# Up front money?



## B4T (Feb 10, 2009)

Gamit said:


> Is it wrong to ask for a small deposit for new customers? I just had a customer complain that he didn't know who I am so was uncomfortable giving me a deposit. I told him I didn't know who he was either and if your spending the money anyway...right.


I never ask for money up front.. but I am a minority here..

When they say.. "I don't know you either".. remind the customer you could lose your electrical license over something stupid like not performing the work you were being paid to do..

Asking for a deposit turns some people off right away.. just the way it is.. why I don't ask for one..


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## 480sparky (Sep 20, 2007)

Depends on the amount and what the state laws are there.

5-10% isn't too much to ask for, but you may not be able to legally ask for more.

You could also require the deposit at the end of the first day.

Like all things, it's negotiable. You could also ask how he plans on funding the job (money in savings, loan from credit union, etc.) and ask for proof of such.


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## lovethetrade (Apr 12, 2011)

The risk is on both sides but more for the Electrician in my opinion.

You are licensed, insured, bonded? Have a company trucks with your name on it?


Who's more likely to rip who off?


If your a real business you can provide them with a receipt with a company letter head. I always get upfront money on jobs over a certain amount.

Are you a bank or an electrician?


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## nitro71 (Sep 17, 2009)

I think it's reasonable to expect to get a percentage of the money up front the day you start the job. If they can't/won't front some money when you show up with permit and materials in hand I don't see how you can expect to ever get paid. Some general contractors won't operate like that but if you're working for an established company they are likely to pay you.


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## Gamit (Dec 30, 2009)

lovethetrade said:


> The risk is on both sides but more for the Electrician in my opinion.
> 
> You are licensed, insured, bonded? Have a company trucks with your name on it?
> 
> ...


I agree I told him he would get a receipt and a signed contract.

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## bobelectric (Feb 24, 2007)

That is why you 
need to build up your credit base,so you look reputable to the customer.Only ask for up front money on jobs you can't finance over 30 days.


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## lovethetrade (Apr 12, 2011)

bobelectric said:


> That is why you
> need to build up your credit base,so you look reputable to the customer.Only ask for up front money on jobs you can't finance over 30 days.



Lots of industries and businesses ask for deposits for services so why would a electrician not be reputable asking for a deposit?


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## Gamit (Dec 30, 2009)

lovethetrade said:


> Lots of industries and businesses ask for deposits for services so why would a electrician not be reputable asking for a deposit?


A few years back I had Sears do some work in my home and they required my credit card number to start job and Sears could not be more established. I think it shows a commitment to a contract and also gives us another signed document for legal proceedings if needed. But I do agree it could turn off a consumer but as a consumer myself I do not mind paying a deposit for a service I agree to.


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## robnj772 (Jan 15, 2008)

bobelectric said:


> That is why you
> need to build up your credit base,so you look reputable to the customer.Only ask for up front money on jobs you can't finance over 30 days.


 
Why is that? We are Electrical contractors not banks.

If a customer doesn't want to give me a deposit I don't do the job END OF STORY


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## jwjrw (Jan 14, 2010)

We never ask for money down for small projects. We stock most items anyway so whats the big deal? Our customers write a check after inspection passes. If its a larger project we ask for a material draw when the material is delivered. I mean honestly on a small project how much do you really have in materials? Most cases not that much. The customers that call us want the service we provide and pay us when we are done.


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## kevmanTA (Jul 20, 2010)

50% down on all quotes.
Been doing it for years, some people don't like it, but they get over it.


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## jwjrw (Jan 14, 2010)

Gamit said:


> A few years back I had Sears do some work in my home and they required my credit card number to start job and Sears could not be more established. I think it shows a commitment to a contract and also gives us another signed document for legal proceedings if needed. But I do agree it could turn off a consumer but as a consumer myself I do not mind paying a deposit for a service I agree to.




A credit card authorization is fine. The customer can dispute it. Cash or check is different IMO.


