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#158797 - 09/02/06 04:39 PM When do you ask for a deposit?
renosteinke Offline
Cat Servant
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Registered: 01/22/05
Posts: 5305
Loc: Blue Collar Country

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Business, Office, Estimating, Legal:
#158798 - 09/02/06 05:21 PM Re: When do you ask for a deposit?
ExpressQuote Offline
Member

Registered: 04/27/06
Posts: 83
Loc: BC, Canada
I am currently helping out one of my consulting clients.

They have started a new division, and have yet to figure exactly where their market is. However, they have more requests for estimates than you can shake a stick at.

In the process of trying to sort the business out for them, they have asked me to step in as a commission sales rep. To see first hand what is happening and to help them figure their systems out.

The moment that I am giving the proposal and I get a verbal agreement from the customer to get the project done. I ask for the deposit. Because the product is generally special order, we are requesting a minimum of 25% down. 5 sales in the last 5 days and no problem collecting the deposit immediately.

If you don't have the financial backing to carry the customer indefinitely, you need to make sure you don't finance the project at all. It is the customers project, let them pay. I believe in using terms like 10% on signing (although, many are asking for much more), 40% on materials arrival, 30% on completion of rough-in, 20% on completion. Or, some variation.

Just my thoughts.

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#158799 - 09/02/06 08:31 PM Re: When do you ask for a deposit?
macmikeman Offline
Member

Registered: 07/16/02
Posts: 718
Loc: Honolulu, Hawaii
Although I am not burdened by this requirement, some states do not allow large deposits on home owner contracts. Ask the California guys about it.

[This message has been edited by macmikeman (edited 09-03-2006).]

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#158800 - 09/06/06 07:11 AM Re: When do you ask for a deposit?
PE&Master Offline
Member

Registered: 02/25/06
Posts: 138
Loc: TX, USA
I generally get 1/3 to 1/2 down before I start work.

The exception to this is when we do a larger commercial project. The GC has his own ideas on when/if to pay you. You can 'bank' on him being late or paying just before you apply for the next draw on the project. The key to these projects is to READ the contract and markout anything you dont' like. The contracts are typically a AIA standardized form that is written solely for the benefit of the GC. Phrases like 'this is a no lien project' and 'sub-contractor pays all legal fees' need a big fat line drawn through them.

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#158801 - 09/10/06 09:24 AM Re: When do you ask for a deposit?
Tiger Offline
Member

Registered: 05/04/05
Posts: 714
Loc: Crystal Lake, IL USA
I require a deposit on larger contracts and attempt to make the payments according to my need for cash on their project. For a house or new commercial projects I like an advance that covers the service, a mid-payment that covers everything to rough & a final payment that covers trim. With emt jobs the payments are front-loaded to the advance and rough. As a percentage of contract, trim is not very much.

Dave

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