Collecting Money From Contractor

bdog1234

Here is the situation. I have been doing sub work for a certain contractor for about 5 years. They send me a lot of work. I would say 30-40% of my business is from them. Our general agreement is I get paid when their customer pays. They are always good about it and wire me the money the same day. 5 years no problems.

Well earlier this year we did a big job, about 50k, and the customer has stiffed them. What can I do? Contractor says he tries to collect and I believe him but the fact is they marked it up 10% maybe so they have 5k on the line and no expenses. I am out 50k and about half of which was expenses.

I have no contract with customer, and hate to get ugly with contractor as they are one of my main sources of work. At the same time I just don't think they are that motivated in trying to collect as there is not a lot in it for them.

Any ideas?

MALCO.New.York

Contract is with the Contractor and NOT the Client. Got something in writing???? If not...........You be done!

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bdog1234

Well I do, but the contractor sends me work all the time. Over 500k a year. Sent me stuff just last week. I don't want to bite the hand that feeds me.

Being burnt on 50k hurts but is it worth resorting to legal means and ruining 500k a year over?

I guess I am just looking for ideas or ways to get them motivated about collecting this. I think they just send late notices, make calls etc.

curapa

No contract... good luck, I would visit my attorney immediately if were you.

I wouldn't care how much work the contractor gives you, it's 50k.

There has to be some other issue you are not mentioning. Come clean.

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bdog1234

No issue really. Just the fact that this contractor is my main source of business. I know it is not their fault. 5 yrs and tons of other jobs and no payment probs. I don't expect them to pay me and eat it and not get paid themselves. I just know they do millions of dollars of business a year and missing out on their 5k markup on this isn't high on their priority list.

curapa

I don't know then, I wouldn't feel comfortable working for a contractor that didn't respect my 50k loss and try to reclaim my money.

What if it happens again, how would you feel then.

I would definitely consider it a lesson learned and not front that kind of money for them again, or for anyone for that matter.

As for your question, I would simply let them know how much of a loss this event has caused you, if you haven't done this yet, and plead with them to collect. If they value your service then it shouldn't be a problem.

Visit your attorney and get professional advice for collecting your money.

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MALCO.New.York

If the level of what he sends you is correct..........Continue on a DO NOT "Upset the Apple Cart". Allow another job, but.........ALLOW him to purchase the materials. You handle the Labor so your OOP (out of pocket) is limited to these costs ONLY!

Sometimes a "Kick in the Groin" is "The Cost of Doing Business".


500 K IS 500 k!

"Take one for the Team". We have ALL heard that! It carries weight!

It will, over time, wash itself! IF he does not make good.

You do need to handle it PROPERLY so he does not take you for a "Chump".

__________________
Something to One may be Nothing to another!

Ultimate Wisdom---------
http://www.youtube.com/watch?v=OW-cnizLDEE

curapa

Yeah, but how much of that is profit and how has that 50k affected that for this year.

I once worked for a contractor that bragged about over 1mil a year going through his company but he didn't make much more money than I did and with alot more hours and headaches.

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TigerFan

Is there a way you can join with him in collections?

In La, if a sub is not paid, the sub can place a lien on the property - I doubt that would make the contractor mad... in fact I have used it myself - "not only, Mr Homeowner, am I going to lien and sue you, but so are my subs. You'll be dealing with 5 liens, and 5 lawsuits, some in small claims court, which moves QUICKLY."

Seems to get their attention.

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http://www.bayoucontracting.com

MALCO.New.York

That is WHY I posed the question!

__________________
Something to One may be Nothing to another!

Ultimate Wisdom---------
http://www.youtube.com/watch?v=OW-cnizLDEE

nlgutters

Here you can lien the home owner even though you went through the builder. You will find out real quick who is screwing you. But im guessing you are past your time to lien 90 Days here. It could be the contractor stole your 50k and is keeping it for himself. It will probably happen again too. If you have not done anything about this 50k.

GregS

Tell me again why you agreed to get paid when the contractor gets paid? Why make it your problem if they don't get paid?

Get rid of that stupid clause from your 'contract'.

And lein the house.

Forry

Naw, keep it simple... $$ motivates. Begin charging interest and they'll notice.

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wyoming 1

That is why I do not do sub work for builders they take all the glory you take all the risks (50 k ) and if things go great he makes 5k off of your back and if not he loses 5 k and you got stuck with the rest This is the main reason big builders swithed from employees to using subs you have to worry about everything builder slows down and lays off the subs doesn't cost his UI a thing he gets busy and you have to find more guys to keep up and if not he gets a new sub. As far as collecting your debt if you are past the 90 days I think Malco had it right you just took one for the team.

MrHands

I can understand your plight.

He only lost the 5K mark-up?

There were no out of pocket expenses for him?

Well, he has little motivation to collect. He needs to be motivated.

Have a nice long chat with him about making timely payments until you are paid back. Be nice, but make sure he understands you have lost actual money and he risked NOTHING. Play to his sense of fairness.

Also talk to a lawyer about legal repercussions, you may want to use the "idea" of a lawsuit to motivate the GC.

AND, tell him that you feel it is now necessary to rewrite your contract with him. Give him some motivation for future collections.

naildriver

Any legitamate business that has to pay when they get paid is not worthy of your services. If the contractor hires you to do the work then he is liable for your pay, not the homeowner. I agree to put a lein on the property. I had a contractor do this to me a few times (pay when he was paid) and sometimes the pay was drawn out for months. I'm afraid if you let this one slide then he will know he can take advantage of you every time his pay is drawn out.

mrghm

so you are out of pocket directly 25k.

i would right off the other 25k.

every new job build in a few k till you cover the 25k you out laid.

buletbob

put a lean on the house, its up to your company that you are subing from to make sure that there will be no leans posted to the house. Before I can receive my final payment I must show that all subs where paid in full with all suppliers. BOB

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AtlanticWBConst

Don't bite the hand that feeds you. Communicate with the guy that hired you. You should both be going after the jerk that owes you money. You are both the victims here, and the scum is the Customer that screwed you guys.

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It's time to establish a relationship with an attorney. Tell him your story and what's at stake.