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## 220/221 (Sep 25, 2007)

One of the benefits of being a _little bit_ larger business is that you _appear _more legitimate and rarely get any flak for deposit requirements. 

When I was a one man operation I rarely asked for a deposit because I wanted the people to trust me so I broke the ice by trusting them. I don't remember ever getting screwed.

We generally ask for 50% deposit with balance on completion.


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## Mr Rewire (Jan 15, 2011)

Every job we do we get money up front usually 50%. I use to be one of those that didn't ask for cash up front until I realized my bills needed payed on time and employees wanted a paycheck on friday. You invoice someone and you could easily be looking at 30 days or more before you see any cash. 
Buy getting money up front I never dip into my own funds to finance jobs.After waiting two months to get paid on a two day job I decided to change the way we operated now it a deposit or no work plus once you get the deposit they wont keep looking for someone cheaper which also happened. Nothing like shaking hands on a job friday to then get called Sunday to tell you they went with someone else.


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## Cletis (Aug 20, 2010)

*upfront*

I never ask for money upfront. Except Indians and GC's Never been stiffed


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## Gamit (Dec 30, 2009)

Cletis said:


> I never ask for money upfront. Except Indians and GC's Never been stiffed


That's funny you mentioned Indians because that was the customer who was complaining. They really are the cheapest people on earth! No offense to anyone

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## LK1 (May 7, 2011)

Gamit said:


> A few years back I had Sears do some work in my home and they required my credit card number to start job and Sears could not be more established. I think it shows a commitment to a contract and also gives us another signed document for legal proceedings if needed. But I do agree it could turn off a consumer but as a consumer myself I do not mind paying a deposit for a service I agree to.


It is not just Sears that operates that way just about all the services I had done at home required a deposit or up front money, and you had to sign a contract in every case, none of these companies are banks and they all have to assure they are paid for the work they provide, my son made the mistake of not getting up front payments or signed contracts when he started, working with up, he is still paying off the $7k we lost, no need to say he learned the hard way, he was a bleeding liberal, who loved and trusted everyone, now this dog not only hunts he bites.


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## lovethetrade (Apr 12, 2011)

Gamit said:


> That's funny you mentioned Indians because that was the customer who was complaining. They really are the cheapest people on earth! No offense to anyone
> 
> Sent from my iPhone using ET Forum


I don't work for Indians anymore for that exact reason. Call me racist or whatever but based on my experience with them they are insanely cheap to a point they are delusional.


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## Magnettica (Jan 23, 2007)

One nice thing about getting a deposit is that a sale has been made. Depends on the job specifics if we ask for one or not. I always allow for not more than 10% due after final inspection.


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## Magnettica (Jan 23, 2007)

lovethetrade said:


> I don't work for Indians anymore for that exact reason. Call me racist or whatever but based on my experience with them they are insanely cheap to a point they are delusional.


Why so much?


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## Jlarson (Jun 28, 2009)

Money upfront here, except for a select group of priority, long time clients.

I heard once that companies should be able to fund the project but I was like "yeah I can, but I am not a bank and am not gonna pay for the material for _your_ project" :laughing:


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## captkirk (Nov 21, 2007)

I dont ask for upfront money unless there is a large amount of material involved. It really sends a bad message to most people. I havent really been stiffed yet.


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## Gamit (Dec 30, 2009)

Looks like it's split some ask some don't so I guess it really is a matter of sizing up the costumer.

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## Magnettica (Jan 23, 2007)

Gamit said:


> Looks like it's split some ask some don't so I guess it really is a matter of sizing up the costumer.
> 
> Sent from my iPhone using ET Forum


Keep in mind that securing a deposit means a sale. Getting one ASAP means they don't try to find the cheapest EC in the area.


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## Gamit (Dec 30, 2009)

Magnettica said:


> Keep in mind that securing a deposit means a sale. Getting one ASAP means they don't try to find the cheapest EC in the area.


