Contractor Problem

ACutAbove · 09-15-2005, 10:09 PM

I would just like to defend my reason for asking, for as deposit. Although I can see your point with the cod status or a "late payer". Thst is not slways the case. If a company is new they might not have the resources to be able to get a credit line or not enough equity in the buisness to aquire a credit line as of yet. Being a contractor I would not have any problem showing you my insurance documents or workmans comp policy. Which I pay a ton of money for, but i feel in my line of work is nesesary to be able to make clients feel confident in useing my service. This is my first year in buisness and I think with the type of work and the quality I show in my work , my customers have been quite pleased.
Sorry for hijacking the thread with my ramblings. I would just like to say that not all contractors are the same!

Quote:

Originally Posted by NightWing

No, it is not necessarily wrong to ask for a reasonable deposit in addition to a signed contract. However, most reliable companies have their own credit lines with established vendors and they do not pay cash for their materials. If you hire someone who requires money to buy materials, that generally means he is on a COD status with his suppliers, since he doesn't meet their credit requirements or he has been a late payer for too long and they shut him off.

One thing to always ask to see is a copy of his liability insurance policy and his Worker's Comp policy, if he has others working for him.

Finally, if he is not an established businessman, tell him you need his SS# for the 1099 you will file at the end of the year. Watch his reaction to that!

NightWing · 09-16-2005, 04:48 AM

ACutAbove, I agree that not all contractors are alike and that some very reputable contractors may be undercapitalized, as I mentioned in a previous post. That, in itself, is no disgrace. Owning a new business is challenging and growth requires capital, and that can be difficult to keep up with.

I also mentioned that a deposit is a reasonable request because it shows good faith and also allows the contractor to cover some of his work at the beginning. The deposit amount can usually be agreed upon at the time of contract.

However, I think 50% down takes away some of the incentive for timely completion of the job, and that progress payments might be a better way, if the job is large and is going to take a while to do. That is the way most construction loans are handled.

Asking for insurance documents should not be an insult to a legitimate contractor and it is necessary to allow piece of mind for the customer. It also assures that the workers are covered if anyone is injured on the job and is required by state law.

I appreciate your position, since I was a business owner for many years and I can recall the growing pains when I started out. It sounds like you are on your way to a successful career.

SIKSUKR · 09-16-2005, 07:58 AM

I hate to disagree with guys but I've never ever paid any money upfront for any work I've had done for me.I'm in the process of building a parking lot for many hundereds of thousands of dollars and I've not put up one cent.Maybe part of that is our reputation but at onepoint we did not have one.I'd be very carefulll about putting money up front unless you feel very comfortable with the contractor.

ACutAbove · 09-16-2005, 07:36 PM

SIKSUKR, there is a difference in the type of projects we do. I can understand that a bigger project like yours would require a much bigger company with more capitol to do. Where they might be able to swing it, as a smaller company might need a little help to get the project off the ground.
I have a client right now that I am in the process of building something for, and yes I did ask for a deposit. Although he signed a contract and faxed it back and dropped a check in the mail for 1/2 of the project. I have not recieved it as of yet, but his material is already on site and the site work is 80% complete already. He is a regular customer of mine so I had no fear of starting the job and not getting paid to do it. But I did need to cover my material cost out of pocket so the 1/2 down will really help. And he can feel good about it when he shows up at his house this weekend and sees the amount of work already done. But that is just how I chose to operate.
My whole thing with running my buisness is treat people how I would want to be treated. I think if more companys looked at it that way it would be so much eaiser to do buisness and there would not have to be discussions like this one.
Shania, Sorry for hijacking your thread.
If anyone would like to contine with this topic lets start a new thread..ok?

RLW · 09-17-2005, 07:56 PM

Quote:

Originally Posted by SIKSUKR

I'd be very carefulll about putting money up front unless you feel very comfortable with the contractor.

What about the customer. We've had several customers stick us and we have an excellent reputation. No advertising at all, just word of mouth advertising and we are scheduled out until next April. This all said, we request a % down and % after each major part of the job is completed in the building process. One should always ask for references and CHECK them out, also ask the reference person, how what is being discussed here in this thread was handled by the contractor they are inquiring about.

