Payment Schedule On Commercial Job

[tyha]

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



WHY should I finance ANYTHING on a job?

did you even read the rest of my post or do you just arbitrarily find parts that you can question. The plain and simple fact is this: what you do wherever you are at is great and i hope it works out for you, I sincerely do. But here where I am and the business that I run and have run for many successful years does it my way. And every other successful electrical contractor in the area that I know and that does the type of work that we do follows in line with what I have previosly posted.

 

[celtic]

did you even read the rest of my post or do you just arbitrarily find parts that you can question. The plain and simple fact is this: what you do wherever you are at is great and i hope it works out for you, I sincerely do. But here where I am and the business that I run and have run for many successful years does it my way. And every other successful electrical contractor in the area that I know and that does the type of work that we do follows in line with what I have previosly posted.

Let me re-phrase my question since you seemed to have missed it:
Does that mean EC's, where you are, are sitting on millions of dollars???

 

[tyha]

No. do they where you are. because apparently you guys have the choice of getting the money before you do anything and walking away. That must be great. You can really rack up the money there. basically take all the money up front and leave. There must be millionaire ec's everywhere.

 

[celtic]

It sure beats having the GC pack-up and leave... taking all the money with him.

 

[iwire]

WHY should I finance ANYTHING on a job?

Because it is a normal part of business in many instances?

Why should the supply house stock the shelfs before you pay them?

I guess much has to do with the work you are going after, I do not think the company I work for gets 'money up front'.

We start working and after a month we can put in a requisition for work that has been done, not for work that is yet to be done.

We may have legal action against a GC over a disagreement on Job X but we still continue working for them on jobs Y and Z.

If you can be successfully and always get money up front great, but I don't think that is representative of much large scale work.

Disclaimer; I have never owned a business so take my post for what it's worth.

 

[tyha]

you see. That is what we do here. 5% of you total bid goes to the electrical ninja strike force. they hunt him down and torture him until he gives up the secret gc pot o gold. Seriously, Iknow where your comming from and if we could get money up front we certainly would. But I have never seen it here and i dont think you would survive if you depended on it.

 

[ptonsparky]

I was always assured by local managers that "Corporate" would pull no punches in helping to collect with a slow/no pay customer. The 17K that was large to me, meant not much more than additional service charges to them. They were no help whatsoever. Felt like I was screwed twice and not kissed once.

 

[satcom]

On commercial work, allot will depend on how the job is financed, on some larger jobs the GC will usually wait for the bank to approve either a construction loan, or a secured note, with payouts going to the GC as the job progresses, in either case, there is no need for a down payment, the money is secured.
The sub contractors, in most cases do not have this same protection, so payment terms, become an important issue, How these terms are structured will depend on the project size, GC's credit report, years in business, experience, and past performance. If the GC fails on a credit check, has limited experience, and or a new business, you may want a down payment, and a scheduled progress payment plan.

It's not so much about getting money up front, as it is checking to see how the project is financed, and agreeing to terms, that will allow you enough cash flow, to continue operating..

 

[petersonra]

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.

You want to be in the game, you have to put something at risk. The GC has a risk in selecting you, especially if you are a small business. What happens if you have a heart attack and die midway in the job and they have given you a big chunk upfront? Or it turns out you took on more than you can fullfill? Or you did a serious underbid? You are not the only one with something to lose.

In most cases, bankruptcy is not a big surprise when it happens. If you look at the project and can't figure out how it will ever be paid for, maybe you are better off not bidding. Do you do any serious looks at the financial risks? A lot of small contractors don't. They do not want to spend the time and money doing the research.

The company I work for has been burned by this more than once. The salesmen (might be you yourself) get blinded by the prospects of a sale and plunge ahead when every indication is screaming don't do this. The cases I was involved in just screamed to me that the customer was in serious trouble, and I made no bones about it to management, but the promises of future business and eventual payment of past due invoices won out and additional credit was extended. In retrospect you wonder how anyone could be so blind when all the signs were there, but it is easy to not want to see them. It is also a lot easier to see them after the fact.

 

[satcom]

Do you do any serious looks at the financial risks? A lot of small contractors don't. They do not want to spend the time and money doing the research.

the promises of future business and eventual payment of past due invoices won out and additional credit was extended. In retrospect you wonder how anyone could be so blind when all the signs were there, but it is easy to not want to see them. It is also a lot easier to see them after the fact.

Good post Bob, In a nut shell that's the bottom line.

 

[growler]

the promises of future business and eventual payment of past due invoices won out and additional credit was extended. In retrospect you wonder how anyone could be so blind when all the signs were there, but it is easy to not want to see them. It is also a lot easier to see them after the fact.

I agree with Satcom. That is a profound statement Bob. Probably should be chiseled into a plaque and wall mounted into every contractor's office.

 

[roger]

Just a question, (maybe a little OT) does anyone else here do AIA structured jobs, meaning bonding, AIA forms, product submittals, bill material when stored or installed, certificate of insurance for stored materials, (if stored off site) retainage held, etc...?

If so, the schedule of values as already mentioned may have to be submitted for approval and this is how you will be paid progressively.

As already stated, the Schedule of values will include a mobilization line item that you can bill up front and you can also bill the bond immediately.

Roger

 

[hardworkingstiff]

my 2-cents

my 2-cents

I try to get money up-front when I have a big dollar material ticket that is non-stocking. In my case, that would be a $30,000+ order for type W cable. I don't try to get all the material costs up front, maybe 50% of the material costs (which if you believe material and labor are 50% of the job each, then about 25% of the job).

The more risks you take, the bigger the pay-off. It is common for GCs to drag out paying the subs. I pay my creditors promptly monthly. I am often financing the electrical work for the GCs . I don't like it, and I get nervous at times. If I don't take these risks, I will make the same amount as a good lead-man and I'm not working to make wages.

It's a balancing act. Right now I'm concerned about money going forward and I'm going to get a little tighter with money control (just as soon as I collect what's owed to me, about 20% of last years gross sales).

 

[bradleyelectric]

Just a question, (maybe a little OT) does anyone else here do AIA structured jobs, meaning bonding, AIA forms, product submittals, bill material when stored or installed, certificate of insurance for stored materials, (if stored off site) retainage held, etc...?

If so, the schedule of values as already mentioned may have to be submitted for approval and this is how you will be paid progressively.

As already stated, the Schedule of values will include a mobilization line item that you can bill up front and you can also bill the bond immediately.

Roger

We do basicaly that, except we are not required to provide AIA forms. We bill by the 20th for work that will be completed by the 30th. Terms are always expected to be net. 30, though our invoices always say net. 15. Kind of a wish. Fixture and gear submittals, Insurance certificates before work begins. Retainage held. On the invoices we submit by the 20th it may list:

40% of walls rough wiring.............$17,400.
service complete........................$23,200.
--------
TOTAL $40,600.

This is done on a company generated and professional looking invoice. I have seem AIA forms. No one has ever questioned me about using my own invoices and own schedule of values. We also do work directly for building and business owners. They have never asked for submittals. They also tend to pay net 7-15 days, though some pay net 30. We also do homeowner service work. Payment is expected at days end for that. We do except credit cards. It costs about $25. a month to except credit cards. I forget the exact way the service charges are set up, but it is something like monthly fee of $10., each transaction is $.85, + 2.17% of each transaction. The minumum monthly fee to the credit card company is $25. If anyone wants these figures exact, let me know, or ask your bank what the fees are for their merchant services accounts.