A contractor recently did work for me at my home. He did not get a deposit before doing the job – and it was a big job requiring lots of materials. When he finished, he didn’t send me a bill for about ten days.
He should have asked for a 30% deposit – I would have given it to him. He should have come to the job with a bill printed out already, and when the job was done, presented me with it and asked for payment – the day he finished. This is how we do it at my company. Then the accounting department doesn’t even have to send a bill and chase it down.
Getting paid faster and speeding up your cash flow is good business. What do you do?
I was like the contractor your talking about. Wearing all the hats and getting nowhere fast. (Except burnt out and mad all the time). These types of contractors need SOE…hands down! It’s not easy, but it’s the answer
Hey Larry! Thanks for the shoutout!
Preventive maintenance agreements are paid in advance for 1 to 3 years.
Projects
50% down 50% the day we finish install
Anything over 50k 33% deposit 33% when we start 33% when completed.
It took me a while, but I stopped being the person like your contractor. Especially in a one person business, cash flow is the key to sanity.
For one reason or another, I don’t collect a deposit from 2-3 clients per month. About two-thirds of these reduce the jobs scope or postpone/cancel at the last second. A deposit just seems to increase the odds of having a considerate clients. (we collect 40%-50% upfront and nobody has ever baulked)
Hi Larry. I hear what you are saying but, I tend to look at it differently. I like to work on the trust issue. If I trust the Customer to pay when we have done a great job then, I think that the Customer will in turn trust us for future jobs and for referrals. I do not want my Company to be seen as “all about getting the money”. In fact, we are about creating the best possible experience for the Customer.
To cover our risk aspect I will ask new Customer for a deposit. I will even go to a 50% with Order and 50% before delivery. We have obtained significant business simply as we have not forced this “pay the money now” approach.
I think 10 days is too long for the Invoice. We work on 2-3 days after the delivery. WE like to phone the Customer on day 1 after the delivery to check that all is “happy” and, “the Invoice will follow in the next day or two.”
In 15 years, we have had one Customer rip us off.
Cheers.
We finished a job last week and after going over the finished project with the owner and making sure they were happy, the project manager asked for the final payment and the owner said “I’ll just stop down to the office and pay” as he proceed to walk in to the house, thanking him for a great job. The pm was unsure what to do and it seems like we are such a slave to positive reviews that he didn’t want to chase him into the house and demand payment. That was last Tuesday and the owner hasn’t been in to pay yet. We did get a 30% deposit on the $17k two day job. We have left several messages, with no response from the owner.
We collect 30% (50% if the job is under $50k) as a deposit when we sign our construction agreement with our clients. We base our progress payment schedule on the duration of the project and shoot for 2 payments a month with a substantial completion payment when the job is 95% complete (determined by a certain phase being complete which is based on the type of project it is). We hold back 5% for the final payment which we collect once the final inspection is done and the client is occupying the space. We typically don’t get any push back about our billing system from our clients. We explain that we are not a financing company so we need their money to finance their project. I have done something wrong in our sales process if we get to this stage and the client doesn’t trust our payment system. It’s then my job to find out where this has broken down and why and either fix it or kill the deal because there needs to be trust both ways. This system works well for us and helps cash flow which allows us to run the buisness.
We do exactly what you do, get 30% upfront and have balance due invoice with the installer foreman for payment on the last day of the job. Makes life easier for everyone!!
I met with a landscape contractor last November for some new bushes in front of the house. He gave me a quote for $530, labor and bushes. He did the work seven months later in mid-June. He mailed me an invoice six weeks later in late July for a total of $850. No explanation of the higher amount and when I called him and questioned the invoice in a voicemail, he called me back five days later and chewed me out. I told him I would send him a check for $600 to keep the peace and he said “whatever I am taking a bath on this job.” So his bad business practices are somehow my fault?