brady Electric]

payment schedule on commercial job

payment schedule on commercial job

I agree with Satcom. I have a good enough repetation that I always get one half up front on all jobs and one third at the rough or as I need it and the last one third at the end of the job. If I don't get that I will sit at home, but I always do and I stay busy all year long usually three or four weeks behind. When you get my age Its good that people trust you and your work. Semper Fi

 

[LarryFine]

. . . I always get one half up front on all jobs and one third at the rough or as I need it and the last one third at the end of the job.

Hey, I like your math! :wink:


"There are three kinds of people: those who are good at numbers, and those who aren't."

 

[tyha]

i dont know what kind of gc's you guys are working for or what dollar value your projects are worth but here in the triangle area of nc you cant get a deposit for work thats not in progress unless your project is front end loaded with special equipment ie generators and so forth. all we have ever done is commercial work ranging from $10,000 to $250,000 and part of doing business is being able to swing jobs through the first progress payment. I understand if youre like a one or two man shop but i have been down to myself and 1 other and still never even considered asking for a deposit. its not as though we are some cash cow but that is why you set up job accounts and so forth with your suppliers to help keep yourself protected in case you dont get paid. the only thing you are out is your labor and other direct cost that can be mitagated through other means. plus our supply houses run the best credit and verification for any owner or gc im doing business with

 

[satcom]

i dont know what kind of gc's you guys are working for or what dollar value your projects are worth but here in the triangle area of nc you cant get a deposit for work thats not in progress unless your project is front end loaded with special equipment ie generators and so forth. all we have ever done is commercial work ranging from $10,000 to $250,000 and part of doing business is being able to swing jobs through the first progress payment. I understand if youre like a one or two man shop but i have been down to myself and 1 other and still never even considered asking for a deposit. its not as though we are some cash cow but that is why you set up job accounts and so forth with your suppliers to help keep yourself protected in case you dont get paid. the only thing you are out is your labor and other direct cost that can be mitagated through other means. plus our supply houses run the best credit and verification for any owner or gc im doing business with

that is why you set up job accounts and so forth with your suppliers to help keep yourself protected in case you dont get paid.

So when the GC goes belly up, your supplier takes al the risk?

"the only thing you are out is your labor and other direct cost that can be mitagated through other means"

So if you loose $70K from GC non payment on your labor, what are these other means that recover this money?

 

[bjp_ne_elec]

Satcom - I don't follow how you are protected from paying the suppliers. Is this account at the supplier being billed to the GC? I don't see how else the EC wouldn't be liable, assuming it's his (the EC) account the material is being billed to. I buy material for specific jobs by using a PO number for each particular job, but I'm not really following what you are getting at.

 

[satcom]

Satcom - I don't follow how you are protected from paying the suppliers. Is this account at the supplier being billed to the GC? I don't see how else the EC wouldn't be liable, assuming it's his (the EC) account the material is being billed to. I buy material for specific jobs by using a PO number for each particular job, but I'm not really following what you are getting at.

Me neither, that was my question, how is the EC not liable for the default should one occur.
Protected from paying the suppliers, that was Tyha's position not mine.

We just went thru a housing bust here in Jersey, it left many contractors taking big hits, and putting them, and some of their suppliers out of business. A 3rd generation GC with a good track record, was telling me he can't find any of the trades, that will work without an upfront payment now, I guess it takes a reality check, to understand the difference of banking a job and a contracting one.

There are plenty of contractors out there that do not take the business approach, they let others determine the terms, and go along with it, usually there reason is if I don't I will not get the job, that is not a job, that is banking a job, something the GC, or Owner should be doing.

 

[tyha]

this is the way it is here! once I am awarded a project I go straight to my suppliers and set up accounts. if the account cant be set up then the contract doesn't get signed. I deal with about the same 12 or so gc's that I have been doing business with for years so there is never a problem. I dont go out to any contractor that I dont know of and i dont wire houses. Maybe thats the difference between us. Maybe you guys should do your own research on the gc's your pricing work for. And as far going 70K in the hole on labor the first month and you dont have some sort of idea that the gc is not making it and you have no other protection then I dont know you would kept your business afloat that long making those type of decisions.

 

[LWFLASH]

Set your own terms

Set your own terms

Over the years I have found that you need to set your own payment terms and agreements. It is your business and you know what your cash flow has to have to survive and grow with profit. Only you can determine whether you should take on the project or not. I always have material draws set up with my mark up plus 10% for the retained funds they hold. If the project is for a long period of time, I put in retained funds release dates or time span's in which I will allow the G.C. or whomever to hold my funds. I have had a few laugh and go about hiring someone else, no big deal, I can not have my company stuggling to meet payroll or supply bills. If they are a reputable contractor they will meet you half way. Once you have done one project for them and if you run your company to always provide the best service and installations, they will not even question it the next time. If the project is for 1 1/2 to 2 Years I put an interest rate on the retain funds, after all that is my money earned and it needs to be working for my company, not the G.C. or the Bank.

