Trade references?

[curt swartz]

I don't believe in general the cc companies allow a cc to be charged before the merchandise ships.

And why would there be any question of a lien on the part of the supply house if the material was paid for on a cc.

There are a lot of small, medium, and large size businesses that buy a lot of stuff on cc these days.

Supply houses always charge in advance for special order items. If you have an open account with them they charge it to the account but typically don't require you to pay until you receive the merchandise.

Online businesses may not charge for items before they ship but all brick & mortar businesses that I know of charge in advance for items ordered.

Sure, many businesses use credit cards but they are not putting large orders on the cards. Most cards don't have that high of a limit and the supply house is not going to eat that much in card fees.

 

[Coppersmith]

I take credit cards, but I add the processing fee to the bill.

 

[g3guy]

I don't believe in general the cc companies allow a cc to be charged before the merchandise ships.

The credit card companies want nothing to do with keeping track of shipments. That's entirely up to the seller. Some sellers believe it's a consumer 'feel good' point to hold off charging until shipment but most don't. Some fake it.

I've had my Amex card for 53 years, I charge almost 100% of everything I buy and believe me , I've perused a lot of charges.

 

[hbiss]

Supply houses always charge in advance for special order items. If you have an open account with them they charge it to the account but typically don't require you to pay until you receive the merchandise.

They do that because it is non-returnable. So if you pay with cash you pay when you place the order. However, I see no difference between charging an open account and not requiring you to pay until you receive the merchandise or having a CC on file and charging that when you receive the order. Actually if you refuse the merchandise they have a better chance of getting their money from the credit card than chasing you for it.

-Hal

 

[curt swartz]

They do that because it is non-returnable. So if you pay with cash you pay when you place the order. However, I see no difference between charging an open account and not requiring you to pay until you receive the merchandise or having a CC on file and charging that when you receive the order. Actually if you refuse the merchandise they have a better chance of getting their money from the credit card than chasing you for it.

-Hal

CC provides zero security to vendor if charge to card is not made at time of order.

Customer gets $30K quote for lighting order. Customer approves order and vendor asks for CC number but doesn't charge CC. Order arrives and vendor tries to charge CC but transaction gets declined. Card could be over limit, account closed, etc. If customer doesn't make good with alternate payment method vendor is now stuck with order.

If customer has an open account with vendor they will have credit history and will decide how much they trust the customer to pay bill (AKA Credit Limit).

Most supply houses require Job accounts for large orders. They get job info (owners, address, lender, etc.) and file preliminary notice. If contractor doesn't pay supply house they go after property owners for payment. If property owners don't pay they put lien on property.

 

[zbang]

Remember that a lot of this depends on what's customary in your area and what the state laws are.

 

[hbiss]

If customer has an open account with vendor they will have credit history and will decide how much they trust the customer to pay bill (AKA Credit Limit).

I agree with what you are saying. But if I were a vendor I wouldn't place a special order for anybody I didn't have history with without 100% up front. But if you have a customer who has an open account or CC terms and has a history of no problems I don't see what's the difference. You set a credit limit the same either way also.

Large job orders should be handled differently than your guys coming in for supplies.

-Hal

 

[Jerramundi]

I thought that when I started my business that supply houses would sell me materials cheaper than I could get them at Home Depot. This turned out to be mostly false.

Slowly coming to the same realization. I get conduit $0.50/ft cheaper at HD. Not a huge fan of shopping there. I would rather support the local small business personally, but sometimes it's hard to pass up.

I've got a lot of customers that want to buy their own materials off Amazon now too and cut out my materials mark-up. It's really annoying. I get trying to save money, but when you try to undercut a businesses profit margin that's already low, like mine, that's kinda lame.

 

[curt swartz]

I agree with what you are saying. But if I were a vendor I wouldn't place a special order for anybody I didn't have history with without 100% up front. But if you have a customer who has an open account or CC terms and has a history of no problems I don't see what's the difference. You set a credit limit the same either way also.

Large job orders should be handled differently than your guys coming in for supplies.

-Hal

For the customer to have history they do have an account. Your basically saying the customer would pay the account with a credit card instead of a check/cash. Then is comes down to if the supply house is willing to accept the financial hit by accepting the credit card vs scanning a check into their bank. Either way they need a credit department or person to handle the accounts and payments.

