Hi, I am wondering what the rest of the country does in respect to deposits on jobs? I have a proposal that I get signed with each agreement. I always request some deposit to help cover my self if the job goes south or whatever.
I usually try to get at least 50% depending on the size of the job but will go down to 40% on bigger jobs. $20K is as big a job that I will do.
i had a guy wanting to remodel a 100 year old building into a restaurant that had a new 400a service but little else that was usuable. I bid $19,999.00 on the job. NO PLANS OR DRAWINGS.
I told the guy who was trying to act as his own gc that i need at LEAST 40% deposit when he signed the agreement to mobilize..he said he wouldn't pay until two weeks work had been done.
we parted company very quickly..
i have found that any client who doesnt want to commit in the form of a payemnt is better left alone..A PAYMENT SCHEDULE MUST BE LAID OUT! %40 to MOBILIZE then 30% on rough -in and 30% on final and customer satisfaction..PERIOD!
if i am working for gc with a signed contract i will forgo my company policy of NO WORK WITHOUT A DEPOSIT
[This message has been edited by mustangelectric (edited 09-19-2004).]
50% deposit/expenses and 50% upon completion (not necessarily after final inspection). Or sometimes it is 50% dep./exp. and 25% when "substantially" complete, 25% upon completion. If anything fails inspection I would have to go back regardless if I'm paid or not if I want to keep my license (I tell this to clients who question my terms). But this is for work where I DICTATE the terms (like service calls, residential stuff, the RAC's, etc.). Often I cannot dictate the terms but am bound by the GC's terms or sometimes the Restaurant is Corporate owned and I have to let it go through their offices, etc. I usually mark things up higher when I know I'll be waiting 30+ days. It happens all the time and I have yet to be screwed over; I've come close but I don't let them get away with it.
Other commercial work, you are at the mercy of them. They even withhold 10% retainage on every payment. It is not uncommon to be completely finished with a store in a Mall (for example) and still not have received a mobilization check (!) not to mention even temp. lighting, etc. But, you always get paid eventually....atleast I always have.
I suppose when the economy goes bad though, you really need to watch it.
It is standard procedure for us to put a lein on anything over 50K IMMEDIATELY! Because the first with the lein is the first to get paid if anyone goes bankrupt on you.
I did a house last year that was $160,000.00 electrical! No, I'm not kidding! That was a HELLUVA house! I slaped a lein on that puppy the day we signed the contract. This job was broken up into thirds for payment PLUS I got a TON of extra's which were paid as we went (like 100KW emer. Gen., Automatic Transfer Switch, Home networking center, etc.).
I guess it really does vary on what you are doing (the deposit you get).
If your state only allows small deposits, you can still write a contract to include progress payments.
Such as: 10% deposit, another 25% after phase 1, another 25% after something else, etc. so you can keep the payments even or better yet, ahead of the work so if something goes bad, you don't loose your shirt.
I had a residential remodeling/construction company and that's what we always did.
We never get a deposit. We don't work for customers we don't trust. We have never been burned. To me it tells the customer either you can't manage money very well or you don't trust them if you have to have a deposit to buy materials. It's one thing if you just want the deposit to protect yourself, but quite another if you Have to have the deposit. Some of our subs are like that, if we didn't provide the material, they couldn't do the work.
You guys that get deposits, do you get it on jobs you know will be finished in 1 day or only on large projects?
My experience is very similar to CJS. For homeowner work or small commercial where I have control of payments I get a deposit. When run through a title company I get a rough payment and a final payment.
The beauty of going through a title company is that payment is guaranteed, the downside is waiting one to six weeks past rough & final. Sometimes I don't get the rough payment until after I've paid for all the materials and the job is almost finished. The bank won't release money until they see materials installed, so that's just the way it is, but the jobs are bigger. On a $30,000 job, if I don't have $10,000 cash available, I'll be in a bind.
ALWAYS GET A DEPOSIT if possible! Just because you haven't been burned only means that you haven't run into the situation that a lot of us see out there. Sure if I know you I will do the job without a deposit but if I do not know you, even if you are GC, I get a MOBILIZATION fee BEFORE the work starts.
If the job is under $500.00 I do not get a deposit. If it is over $500 I get a signed contract and a deposit or I will pass on the job.
I have paid enough lawyers in my day.
Liens and lawyers are not near as good as having at least SOME of your money when it all goes bad..
Those of you folks who have never lost a penny you are an exception NOT the rule.