I know I'm on the yay side of this subject.

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## captkirk (Nov 21, 2007)

I think when you ask for money up front, your basically telling the customer you dont trust them at all. And gaining the customers trust is the first thing we need to do,especially if you want them as a repeat or referals from them as well. 
We are in the business of selling services and asking for money up front is like going to a store and saying "can I take the thing home first, then ill send you some money for it.." 
I can totally see if the customer gives you a funny feeling or its a GC you never worked before and you want to stay ahead on the money, sure it makes total sense... but for most of my work which is usually under 7500 bucks it works out. Just think about how many jobs you might have lost becuse of this practice..If you already have some sort of agreement wether its electronic or paper it should be enough.


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## Mr Rewire (Jan 15, 2011)

captkirk said:


> I think when you ask for money up front, your basically telling the customer you dont trust them at all. And gaining the customers trust is the first thing we need to do,especially if you want them as a repeat or referals from them as well.
> We are in the business of selling services and asking for money up front is like going to a store and saying "can I take the thing home first, then ill send you some money for it.."
> I can totally see if the customer gives you a funny feeling or its a GC you never worked before and you want to stay ahead on the money, sure it makes total sense... but for most of my work which is usually under 7500 bucks it works out. Just think about how many jobs you might have lost becuse of this practice..If you already have some sort of agreement wether its electronic or paper it should be enough.


 First why should you trust the customer? Get burned a few times and you may think differently.
I have never lost a job because of asking for money down.The quality of the work is what sells the repeat jobs.

*"can I take the thing home first, then ill send you some money for it.." *
isn't this what you are letting the customer do if you don't ask for money up front?


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## robnj772 (Jan 15, 2008)

captkirk said:


> I think when you ask for money up front, your basically telling the customer you dont trust them at all. And gaining the customers trust is the first thing we need to do,especially if you want them as a repeat or referals from them as well.
> We are in the business of selling services and asking for money up front is like going to a store and saying "can I take the thing home first, then ill send you some money for it.."
> I can totally see if the customer gives you a funny feeling or its a GC you never worked before and you want to stay ahead on the money, sure it makes total sense... but for most of my work which is usually under 7500 bucks it works out. Just think about how many jobs you might have lost becuse of this practice..If you already have some sort of agreement wether its electronic or paper it should be enough.


 
ANY good business man is going to get a deposit.

If you buy a car,house,boat,pool you pay a deposit.

The GC takes a deposit from the customer why should you finance his project? I don't know about you but it says Electrical Contractor on my license and business card not Savings and loan.

The deposit is a sign of good faith between you and the customer. I require a deposit to secure the apointment. 

I asure you any job lost because someone required a deposit was a job not worth having. On small jobs I require 50%. On larger jobs like new construction and renovation I won't seal the permit without 10%. I even take a trim deposit before I start the trim. It is just more profesional that way.


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## LK1 (May 7, 2011)

Jlarson said:


> Money upfront here, except for a select group of priority, long time clients.
> 
> I heard once that companies should be able to fund the project but I was like "yeah I can, but I am not a bank and am not gonna pay for the material for your project" :laughing:


That is a usually something a GC tells the EC when he is trying to BS him into thinking that is how everyone works, when in fact that is not how a smart business person operates, they are not banks and would never do anything so dumb as finance someone's project, The GC secures a construction loan, and he is given payments on work progress, and the. Subs are also paid from these payments, so there is no need for a sub to finance their project, however there are GC's that want to hold this money back, so they try to make a green new EC feel dumb when he asks for money
When a EC tries to finance a project he will most likely loose money or go belly up, most of the subs that get stung usually don't like to talk about how they were suckered by a GC so they continue to fInd new fish.