The other thing to consider is by having an account at supply houses you can get much better pricing. If you are just walking up to the counter making cash sales every time you are paying what ever generic prices have been loaded into the system which are usually not very good prices. When you have an account you can have the supply house load better price matrix's on your account. If you purchase enough of certain line you can also have them set up Special Purchase Agreements with manufactures reducing you prices even more.

 

[curt swartz]

Slowly coming to the same realization. I get conduit $0.50/ft cheaper at HD. Not a huge fan of shopping there. I would rather support the local small business personally, but sometimes it's hard to pass up.

I've got a lot of customers that want to buy their own materials off Amazon now too and cut out my materials mark-up. It's really annoying. I get trying to save money, but when you try to undercut a businesses profit margin that's already low, like mine, that's kinda lame.

Not sure what type of conduit you are pricing but even though HD may be $.50 less look at the price of fittings. HD is really good at marketing. They know people will look at the price of common items so they sell them at little to no markup. They make up for it on the accessories.

Let use 1/2 EMT as an example. HD may be $.50 less for 10' but they are substantially more for fittings. Last I checked 1/2 EMT fitting were 3 times the price of my supply house if buying in 5-packs. Buying the bulk packs saves some but they are still twice the price.

PVC fittings are usually 50% - 100% more than supply house too.

Most contractors that think HD is cheap is because they don't try to set themselves up with supply houses and establish better pricing.

Non electrical related comment.
I spent 2 years building a new house that I finally moved into this past April. I did my own plumbing with some help of a plumber I know during his off hours. I used many hundreds of feet of 1/2 - 1-1/2 Type L copper, 1/2 -2" in black pipe for gas. 1-1/2 through 4" ABS for DWV plus hundreds of fittings for all the above.

I did look at pricing of some of the material at HD but they don't even stock much of what I needed. I decided to go to one of the currently popular wholesale plumbing supply houses and talk to them. Told them I was an EC and building my own house so would like to open an account. They set up the account and set prices that were substantially less than the items I could get from HD.

 

[Another C10]

So I do almost all my material shopping at Home Depot and I love it. I can go online and see all the material available. I can see the inventory level at every store. I can see the exact price I will pay. I can go get it or have it delivered. I live in an area with lots of HD stores, so if I need something while on a job, I'm usually no more than 20 minutes from a store. The only time I go to supply houses is for big wire and a few odd things HD doesn't carry.

well we agree on this ..

As far as the original post, If possible stay away from materials on credit, been there done that, very risky. My motto for the most part, if I cant afford it and a deposit is not provided by client then I simply don't do the job. There is something empowering when the only money you need for funding a job is the clients or what your willing to invest on hand.

 

[Jerramundi]

Not sure what type of conduit you are pricing but even though HD may be $.50 less look at the price of fittings. HD is really good at marketing. They know people will look at the price of common items so they sell them at little to no markup. They make up for it on the accessories.

No need to warn me about the retail game. I wasn't always an EC, but I appreciate the thought. I know all about the dangers of end caps, impulse buys, etc. Where do you all think I got my pissy attitude towards outrageous mark-ups from? Hahaha

I'm that weird guy in the isle of HD with his calculator out, haha.

 

[Fred B]

I'm that weird guy in the isle of HD with his calculator out, haha.

You too?

 

[Gbeu92]

My main thing is I would like to start bidding on larger jobs for different GCs in the area. On most of these jobs, the electrical contractor (me) would be responsible for furnishing all fixtures, wire, etc as you would expect.

I have no problem doing this for house rewires and small commercial jobs, but the cost of the fixtures and materials for the larger commercial projects are out of my budget. In the past I've talked the owners into purchasing the fixtures they liked and I handle wire and materials, but that's when I was hired directly by the property owner.

With the GC's, I don't know that they will be working with me on that one. Considering they have $800 fixtures spec'd out, I don't see being able to finance the whole cost.

Was thinking an account with a supply house would open up the ability to supply everything, some stuff coming out of my budget while others are put on the account.

Kind of attempting to take my company to the next level and start doing more new construction, commercial build outs, etc. I've focused on residential remodels, services upgrades and repairs prior to this with a handful of commercial lighting projects under my belt also. Would like to start growing my brand as much as possible.

