Demand For Payment Letter

 
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Old 03-17-2009, 10:59 AM   #1
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Demand For Payment Letter


Hi,
I'm trying to figure out how to compose a letter to demand payment. The company I work for was subcontracted by another company to do an office build out, we have a contract with them, the work has been completed for about 2 months now and they are trying to say it's a cost plus job and we get our money when the owners pay them. No where in our contract did it say it was cost plus. I'm not exactly sure what that means, this is the first time i've worked in this field so i'm not exactly sure how to word the letter.

any advice would be greatly appreciated!

Thanks,
Jenn
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Old 03-17-2009, 11:14 AM   #2
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Re: Demand For Payment Letter


If you have Microsoft Word...you might find something/template in the software or on the website...

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Old 03-17-2009, 11:58 AM   #3
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Re: Demand For Payment Letter


You have two unrelated problems here

1) They are telling you it is a "cost plus" job, and you do not think it is. For all practical purposes, cost plus is the same as T&M. Your costs (labor and materials) plus a percentage mark up. Was your bid to this company cost plus? or hard money? You need to clarify this with them.

2) Regardless of that portion of the contract structure, you are mostly concerned with the payment clauses. It is common for a GC to have some clause where some portion of payment is withheld until he gets paid by his final client. This portion can vary from zero to 100%. It is even more likely for a GC to make this claim in order to hold up payment to his subs. A common term for this is "lying". Read your contracts with this GC. Is there any verbiage regarding payment? But, whether or not your contract is T&M or hard money, this is an entirely separate issue from your payment schedule.
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Old 03-17-2009, 01:41 PM   #4
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Re: Demand For Payment Letter


Dear Sir, Madam or the azzhole that cuts the checks.

This is an attempt to collect payment on a job. I am trying to be nice and mail you a letter even though my first impulse was to drive over to your office and choke the first employee I saw, eventually working my way up to you.

But I came to my senses and realized I should give you 5 business days to do the right thing. If I do have to drive over to your office and collect. I going to stick my foot so far up your azz that you will be tasting Timberland boots for a week.

Hope you see fit to mail out my payment and work this out amicably if not see you at your office Friday.

Thanks Jenn
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Old 03-17-2009, 01:59 PM   #5
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Re: Demand For Payment Letter


lol that sounds good. Thank you guys for the input. My boss went ahead and took care of it verbally. we were gonna withdraw from the big job comming up and they can't loose our work, so i believe we will get our check

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Old 03-17-2009, 02:08 PM   #6
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Re: Demand For Payment Letter


Are you doing residential or commmercial work. What county in Virginia are you in
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Old 03-17-2009, 02:19 PM   #7
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Re: Demand For Payment Letter


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Originally Posted by J3NN83 View Post
lol that sounds good. Thank you guys for the input. My boss went ahead and took care of it verbally. we were gonna withdraw from the big job comming up and they can't loose our work, so i believe we will get our check

Jenn

Next time...hold their first born as collateral....
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Old 03-17-2009, 06:42 PM   #8
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Re: Demand For Payment Letter


Do you remember your VA license test? Do you remember the part about any contractor paying another contractor or sub?

It's 3 working days. 72 hours of completion.
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Old 03-17-2009, 08:09 PM   #9
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Re: Demand For Payment Letter


Try this
Attached Thumbnails
Demand for payment letter-pay-up.jpg  
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Old 03-17-2009, 08:23 PM   #10
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Re: Demand For Payment Letter


WOW,
Every commercial job I've been involved with has worked exactly the same way. Subs get paid when gc gets paid, sub's suppliers get paid when sub gets paid, etc. Whether this is fair or not is probably debatable, but there really isn't anything we can do about it.
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Old 03-17-2009, 08:25 PM   #11
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Re: Demand For Payment Letter


Quote:
Originally Posted by rbsremodeling View Post
Dear Sir, Madam or the azzhole that cuts the checks.

This is an attempt to collect payment on a job. I am trying to be nice and mail you a letter even though my first impulse was to drive over to your office and choke the first employee I saw, eventually working my way up to you.

But I came to my senses and realized I should give you 5 business days to do the right thing. If I do have to drive over to your office and collect. I going to stick my foot so far up your azz that you will be tasting Timberland boots for a week.

Hope you see fit to mail out my payment and work this out amicably if not see you at your office Friday.

Thanks Jenn
I like it
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Old 03-17-2009, 08:40 PM   #12
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Re: Demand For Payment Letter


Nicky Santoro: I think in all fairness, I should explain to you exactly what it is that I do. For instance tomorrow morning ill get up nice and early, take a walk down over to the bank and... walk in and see and uh... if you don't have my money for me, I'll... crack your f***in' head wide-open in front of everybody in the bank. And just about the time that I'm comin' out of jail, hopefully, you'll be coming out of your coma. And guess what? I'll split your f***in' head open again. 'Cause I'm f***in' stupid. I don't give a f*** about jail. That's my business. That's what I do.
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Old 03-18-2009, 04:45 AM   #13
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Re: Demand For Payment Letter


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Originally Posted by backhoe1 View Post
WOW,
Every commercial job I've been involved with has worked exactly the same way. Subs get paid when gc gets paid, sub's suppliers get paid when sub gets paid, etc. Whether this is fair or not is probably debatable, but there really isn't anything we can do about it.
This one of the main reasons I got out of commercial work. Got tired of being the lost rung on the payment ladder. GCs will use ANY excuse to hold up payment. Obviously make sure you do not let your lien rights expire. Not sure about the exact laws in your state but, in Georgia you need to request a notice of commencement from the GC and send copy to you contractor. Also, if its bonded send a letter to the bonding company as well that you intend to attach the bond (CC everyone)