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## captkirk (Nov 21, 2007)

Mr Rewire said:


> First why should you trust the customer? Get burned a few times and you may think differently.
> I have never lost a job because of asking for money down.The quality of the work is what sells the repeat jobs.
> 
> *"can I take the thing home first, then ill send you some money for it.." *
> isn't this what you are letting the customer do if you don't ask for money up front?


 in their eyes it is... Now im talking smaller jobs... I did a 40,000 light retrofit last year in a building and you can bet your bottom I asked for money up front. 
How do you know and some of the other guys know that you didnt loose out to someone else..? In the past four years I have really heard some horror stories about contractors not finishing all the work or doing ****ty work and running with the money. 

Lets say you bid on a service change and your price is close to another guy but he doesnt need money down Im pretty sure they will go with the other dude..Trust me many people get nervous when you want a few grand before any work starts. 

Hey if it works for you dont worry about it. Youve been in business much longer than me so maybe im the stupid one here, but for now my approach is working, and i have no shortage of work. And havent been stiffed yet. The only stiff ive gotten was from a couple of old, hoarding lesbians and it was for 145 bucks. But how do you ask for money down on a 20 minute service call?


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## captkirk (Nov 21, 2007)

robnj772 said:


> ANY good business man is going to get a deposit.
> 
> If you buy a car,house,boat,pool you pay a deposit.
> 
> ...


 Once again im not talking about bigger work or working with GC's. That stuff is pretty much SOP as far as money goes. Im talking about small one two day jobs..


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## MDShunk (Jan 7, 2007)

Financing aside, down money completely eliminates "buyer's remorse". Say something like, "...ten percent to put you on the schedule". Even if you're the sole prop., you can always fall back on the old trick of, "...well, it's the boss's rules, and I have to follow them".


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## doubleoh7 (Dec 5, 2009)

I have not had a problem getting money down. One time I had a customer just write a check for the whole thing instead of 25%.


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## MDShunk (Jan 7, 2007)

doubleoh7 said:


> I have not had a problem getting money down. One time I had a customer just write a check for the whole thing instead of 25%.


Same here. Some people insist on it. I guess it gets that bill off their plate and out of their mind. Perhaps, secretly, they think that if they don't pay you right there and then, the price might go up. I don't know.


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## doubleoh7 (Dec 5, 2009)

MDShunk said:


> Same here. Some people insist on it. I guess it gets that bill off their plate and out of their mind. Perhaps, secretly, they think that if they don't pay you right there and then, the price might go up. I don't know.


That could be. My proposals, however are very direct and precise in regards to the work and price. There is no way for me to add $$s, unless they request something extra. Blank change orders are always in th truck.


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## MDShunk (Jan 7, 2007)

Right. An accurate scope of work is very important and avoids misunderstandings. A accurate scope of work IS NOT a price breakdown or a material breakdown. Just a detailed list of what will be accomplished.


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## doubleoh7 (Dec 5, 2009)

MDShunk said:


> Right. An accurate scope of work is very important and avoids misunderstandings. A accurate scope of work IS NOT a price breakdown or a material breakdown. Just a detailed list of what will be accomplished.


 
That is how I do it. The only price they see is the total price!


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## jwjrw (Jan 14, 2010)

This is what is on our state electrical board website. I totally agree. We are talking SMALL PROJECTS UNDER 10K........Larger ones get a material draw when material hits site. 

State law requires a person, firm or 
corporation to be licensed before engaging 
or offering to engage in the business of 
installing, maintaining, altering or repairing 
any electric work, wiring, devices, 
appliances or equipment. People are 
licensed only when they prove their ability, 
pass a difficult exam, and take continuing 
education. 
Protect yourself from unscrupulous or 
unlicensed electrical contractors. 
Beware if a supposed contractor says no 
electrical contractor’s license will be needed 
as long as you pull the permit. 
*Beware of any contractor who needs an up 
front payment or solicits door-to-door. 
Most professionals can finance their own 
work. *
Remember there are scam artists posing as 
contractors who will take advantage of 
homeowners. Don’t rush into repairs, no 
matter how badly they may be needed.