Maybe I'm putting my neck out there a little bit, but would rather take a risk and grow my company then remain at the same level because I'm comfortable with it.

 

[Jerramundi]

My main thing is I would like to start bidding on larger jobs for different GCs in the area. On most of these jobs, the electrical contractor (me) would be responsible for furnishing all fixtures, wire, etc as you would expect.

I have no problem doing this for house rewires and small commercial jobs, but the cost of the fixtures and materials for the larger commercial projects are out of my budget. In the past I've talked the owners into purchasing the fixtures they liked and I handle wire and materials, but that's when I was hired directly by the property owner.

With the GC's, I don't know that they will be working with me on that one. Considering they have $800 fixtures spec'd out, I don't see being able to finance the whole cost.

Was thinking an account with a supply house would open up the ability to supply everything, some stuff coming out of my budget while others are put on the account.

Kind of attempting to take my company to the next level and start doing more new construction, commercial build outs, etc. I've focused on residential remodels, services upgrades and repairs prior to this with a handful of commercial lighting projects under my belt also. Would like to start growing my brand as much as possible.

Maybe I'm putting my neck out there a little bit, but would rather take a risk and grow my company then remain at the same level because I'm comfortable with it.

I'd be careful here. I know the temptation all too well to do whatever a GC asks because you want the job, but trust me, it can turn around and bite you in butt where you then end up chasing the GC around for months trying to get paid.

You're not a bank. It's not your responsibility to finance the cost of $800 worth of fixtures... unless you're explicitly selling your services in the form of a payment plan over several months, etc.

You're only responsible for furnishing the fixtures if you're terms/contract says you are. Write your terms and contracts so that they address this issue. I've been developing my own contracts since day #1, adding new clauses and terms as I go and learn. I started with a simple one page document featuring very standard clauses such as "payment due upon completion of work" and "termination rights." Now I've got 3-5 page contracts that I should probably trim down, haha.

You shouldn't be installing fixtures until final trim anyway, so maybe include majority of the cost of fixtures (or even the full cost) as your 2nd to last payment or something like that.

 

[Jerramundi]

Iunno, maybe I'm reaching out of my league here, but I don't think the ability to finance $800 worth of fixtures should be the deciding factor on whether or not your able to take on larger jobs. That should be based on your knowledge, skill, your labor force (if you have one), etc. The idea that you need to be like a bank and finance costs just seems like a conflation between being an EC and a financial institution.

 

[Gbeu92]

I mean $800 an individual fixture lol. They have a few fixtures spec'd out that are priced over $500 (at least from the listing I found).

Total fixture cost is on the ballpark of 7k.

But actually that is a good point, fixtures don't have to on the job for quite some time. With a payment schedule in place, I could receive the estimated cost prior to the lights ever needing ordered.

I always try to do something close to a 30/40/30 split of payments. Get 30% down, 40% after rough in is approved, and 30% after final inspection/punch list is complete.

With that schedule, I should be able to swing the light fixture cost with out even having to take it out of my own budget.

 

[petersonra]

Part of any contracting business is being able to finance the upfront costs. A lot of contractors of all types are under capitalized and so are dependant on getting their vendors to finance the parts while they wait to get paid.

 

[Jerramundi]

But actually that is a good point, fixtures don't have to on the job for quite some time. With a payment schedule in place, I could receive the estimated cost prior to the lights ever needing ordered...

...With that schedule, I should be able to swing the light fixture cost with out even having to take it out of my own budget.

Now you're thinking. Write your contact terms to suite your needs. If they are relying on you to finance super expensive fixtures, I would be wary of that relationship.

I know contractors that ask for 100% of material costs up front in addition to a deposit on labor... up to 60% of the overall job cost upfront or you don't even make the schedule.

 

[Jerramundi]

Part of any contracting business is being able to finance the upfront costs. A lot of contractors of all types are under capitalized and so are dependant on getting their vendors to finance the parts while they wait to get paid.

I disagree. As EC's we are NOT financial institutions. It's our job to install electrical equipment safely and correctly, not to finance jobs (unless of course you are providing some sort of monthly payment plan).