Glad it looks like you will be getting paid but keeps these in mind for the next time.
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Old 03-18-2009, 05:16 AM   #14
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Re: Demand For Payment Letter


Quote:
Originally Posted by backhoe1 View Post
WOW,
Every commercial job I've been involved with has worked exactly the same way. Subs get paid when gc gets paid, sub's suppliers get paid when sub gets paid, etc. Whether this is fair or not is probably debatable, but there really isn't anything we can do about it.
Doing business this way is bad business practice. I understand there is no way of knowing this will become the situation at the end of the job and there is not much of a choice you have but to wait and pray you will get paid. Would you do the work if you told, you will only get paid after your builder gets paid? I doubt that, unless you know he is a stand up guy and he will do the right thing if something should happen.

I am a GC and when I was starting out, my brother and me, we did lots of sub work for big builders and other GC's doing decks, kitchen installs, trim work and this was one of the reasons why we stopped doing work for them because of this BS business mentality " I didn't get paid from the HO yet, you have to wait". That is BS and that is illegal business practice. It most cases this BS excuse is used to knock the bill down. I'm sure many of you when waiting to get paid heard this magic sentence "I got stiffed and I don't have money, but I can pay you only so much" By that time you are happy you got anything at all and take what ever you can get, unless you are willing to waste more time and go to court. Most cases we just took what it was and never work for this GC again. Same as if a HO hires you and after job is done they tell you "You have to wait untill I get my tax refund" WTF is that...

My buddy just lost 200k doing trim fork for Kara Homes, now they out of bankruptcy and be operating under the different name.

As a GC if I hire a sub to do the work, I already have his money. My agreement with him does not say he will get paid when I get paid.

I know things are tough in this economy, and I know sometimes it takes a little extra time to come up with the money, but there is no excuses, you hired me, my end should be covered, I did the work, I want my money after I am done... Period.

If anyone doing work for anyone, the most important thing is to have payment schedule spelled out in your contract. Final payment is due after job completion and final inspection. Because if unfortunate situation happens, and you end up in court, forget about it how hard you worked, the 20 hours a day you worked, or how you gold-plated your customers job, the only thing it will matter is what you have in your contract. If you have scribbles on the toilet paper, that is exactly what you will end up with.

Good luck
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Old 03-18-2009, 07:49 AM   #15
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Re: Demand For Payment Letter


why would a gc pay for something that he hasn't been paid for yet?

Unless the Archi or Engineer has approved quantities on pay request
he'd run the risk of getting hung. Certainly I wish I could get paid immediately but, if I made a big stink about it I would just tick off
my customer and get to find other customers that may or may not
pay promptly.
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Old 03-18-2009, 08:16 AM   #16
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Re: Demand For Payment Letter


Quote:
Originally Posted by backhoe1 View Post
why would a gc pay for something that he hasn't been paid for yet?
Because its how it usually works. If I hire you to dig a foundation for me on the house I am building, do you want to sit and wait for your money until I sell or finish the house? Or you want to get paid after your work is done? What if it takes me 1 year to finish or sell? You want to use your money to carry my project? I don't think so, It's not how things work my Friend. If this how you conduct your business, and want to lay out your money and wait to get paid, that is totally up to you. I want to get paid after my job is completed, I got bills like everybody else.
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Old 03-18-2009, 08:29 AM   #17
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Re: Demand For Payment Letter


I want my money now mo-fo.

You must comply, or the consequences will be dire.
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Old 03-18-2009, 09:16 AM   #18
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Re: Demand For Payment Letter


Like I said before. In Va., the law states 3 days.
The procedure is; GO to small claims and file, $30.00, go to SCC and present the filing, file again, $30.00, and the SCC will show up there within 72 hours with a sheriff.
Whenever I did that, my phone started ringing and I got paid then!
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Old 03-18-2009, 08:58 PM   #19
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Re: Demand For Payment Letter


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What if it takes me 1 year to finish or sell? You want to use your money to carry my project?

I never said anything about finishing or selling anything, Is it normal to not have any pay requests until a project is over?

I think you misunderstood my point. I was trying to say that in commercial work it's not as simple as someone just writing a check. however if the gc is holding the money after he's been paid that's a completely different story.
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Old 03-18-2009, 09:58 PM   #20
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Re: Demand For Payment Letter


Quote:
Originally Posted by backhoe1 View Post
I never said anything about finishing or selling anything, Is it normal to not have any pay requests until a project is over?

I think you misunderstood my point. I was trying to say that in commercial work it's not as simple as someone just writing a check. however if the gc is holding the money after he's been paid that's a completely different story.
I understand what you saying, and you should be getting paid as the job progress.

If I am doing one house, and you come to dig my foundation, after you done, I will write you a check.

If I am doing a small development and you come and do the lot clearing, I cut you a check, next you will cut the road, you got another check, sewer laterals, storm sewer and water main,etc, you will get a check as work progresses, most times every 15 days. I don't expect you layout 200k and wait until I get the money, plus for each project, I have secured financing, I already have the money for the work I need done. That is a standard practice. Same goes for other trades.

I would never call anyone to do any work for me if I don't have the money and I count on someone to pay me so I can pay them. I don't believe in this type of business practice.

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