Tips on dealing with GC's

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bjp_ne_elec

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I'm still very wet behind the ears when it comes to business - and I'm wondering how you guys bill your GC's over the course of a project - and then what terms you put on your invoices.

I turned in an invoice, and it's been three weeks now, and no check yet. I called, quizzed the GC, and he implied a check would be "in the mail". Well it's been almost a week, and still no check. I didn't put any terms on it - so is there an implied "net 30 days". I know in the future, I'll probably want to put a "net 30 days" - and then tie in some interest beyond the 30 - but how bad did I mess up by not putting any conditions?

Like to hear how some of you handle it, and then tips on how I deal with a GC who's a little slow on the draw.

Thanks
 
GC's for small jobs Day rate, they pay end of day, or no show next day, until payment.

Larger job, deposit, then progress payments, they miss a progress payment, and, no return until the payment is made.

All GC work, must have a signed contract.
 
Tips on dealing with GC's

I agree with Satcom. I get one half money up front and one third at rough and the last one third at end of job on bigger jobs and money after the job is complete on one day jobs. I don't bill anyone. You have to have a good reputation to do that. Good Luck and Semper Fi. Buddy
 
This is from my experience only and does not imply an industry standard. Most CG's are looking for whoever they can manipulate with the lowest possible prices and with the best terms. All that has to happen is for some well capitalized electrical contractor to come along and give the best terms and suddenly he sets the standard for what this GC will accept. I once had a $35K job where the GC gave me $17K after the rough because that's what "so and so" does. Having said that it doesn't matter whether your invoice indicates net 30, 2-10-net 30 or due on receipt, the GC is going to pay you whenever he wants and take as long as he can get away with. Brady and Satcom gave good advice but if you need the $$ that the GC is holding back you'd better have more jobs in the waiting area to keep you going.

The GC gets "up front" money and you should also. But, like I mentioned, if a previous electrical contractor bills at the end of the rough then that's what the GC expects to be your terms as well. You'll have to "pay for your education" on this but IMHO if you're not well capitalized and if you can conduct your business without having to work for a GC you'll be much better off.

Also, I was warned about this when I first started out in business - DO NOT hook up with a track builder. They start out as ABC builders today, always have you in arrears for 3, 4 or 5 houses and when you've finished the last house they shut down and open up the next day as XYZ Builders and you can't get your money.

Sorry. Didn't mean to be so negative but I hope my experience helps you in dealing with GC's in general.
 
I bill almost everyone. Most of the work we do, no one is around to pay at the end of the job and most likely weren't there at the start. Usually everyone pays by the 10th of the following month after the bill has been submitted. Some by return mail. Some never. Terms the previous posts gave would have taken care of the last group.

For GCs 30-60 days would be normal. If you need money sooner make sure you have spelled the terms out before the job starts and them stick to them. No pay no show, then don't work for them again. Easy to say not always to do.

One other way is find a banker that likes to loan money just because you are a nice guy and don't mind paying interest on someone elses debts. Keep at it, most of the first 20 years I was either dead broke or swimming in cash.
 
I would also suggest that you become familiar with the laws in your state regarding your rights to file a mechanics lien. In Illinois, you need to file within a certain time frame. You should be aware of any time requirements in order to protect your money. Your right to file a lien usually expires after so many days. You can usually file a lien yourself.

I'm not suggesting that you file a lien against your GC for being 4 weeks out. As others have posted, 30 - 60 days is pretty standard. I'm just suggesting that you need to be aware of what your options are. You work hard for your money. Unfortunately, there are unscrupulous contractors out there that don't care about you. You're the only one that is going to look out for your interests.
 
Illinois Contractor - a mechanics lien is something that popped in to my mind, but like you say, I wouldn't want to do it, only as a last resort.

Without involving an attorney, I'm wondering who in the state I could call to find out what the rules are. Anyone have an idea on who to call - again, short of an attorney - as the "meter would be running" as soon as he picked up the phone.

THanks
 
Here is a sample of my payment schedule (BOLD to draw your attention to certain phrases):
Deposit:
CEC requires a deposit before work may commence.
This deposit will ensure that CEC will have proper working capital to purchase materials in a timely manner. The deposit will be based upon the cost of the job, which is approximately 50% of total bid amount.

Payment Schedule:
Payments shall be as follows:

Deposit amount based upon the aforementioned criteria is:
Four thousand, seven hundred and eighty-one dollars and thirty-seven cents ($4,781.37)

Progress payment of:
Two thousand, three-hundred and ninety dollars and sixty-nine cents $2,390.69)
- Due prior to rough inspection being called for

Trim-out payment of
One thousand, one hundred and ninety-five dollars and thirty-four cents ($1,195.34)
- Due prior to any electrical finish/trim work

Final payment of:
Five hundred and ninety-seven dollars and sixty-seven cents ($597.67)
- Due upon completion AND passing of Final Inspection by the City of **********.

Final Inspection does not include Moves, Adds, Changes or Extras, which will be additional and will be billed as per invoice.

Payments not received by due date shall be considered past due. Past due accounts will be charged an interest charge at the rate of 1.5% per month until the balance is paid in full.

No release of lien shall be signed unless all payments are paid in full.
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The GC not paying me only holds his job up....payments are dependant on me being able to do the work....all inspections are dependant on the GC paying me.

It's all well and good to assume you will be paid....but sometimes GCs/HOs have other ideas. I have my own ideas:
OWNER/CONTRACTOR DEFAULTS:
Owner/contractor will be in default if:
(1) Any payment called for under this proposal and all authorized change orders become past due.
(2) Any written agreement made by the owner/contractor is not promptly performed.
(3) Any conditions warranted by the owner/contractor prove to be untrue.
(4) Failure of owner/contractor to comply with any of the conditions of this proposal.

