Question On Payment Terms

davinci

i know how i charge my roofing customers but for windows,especially expensive one's like marvin or pella,do you guys ask for all the money for the windows up front or do you only ask for 50%?
i am doing a job and they want marvin (exoensive),the windows alone are 11,000; thats not including labor. its 10 double hung windows 9 basement windows and installing a sliding glass door. i am charging 250 per window for labor(includes painting) and 220 per basement window(they need to be ripped out of brick).the sliding glass door is 2,000 and the labor is 2,000. we have to tip out a window and steam radiator and frame out for a sliding door. the whole job is about 16,700. should i just ask for 50% or a bit more so i cover all the windows and sliding door?

Ed the Roofer

You stated you are "doing" a job.

Have you already started?

If not, I would require the special custom order to be paid in full, prior to ordering and including markup.

At a critical point in the percentage of completion, I would request that proportion of completion percentage payment.

Do you already have a signed contract?

Payment terms should be spelled out clearly for both parties understanding and protection.

Ed

davinci

no ED,I did'nt start yet. so your opinion is to have the cistomer pay for the windows and sliding door in full and upfront?

philner

I would probably ask for 1/3 down, 1/3 on first day on job with bulk of materials on site and 1/3 on completion. If you can't order them on account or don't have the cash flow to order the windows, that forces your hand at which time I would show the window suppliers quote to homeowner, get that money up front, then split the balance and get half at 50% completion and balance on completion. I understand the reasoning for getting the special order money up front, but I hate revealing my material and labor costs. Phil

wizendwizard

Phil, this is the way i started my business. 1/3 1/3 1/3 probelm ended up being that cost overruns on materials were killing me on the 1/3 up front. I went to 50% up front to ensure this probelm didn't come into play again.

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Patrick

We are always 1/3 down, balance on completion, for one day window jobs. Anything larger, Goes 1/3 1/3 1/3. Anything larger or longer than that, gets a deposit, schedule payment, and weekly payments.

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Originally Posted by Celtic
Like I said...I'm sure you are very good at what you do ~ whatever that is and where ever it happens.

Patrick

1/3 payments as opposed to 1/2 show the financial security of your company to the customer. Unless you get that squirmy feeling about the customer

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Originally Posted by Celtic
Like I said...I'm sure you are very good at what you do ~ whatever that is and where ever it happens.

Brock

Good point. But this is a little different. Because the windows are custom made the person that pays for them is stuck with them.(I once had a customer die in the middle of a bathroom job) His job pays $11000 materials, and 5000 labor. half down aint gettin 'er done in this case. What I do is collect the 11000 up front, and 2500 depaosit on labor. Then when the windows arrive in three to four weeks you install them and receive the balance at completion. They will like it because Lowes charges 100% up front. Same with most of these neigborhood windows dealers.

Make sure you get a licsensed plumber to terminate the natural gas line to the radiator. Your ins. wont cover you if you do the disconnect and the house goes boom.

Ed the Roofer

Some states limit the deposit to 10%, regardless of the material costs, but many contractors go around that regulation anyways with no consequences.

If that were to be the case, I would have the customer write the material check directly to the supplier, at the non-discounted invoice price, to get around that restriction.

Ed

Brock

I dont believe that is true. In fact I don't think any states have a "limit" on deposits of any kind. I will research it though and post back to this thread.

rbsremodeling

the limit here is 1/3 down but special orders are paid in full up front. The state can see me if they have a problem with that.

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philner

Massachusetts has similar rules regarding deposits, a little more complicated, but there are exceptions for special order items. Phil

Brock

Call Lowes and ask them to come over to your house and install a new in-stock (not special order)hot water tank next friday. You will pay 100% of the job today.

I think you guys are refering to the landord-tennant law. Their are limits landlords can charge for rental deposits and those do vary from state to state.

Now as far as services, you can write the contract for 200% down and 100% returned to the customer upon completion if you want. It's an agreement between two parties it can be whatever the two parties agree to and could never be goverened by law.

Tscarborough

If the units are custom, i.e. unreturnable, you are crazy to pay for them out of your pocket. If you can return them or cancel the order for a restock, then you should get that amount upfront, at least.

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Tscarborough

Brock, you are incorrect.

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It ain't Rocket Science unless you are building rockets.

Brock

I usually am.

wizendwizard

Interesting thought here. I might just see if i can institute this at some point. That would end some of the cost overrun problems i have had. Thanks

__________________
"If you start the grout process over, you too could use sparkly grout!"
There is no such thing as an illegal immigrant, they are either illegal or immigrants.
I'm Retired, or a student, don't really know anymore.

philner

Sorry Brock, not trying to pile on. I have rental units, and yes there are limits and escrow requiements in regards to last months rent and security deposits in MA. There are also limits on amounts of up front monies collected from a homeowner by a contractor. They aren't too draconian, most instances limited to a third but they are there. Are there ways around them?sure, Just make sure the judge agrees with you when you're in court with a non-paying customer who is telling the judge you're a bum. Phil

Brock

agree. wierd laws are out there that are rarely inforced. i found that out when i got a ticket for leaving my keys in the ignition at the grocery store. cost me 15 bucks for the lesson.

bottom line is in america you have to learn which laws you are willing to break and which ones you wont. personally i will go to jail before i let a customer get ahead on a large project. i've been doing it to long to allow it to happen.

masterk

The Maryland Home Improvement Comission regulates the licesening. They have deposit guidelines. If you don't follow them your lic. will be revoked.