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## Mr Rewire (Jan 15, 2011)

jwjrw said:


> This is what is on our state electrical board website. I totally agree. We are talking SMALL PROJECTS UNDER 10K........Larger ones get a material draw when material hits site.
> 
> *Beware of any contractor who needs an up *
> *front payment or solicits door-to-door. *
> ...


 Their is a BIG difference between an upfront payment an getting a deposit
.I get a deposit as soon as we agree I will do the job.I have never lost a job over asking for a deposit.It dosen't matter if it is a $500 or $50,000. The only time I ever got burned was on a job i didn't get a deposit.


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## Jlarson (Jun 28, 2009)

jwjrw said:


> *Most professionals can finance their own *


It's not my work, it's their work (the customer's) and I don't see why I should finance it.


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## jwjrw (Jan 14, 2010)

Mr Rewire said:


> Their is a BIG difference between an upfront payment an getting a deposit
> .I get a deposit as soon as we agree I will do the job.I have never lost a job over asking for a deposit.It dosen't matter if it is a $500 or $50,000. The only time I ever got burned was on a job i didn't get a deposit.





There is ABSOLUTELY no difference in a deposit or upfront payment. I won't use a company that needs a deposit period. Never have never will. And I don't expect our customers to do so either. If it works for you great. Do you guys really have that many problems getting paid?


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## jwjrw (Jan 14, 2010)

Jlarson said:


> It's not my work, it's their work (the customer's) and I don't see why I should finance it.




Roofers should not finance electrical work. That I agree with....:yes:



It IS your work. When you go have your car fixed does the dealership want money down to order the parts it needs? Keep in mind........We are talking SMALL PROJECTS. Not new construction or larger projects with lots of money in materials.


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## LK1 (May 7, 2011)

jwjrw said:


> Roofers should not finance electrical work. That I agree with....:yes:
> 
> 
> 
> It IS your work. When you go have your car fixed does the dealership want money down to order the parts it needs? Keep in mind........We are talking SMALL PROJECTS. Not new construction or larger projects with lots of money in materials.


No they don't ask for a down payment for small repairs, but they all will want some money up front if you have major engine work or special order parts, and on the small repairs remember if you don't pay they have your KEYS and if you try to leave the garage without paying that flashing red and blue behind you is not the mister softy truck.


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## CraigV (May 12, 2011)

jwjrw said:


> It IS your work. When you go have your car fixed does the dealership want money down to order the parts it needs? Keep in mind........We are talking SMALL PROJECTS. Not new construction or larger projects with lots of money in materials.


No, the dealership does not ask for a deposit for auto repairs. But they do have your car. And every state has a lien system (not ironically called a "mechanic's lien") in place that gives them the right to keep your car until payment is made.

And dealership parts departments will usually require advance payment for special order parts.


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## Mr Rewire (Jan 15, 2011)

jwjrw said:


> There is ABSOLUTELY no difference in a deposit or upfront payment. I won't use a company that needs a deposit period. Never have never will. And I don't expect our customers to do so either. If it works for you great. Do you guys really have that many problems getting paid?


 upfront payment inplies getting all the money not a deposit. I put up deposits all the time ,hotels , airlines ,seminars ,rental cars it is a natural part of doing business. What i wounder is why you ask for money on big jobs but not small jobs? I do about 90% small jobs (5k or less) and before I started asking for a deposit it was not unusual to have 40k in billables just waiting on a check. It just made cash flow sense to get half of that up front.


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## lovethetrade (Apr 12, 2011)

I don't see what the big deal is giving a legit contractor a deposit. 

They see my truck with my name on it my actual name, i'm licensed and insured. Also my company letterhead has my cell phone, email, buiness phone, state HIC # and license number along with my business address.

So where the hell would I run off to with the customers money?

I have so much of a "paper trail" it wouldn't be hard to find me.


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## B4T (Feb 10, 2009)

Pay as you go works well for jobs longer than a day..