 

[bradleyelectric]

I set up job accounts for each commercial job with Rexel, my supplier of choice. All I have to do to get the account set up is tell my sales guy that I need to set up a job account for "Catholic Center 3rd floor" They will already have knowledge of the job normally due to the fact I got quotes from him on the fixture package and gear. To get him to quote those I fax him a copy of the fixture schedule with counts circled, and a copy of the panel schedules. He needs the panel schedules due to the fact they build the panels with the breakers installed and it is cheaper to buy the panels with the breakers installed than to buy the panels and the breakers separate. He will give me the quote about an hour before I tell him I need to bid the job. Sometimes I just need to set up the job account for a job that isn't that large or I'm just using him for basic materials and he doesn't know the job already. I just call him and tell him I need to set up a job account for "Ryder Truck" or whatever. He will send me a sheet, or I'll fill out the last 1 I copied and send it in and they enter it into the system. It will be my acct.# with a suffix. It will have the GC's info., the Owners info. and expected amounts for material. They will do a background check to make sure they believe I will get paid on the job. If I do not get paid, they will wave surcharges and lien the building. When that does not work, they will tell me I am ultimately responsible for the account. It does help to keep the jobs out of the general account so the fixture package doesn't blow the credit line of the general account all out of whack, and I can get surcharges waved on the job accounts when I run into a slow check on a job. I hold paying invoices for materials on jobs for the amount I'm owed so the GC gets a call from someone else’s (Rexel's) lawyer with no charge to me, and I have my labor paid. There is usually no problem and it doesn't usually get to that point, but it has. It also helps that I am in contact with both my salesman, and credit person regularly and they both find me pleasant and I don't act as if I'm entitled to something. I bought my sales guy a crab cake yesterday and sat in his office while he put together a cut sheet on a panel I needed. I always try to front load my invoices a little. I expect net 30, and they hear from me pretty regular when it doesn't happen. The farther they get from that, the more my invoices get front loaded. To far, and I don't work for them on the next job. All my proposals have the disclaimer "contingent on an agreeable schedule and contract" If I'm not getting paid on the last 1, I'm not agreeing to the schedule on this 1!!

 

[A/A Fuel GTX]

I agree with Satcom. I have a good enough repetation that I always get one half up front on all jobs and one third at the rough or as I need it and the last one third at the end of the job. If I don't get that I will sit at home, but I always do and I stay busy all year long usually three or four weeks behind. When you get my age Its good that people trust you and your work. Semper Fi

Man, you must have a good reputation, that's 10% above your bid

 

[tyha]

I never said I wasn't ultimately held accountable for the charges, but my multi-million dollar vendors have many more resources that can be utilized in order to collect past accounts from the non paying gc or the bankrupt owner. Also, as far as stating your own terms and getting a "deposit" before you even step foot on the job. That doesn't fly here. Contrary to what may be going on where your at the owner is not just sitting around with millions of dollars in cash in a bank somewhere. Most of the projects we do are financed by some other means. That means isnt going to release any money until they see progress. The owner doesnt get, the gc doesnt get it and the subs dont until progress is made. Now if its different where you guys are than I guess thats great but if you ever come here and price the kind of work we do and then ask for a deposit when you sign the contract , good luck because you wont be in business long.

 

[petersonra]

I think a lot depends on how hungry the other ECs are. I find it ironic that small contractors obsess so much over being paid in 60 days. 60 days of interest these days is maybe 1% of the job. If you can't finance that, you are not really financially viable in the first place, especially since a lot of your cost is in materials and that tends to be carried by the supply house, at least for part of that time.

 

[satcom]

I think a lot depends on how hungry the other ECs are. I find it ironic that small contractors obsess so much over being paid in 60 days. 60 days of interest these days is maybe 1% of the job. If you can't finance that, you are not really financially viable in the first place, especially since a lot of your cost is in materials and that tends to be carried by the supply house, at least for part of that time.

"I find it ironic" Might that be because, your not in the contracting business.

This is an observation of business postings in general: I find it ironic, how many comment on business practices, that have little, or no experience operating a contracting business, it makes it difficult for anyone trying to get the right information on business practices.

 

[celtic]

Contrary to what may be going on where your at the owner is not just sitting around with millions of dollars in cash in a bank somewhere.

Does that mean ECs are sitting on millions of dollars???

If you can't finance that, you are not really financially viable in the first place ...

WHY should I finance ANYTHING on a job?

 

[growler]

I think a lot depends on how hungry the other ECs are. I find it ironic that small contractors obsess so much over being paid in 60 days. 60 days of interest these days is maybe 1% of the job

Bob when the company that you work for receives a Notice of Bankruptcy from one of your customers which amount would you prefer to be outstanding in the accounts.

A... $0
B... $10 K
C... $100K
D... Enough to make sure you are out of a job ( it's happened before ).

It's only common sence to want to be paid as soon as possible. The longer you go without payment the more risk that's involved.