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Old 03-09-2005, 01:06 AM
Seedling
 
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1/3 deposit?

Guys what kind of deposit do you get on jobs?I swear I vary it from job to job depending on the owners willingness to pay. I find that since I can't charge top dollar all the time (only third year need to keep busy) I find that 33% isn't enough since it won't cover materials. Do any of you ask for all materials to be covered in the deposit?
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Old 03-09-2005, 01:42 AM
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<edit: I moved this over to the Money Matters forum>

Big Vic,

How do you schedule your client payments? In other words, when do you collect the other 2/3?

Over the years I've tightened up my receivables pretty well. Not as tight as Bill Schwab, but tighter than many. We get 20% at the time of signing, 50% the day we start, and 30% invoiced at completion, due net 15.

Commercial work you kinda have to play ball with them, but residential we stick to our contract.
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Old 03-09-2005, 02:17 AM
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For jobs less than $5,000 I ask for 50% at signing. (For the most part).

Other than that, 1/3 at signing, 1/3 “in the middle” or when materials and labor justify me to ask the owner for another deposit (with their knowledge of this beforehand) and the final 1/3 due at completion with a invoice.

Here’s a good paragraph in my contract that may help out in getting money owed to you when things beyond your control happen.

“Upon completion of work, but excluding work uncompleted but beyond control of landscape contractor (plant availability, building contractor delays, weather, etc.), we will require total amount due less a percent for the work yet to be completed.”
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Old 03-09-2005, 03:23 AM
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I try to get 50/50 but sometimes i get 33/66. Problems arise when we are busy with a few large jobs since we are so small cash flow can be affected if we have a lot of $laying out there. Does anyone have a sample contract I could see, I usually have them sign an estimate with a few terms but NJ is gonna start enforcing contracts on all jobs over $500.00.
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Old 03-09-2005, 07:19 AM
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I require 30% upon signing the contract, 30% when we break ground, and the remaining 40% upon completion. So, we're pretty much getting 60% up front to cover materials, rentals, etc...
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Old 03-09-2005, 09:20 AM
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Check in the Legaleze forum, here: http://www.groundtradesxchange.com/f...=2021#post2021

You should find some of what you're looking for there.
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Old 03-09-2005, 09:54 AM
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The bigger jobs would be 30% upon signing and the other 70% percent upon completion,sometimes. I try to get 50/50, but usually works only on the smaller jobs.

Bigviclbi, 33% should be enough to cover material, no more than 40%. Not expenses, but material. If not, I would crunch the numbers to see what it takes to reach that goal.
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Old 03-09-2005, 10:10 AM
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greenman - you might want to consider changing your receivables strategy - 70% is a lot of money to leave out there, hoping you don't run into any problems collecting. 2 or 3 slow payers in a row and all of a sudden you can't meet payroll.

It can all happen really quickly, and happen even though you're doing lots of business. In fact, that seems to be the time it happens most often.

The less you leave out there for collection at the end, the better off you're going to be. And for me, that meant that I slept through the night more often.
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Old 03-09-2005, 11:07 AM
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No matter what size job, we cannot by law ask any more than 10%, or $1,000.00, whichever is the lesser amount. Now can we bill for anything moe than work competed, supplies on site, or both. Said that, we bill every 3 days, simply because we can. It trains people to keep the checkbook out, and any issues that typically are brought up on the final walk through are address before someone owes us large sums of money. Ever get to the final pay period, you go to collect and the owner tells you they will pay as soon as you do something they don't approve of?

We had a guy hold $5,000.00 because a half pallet of sod died that he did not water. So for $100.00 worth of sod and a few hours labor, he holds $5K of our money? I don't think so. So, we eliminated the problem from happening again by making smaller payments more frequently. We allow a 5% retention for final walk through.

I use two rules in billing and recievables.

Rule number one. Never let someone YOU work for tell you how they intend to pay you. Rule number 2, never give someone the opportunity to use your money as a tool to argue and bicker over a minor issue. As a contractor, we will do anything our clients want within the scope of work. You as the contractor set the terms on how you will be paid.
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Old 03-09-2005, 11:59 AM
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Every three ays wouldn't work but I think I might try 30/30/40. Th eproblem is there are a lot of vacation homes and we don't see customers taht often. Thanks for all the input and hopefully I will have lots of jobs to try these new tactics on.
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Old 03-09-2005, 12:31 PM
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Interesting responses.....As Bill and others like him are saying. With the exception of CA. Law of 10% deposit. The basic theory here is that you collect the majority $ of the poject by day 1 of the work. A deposit is collected and then on the first day another significant payment is to be made.