CEC?s remedies in the event of owner/contractor defaults, CEC may do any or all of the following:
(1) Suspend the work and remove its material/equipment from the premises.
(2) Remove any CEC-supplied material/equipment, whether or not it has been installed and whether or not is has been placed in operation. In this regard, owner/contractor agrees that CEC may enter upon owner/contractor property for the purpose of repossessing such equipment without liability to owner/contractor for trespass or any other reason.
(3) Retain all monies paid hereunder, regardless of the stage of completion of the work and bring any appropriate action in court to enforce its rights. The owner/contractor agrees to pay all costs and expenses, attorney's fees, court costs, collection fees (including fees incurred in connection with appeals) incurred by CEC in enforcing its rights under this proposal.
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The default section is harsh....it's MY money at this point.


******NOTE*******
​
Some of these terms/conditions/language may be SPECIFC to NJ.
Your mileage may vary
Feel free to copy, alter, etc this any way you chose.
​
 
celtic said:
The GC not paying me only holds his job up....payments are dependant on me being able to do the work....all inspections are dependant on the GC paying me.
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What do you do when you discover that someone else has called in an inspection without you knowing?
 
LarryFine said:
What do you do when you discover that someone else has called in an inspection without you knowing?
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Dermand payment to that point...if they fail to pay, they become in default...and I start ripping out.
 
Thanks for the input celtic. I have just begun to start working with a gc and I will definitely change my wording around and payment schedule.
 
celtic said:
Dermand payment to that point...if they fail to pay, they become in default...and I start ripping out.
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Unfortunately, that's illegal, at least here. We checked.
 
LarryFine said:
Unfortunately, that's illegal, at least here. We checked.
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First...the disclaimer:
celtic said:
******NOTE*******
​
Some of these terms/conditions/language may be SPECIFC to NJ.
Your mileage may vary

​
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Now the meat....

I thought that was the case here in NJ also.
I even had a man in a blue uniform tell me "...please don't make me arrest you...just walk away...." ...but that was in 1992 (? give or take).

Fast foward to 2002, when I had a wonderful experience with an upright pillar of the community who was installing fencing on my property.

Long story short....the fence guy was NOT arrested, removed or even cited from trespassing when we had a difference of opinion (I concluded the job was not complete, he insisted it was)....the men in blue were here, but did not offer any assitance whatsoever. The fence guy had those exact words in "Remedies #2".
We did go to court...where the "mediator" (practically mandatory before you ever see a judge here in NJ) decided that the fence guy could sue ME for "malicious prosecution" (look it up, and keep it in your arsenal). I had the case dismissed "without prejudice".


YOU MUST CHECK YOUR STATE'S LAWS BEFORE USING LANGUAGE
YOU FIND ON THE INTERNET IN YOUR LEGAL DOCUMENTS.
​

Hiring an atty to review your documents is a lot cheaper then being caught your pants down.
 
Most of the time if the GC'S lips are moving he's lying. The contractors I work for we have a good relationship 60% on rough, Bal. at trim out. Bill in by Tuesday check on Friday. But it was MY terms when I started with them no backing down and it has worked for several years now.
 
Most of our work is small to medium size projects. Schools, libraries, hospitals, etc. Mostly tax funded projects. In the specifications book it usually states that the contractors are to make a " Schedule of Values" based on their scope of work. You can request payment on either work performed or materials stored on site.

These jobs require a payment and performance bond. If we have trouble with a payment then we notify the bonding agent and things start to happen. Most of the GCs we work for are large reputable contractors. Their word and contracts are true in all aspects. These contractors do several hundred million dollars in projects in a year. They do not have time to play games with sub contractors money. About the only way we can add a little in our pockets before the start of the job is with mobilization.

Now almost all of these GCs will pay you when they are paid, within 3 to 5 days usually. We just finished a small project where the owner did not have financing set up. He owed the GC over 150k for 45 days. The GC shut down the project until a loan was set up, then the GC paid us the next day after he was paid, then we proceeded to finish.

If we were to not recieve payment, we would have to start a removal procedures, but even then you can only remove what is not installed or what will not deface the property. If you install a panel in a wall, then remove it and leave a hole, you are liable to repair the hole left in the wall. It sucks I know, I liked what Celtic said a while back, " We need better lobbyists". The GC industry has the laws written so they have the upper hand either when they are cheating you or if they are getting cheated.

It is most of the time private work when you can lose money from trusting a GC. In government work the chance is alot less.
 
ptonsparky said:
Illegal here to. Once its in, it is no longer yours. Materials you have sitting on the job may not be yours either.
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Indeed. When I dwell on what happened to me when a certain national department store that rhymes with "Say-Fart" filed for bankruptcy, I start to feel physically ill. Had security guards and the whole nine yards. Couldn't even steal back my material that was sitting around in boxes, on pallets, and on reels during the dark of the night. I tried. From then on, I finance nobody's project.
 
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mdshunk said:
Indeed. When I dwell on what happened to me when a certain national department store that rhymes with "Say-Fart" filed for bankruptcy, I start to feel physically ill. Had security guards and the whole nine yards. Couldn't even steal back my material that was sitting around in boxes, on pallets, and on reels during the dark of the night. I tried. From then on, I finance nobody's project.
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Well said. now will anyone take the advice, or continue to think all contractors finance private work.
 
mdshunk said:
I.... national department store that rhymes with "Say-Fart" filed for bankruptcy....
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Completely OFF TOPIC here....

Can someone explain to me (in small words) just how "Say-Fart" can file bankruptcy ....then go and buy a billion year old company; that sells a billion tools and appliances; and guarantees the tools for another billion years?
 
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