One day jobs like a service change I get paid in full when the job is complete and I have never gotten stiffed working like that.. 

This is one of those business topics that works different ways for different people.. :thumbsup:


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## Gamit (Dec 30, 2009)

jwjrw said:


> Roofers should not finance electrical work. That I agree with....:yes:
> 
> It IS your work. When you go have your car fixed does the dealership want money down to order the parts it needs? Keep in mind........We are talking SMALL PROJECTS. Not new construction or larger projects with lots of money in materials.


Yea but the dealership has your car


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## Gamit (Dec 30, 2009)

Gamit said:


> Yea but the dealership has your car


Sorry already mentioned


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## Shockdoc (Mar 4, 2010)

Under $500 is my deductable , it is also my limit for laid out material. anything over that i expect a 1/3rd of job, a 1/3 upon the rough and another 1/3 when final is completed. Other jobs such as large scale services or short pricey jobs require 1/2 down and 1/2 upon completion.


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## Proxy electric (6 mo ago)

Let's all keep in mind there are different type of clients. All professional and established clients that are looking for electrical services will not give you a deposit. They float millions per month and will only pay you when they receive the cash flow from the client in stages of completion on the job. All City jobs also work that way, this is what separates the big guys from the small guys in business. The laws are in place to protect your investment into a property. You need accounts you need cash flow, bill them monthly or on stages of completion.


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## Breakfasteatre (Sep 8, 2009)

Proxy electric said:


> Let's all keep in mind there are different type of clients. All professional and established clients that are looking for electrical services will not give you a deposit. They float millions per month and will only pay you when they receive the cash flow from the client in stages of completion on the job. All City jobs also work that way, this is what separates the big guys from the small guys in business. The laws are in place to protect your investment into a property. You need accounts you need cash flow, bill them monthly or on stages of completion.


thank you for that insight, im sure the dead guys in this thread will sleep better


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## Djea3 (Mar 8, 2019)

This applies to any customer that acts the way that you just described.

To me it is more about the total value of material and hours on job. For a one or two day job....not worth worrying as long as materials are not too high. When considering materials, you can create a separate entity to "deliver and bill materials to the site". This means that state materialman laws cover the lien rights on materials separately, even without a permit in many instances. Your material company bills your EC company each job for the delivery of materials. Remember to include your logistics costs in that billing as part of material value (high mark up).

On any job more than a couple thousand or specifically that requires a permit be sure to file the pre-lien notices and if unpaid according to contract file a lien and walk instantly with a notice that they are in violation of contract and no further work can be performed until you are paid. Notify them that non-payment has voided the contract! When they pay have an addendum to the contract ready.

DUE TO NON PAYMENT THE FOLLOWING ADDENDUM SHALL APPLY TO ALL WORK PERFORMED: Statement that your company is not a lender and does not extend credit to any person or company. Require 50% paid up front each week for work/material performed that week and payment in full with walk through and acceptance/rejection of any work at each Friday until the job is complete. 

Check with a local lawyer, most states allow a contract to void if violated this gives cause for addendum and changes to the contract before proceeding (new negotiation for material breach). BTW all my contracts state that I am not a lender and both parties agree that I do not extend any credit and that all moneys are due and payable instantly for labor and materials and that billings will be (weekly/monthly etc) for convenience only. IT states that parties agree that non-payment is considered irreparable harm.

Courts know that this statement creates specific recovery rights and screws the property owner.

I personally NEVER enter into a contract or perform work IF I find out that the PERSON IS AN ATTORNEY. I have lost more money doing work for attorneys than any other class of people, especially as a GC in TX. Hell I think I paid to work for those kinds....and I had inspections weekly with sign off for all work performed correctly and to workmanlike standards (full acceptance of work). Even then that did not protect me from predatory attorneys! I have had to return moneys earned for excellent work as the cost of suit to fight these asswipes was more than the amount demanded back. Beware.


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## backstay (Feb 3, 2011)

Holy 11 year old zombie thread!


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