SIKSUKR · 09-19-2005, 09:34 AM

After having posted what I did on money upfront,I do remember paying for materials for a deck and a reroof for my residence upfront.The contractor was a friend of mine and we made that arrangement before starting the job.I will say that 100% of my customers don't pay anything upfront but some are on COD.However I am not in the contracting business so I guess I could understand it's a totally different situation.

sky's · 05-21-2012, 06:51 PM

Quote:

Originally Posted by ACutAbove

I would just like to defend my reason for asking, for as deposit. Although I can see your point with the cod status or a "late payer". Thst is not slways the case. If a company is new they might not have the resources to be able to get a credit line or not enough equity in the buisness to aquire a credit line as of yet. Being a contractor I would not have any problem showing you my insurance documents or workmans comp policy. Which I pay a ton of money for, but i feel in my line of work is nesesary to be able to make clients feel confident in useing my service. This is my first year in buisness and I think with the type of work and the quality I show in my work , my customers have been quite pleased.
Sorry for hijacking the thread with my ramblings. I would just like to say that not all contractors are the same!

i'll second that on "not every contractors are the same" i have some of my regular customers pay me for the job before i even begin because i have a great realtionship with them or there leaving town or whatever. Also for myself and how i operate my business i come with insurance certificates and REFERENCES. sorry you got into this situation have you thought about the Attorney Generals Office?

09-16-2005, 07:58 AM	#3
SIKSUKR Senior Member Join Date: Apr 2004 Posts: 5,075 Thanks: 215 Thanked 903 Times in 509 Posts	I hate to disagree with guys but I've never ever paid any money upfront for any work I've had done for me.I'm in the process of building a parking lot for many hundereds of thousands of dollars and I've not put up one cent.Maybe part of that is our reputation but at onepoint we did not have one.I'd be very carefulll about putting money up front unless you feel very comfortable with the contractor. __________________ SIKSUKR

09-19-2005, 09:34 AM	#6
SIKSUKR Senior Member Join Date: Apr 2004 Posts: 5,075 Thanks: 215 Thanked 903 Times in 509 Posts	After having posted what I did on money upfront,I do remember paying for materials for a deck and a reroof for my residence upfront.The contractor was a friend of mine and we made that arrangement before starting the job.I will say that 100% of my customers don't pay anything upfront but some are on COD.However I am not in the contracting business so I guess I could understand it's a totally different situation. __________________ SIKSUKR

09-16-2005, 04:48 AM	#2
NightWing Senior Member Join Date: Aug 2004 Posts: 410 Thanks: 4 Thanked 6 Times in 6 Posts	ACutAbove, I agree that not all contractors are alike and that some very reputable contractors may be undercapitalized, as I mentioned in a previous post. That, in itself, is no disgrace. Owning a new business is challenging and growth requires capital, and that can be difficult to keep up with. I also mentioned that a deposit is a reasonable request because it shows good faith and also allows the contractor to cover some of his work at the beginning. The deposit amount can usually be agreed upon at the time of contract. However, I think 50% down takes away some of the incentive for timely completion of the job, and that progress payments might be a better way, if the job is large and is going to take a while to do. That is the way most construction loans are handled. Asking for insurance documents should not be an insult to a legitimate contractor and it is necessary to allow piece of mind for the customer. It also assures that the workers are covered if anyone is injured on the job and is required by state law. I appreciate your position, since I was a business owner for many years and I can recall the growing pains when I started out. It sounds like you are on your way to a successful career.

09-16-2005, 07:36 PM	#4
ACutAbove Senior Member Join Date: Jun 2005 Location: Holderness Posts: 219 Thanks: 7 Thanked 9 Times in 8 Posts	SIKSUKR, there is a difference in the type of projects we do. I can understand that a bigger project like yours would require a much bigger company with more capitol to do. Where they might be able to swing it, as a smaller company might need a little help to get the project off the ground. I have a client right now that I am in the process of building something for, and yes I did ask for a deposit. Although he signed a contract and faxed it back and dropped a check in the mail for 1/2 of the project. I have not recieved it as of yet, but his material is already on site and the site work is 80% complete already. He is a regular customer of mine so I had no fear of starting the job and not getting paid to do it. But I did need to cover my material cost out of pocket so the 1/2 down will really help. And he can feel good about it when he shows up at his house this weekend and sees the amount of work already done. But that is just how I chose to operate. My whole thing with running my buisness is treat people how I would want to be treated. I think if more companys looked at it that way it would be so much eaiser to do buisness and there would not have to be discussions like this one. Shania, Sorry for hijacking your thread. If anyone would like to contine with this topic lets start a new thread..ok?