This is common practice among contractors. Get the bulk of the money heading into the project leaving as little as possible at the end to be paid. Just about every contractor I know of does this.

Myself. I get 1/3 deposit. I am not so quick as I should be getting the 2/3 payment. Last invoice is given within days, and I am lacking at pursuing the final payment.

What I would like to do and will be more consience of it this year. Getting the 2/3 at the time of rip out or first day. Although I like Bill's approach of leaving just 5% for final payment.

Here is a small crack in that theory, or is there?

Alot of work we do can and is done in 1 days time. So, leaving 5% for final payment may not be feasable.

You know what?.......I can set terms for anyway I want to that would be specific that that project. I can ask for 30% deposit. 50% that day of work. Final 20% upon completion.

Oh. Just thought of another situation. We do most our work with no one home. If that job can be done in a day. No one home. What do I do then?


This is why I prefer not doing a job in 1 day. I prefer doing rip out and site prep work one day......then return a couple days or a week later to install can complete.....That way I can break down the payments, insuring that I get as much paid before we are done.


Things tend to differ when you have a maintenance customer that you been working for 10, 15, 20 or more years. I know them. I know their payment history. I know their character, as well as they know mine. For these people.....I can do a job in 1 day. I do it, that is after all most efficient. Most of the work I get from this catagory of customer I can get a call Wednesday....."Do something with the front, make it nice". I have even been told, don't worry about cost. Just make it nice. Get the call Wednesday. Do the work Saturday. Send the invoice, get paid in full by following Saturday.
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Old 03-09-2005, 12:38 PM
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So.......where was I going with that long post.....

Those of you that are install only.....You do 1 job for the customer and then you have to move onto the next. It is wise that you are are doing like any other contractor out there. Getting the bulk of your money prior to completion.

Those of us that do maintenance and has a realtively new customer that needs a new planting or some other big project. Or a one time job. We must do the same....This brings consistency among contractors..

Now for those of us with maintenance customers of reasonable length of time....We can go by customer history and character. Do we know them well enough, that being paid will not be an issue?

If you have any doubts what so ever. Then approach the project as a one time job. Set up and make it known the payment schedule that you want to be paid. Long time maintenance customers won't be offended. This is after all how all contractors opperate.
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Old 03-14-2005, 08:27 PM
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I would recommend feeling out all of your customers but sticking with a bottom line that will cover all of your materials at the very least. I start at 50% down no matter how large or small the job and will touch nothing with a dollar less. Lately, I shoot for 2/3's down as I can at least have a decent profit even if payment takes a while. Then again, I am very cautious. I take that 50% and pay for all materials outright (at a contractor based price) to avoid as much monthly bill paying as possible. Remember, just because you don't have to pay a bill for a month doesn't make it any smaller. In fact, if your customer is slow paying that 1/3 down can potentially lead to a service charge you may need to pay on your monthly accounts if a given month is slow. Get the money up front, take care of all materials and wait only for your profit pay at the end.
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Old 03-14-2005, 10:46 PM
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Someone asked about collecting the balance when the crew finishes and the client isn't home. A large company in our area that has over 50 crews doing mostly residential installs daily has an interesting policy regarding payment of the balance. When the job is being scheduled, the customer is told that someone must be home ready to pay when the crew finishes. They are told how many days the job will take and if the client can't agree to be there, they rescedule the job for when the homeowner can be there. They don't mail out any invoices.
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Old 03-15-2005, 01:29 AM
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I get 1/2 down, 1/2 at completion and have never had trouble getting it because I am confident in my bid and in my work and the client senses that. Also I am very clear with teh client about how a job will be paid for. Nice but firm.

As far as the client being home when the work is done- I have no trouble driving across town to pickup a large check in the evening at the customers convenience.

Will also say that I really like Bill Schwabs method because I find myself getting nervous with 10k hanging out there waiting for the job to finish, hoping the customer really does have the cash and will be happy. But so far so good.

I like P-Trains contract clause about final payment and with-holding a percent for work uncompleted due to circumstance beyond my control. and I think I will add that to my contracts.

We either learn to deal with the financial aspects of this business or learn to say "would you like fries with that?"
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