Down Payement

mikec

Here in Connecticut ,the state recoomends that home improvment contractors don't ask for money upfront. They reccomend paying upon completetion. If you do pay a deposit they suggest a 1/4 payment plan is best i.e. 4 equal payments during the job(which is fine). But to suggest that you make no downpayment at all seems harsh. On a small job its one thing,but on a bigger job I like to get 1/3 upfront. Mainly this is to cover materials. I have the material delivered the next day in most cases. Or ASAP. Should i ammend this parctice? Should i maybe have them give me the 1/3 after materials are delivered?
I can cover materials on most any job,but i feel that indoing so,and waiting until the job is finished for payment, I am making myself vulnerable. I've never been stiffed,but you never know. I'd like to at least have some money in hand.
What do you guys do?

PressurePros

There are some good thoughts on the topic here.

http://www.contractortalk.com/showth...ht=money+front

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Ken Fenner
Pressure Washing PA
Roof Cleaning Services PA

ProWallGuy

Since I'm not a bank, I get a down payment. I don't like to finance someone else's home imporvement project. The only exception is if it's a one day gig.

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Wallpaper Hanger St. Louis
Digital Murals Installation

tcleve4911

Hi Mike in Conn.
A down payment should be used as token of agreement with the signing of your contract.
We take 5% of the project cost as a downpayment on the day of the signing of the contract. The next progress payment of 25% is due at the "start of construction" which can be defined as first delivery of materials or the guys showing up at the first day. ( Payment is due that day ) Next payment might read " 25% due at completion of framing".
Custom write your payment schedules to make the cash flow work for you and always help the customer to feel that their money is being well-managed
To say you need a huge downpayment for materials hints to me you don't have accounts with the local vendors. Which hints to be you are not in business full time. (30 day accounts are pretty standard.)

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Back in Maine
Dubbin' Around
Doin' good stuff ......

streetracer

Are your customers balking at your downpayment requirements, and citing the state's reccomendations as a reason? If so, you may need to change them to keep the business coming in. If not, don't even think twice about what the state reccomends. That's just an opinion that was probably published after some lawmaker's elderly mother was taken by an unethical contractor.

You know, some of us even exceed the posted speed limit from time to time.

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Second Look Home Improvement
SecondLookHome.com
If you have built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them. --Henry David Thoreau

mikec

Thanks guys. I like the 5% at sigining and 25% at start idea. I think that will work well for me. Then i'll schedule other payments accordingly.

mikec

No one has said anything yet,but i'm getting ready to take this fulltime,and have been reading on the state website. I figure if i were the HO i would research the state site. Therefore i'd like to know what they have read before we meet. Again it seems odd that the state would reccomend this. I mean do they reccomend that you take clothes home from the store and wear them before paying? no.
so why make us finance the HO improvments.

tcleve4911

Hi Pro
I agree, we are not banks & I will be willing to bet that you can't order your materials ( wallpaper ) without a deposit. Mark up that special order wallpaper your typ. 40-50% . Submit and invoice for that and your 5% downpayment at the signing of the contract.
Just my way of getting $ for cash flow........

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Back in Maine
Dubbin' Around
Doin' good stuff ......

tcleve4911

Mike - That state recommendation that you refer to is just that......a recommendation. That's beurocrats looking at the problem of fraud and instead of coming up with some common sense contract ideas for the public & business people, they just throw out an all or nothing solution. That type of short-sited logic doesn't work in the real world. politions

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Back in Maine
Dubbin' Around
Doin' good stuff ......

mikec

Yeah,thats how i'm looking at it. Thanks for your help.

King of Crown

I have just started financing doors and installs.

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Real nice guys

kevjob

Hi Mike C wherein CT are you ? I am from Monroe originally. I do the 5% at signing and the 25% when starting and havent had any issues yet.

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Kevin
Basement Finishing Highlands Ranch Colorado
Littleton Colorado, Basement Remodeling
Kitchen Remodeling Denver

mikec

I'm in Middletown kev. Smack dab in the center

Leo G

I don't care what the state of CT recommends. I don't take anything at the signing but get a 50% down upon the startup, 35% on delivery and 15% upon completion. I feel no need to finance anyones project with my companies money. It may make a better sales impression but it also makes the client who is the one with the power. If I am going to get ripped off it will only be for labor and not materials. I'm from the Hartford area.

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http://lrgwood.com
Custom Cabinets in Hartford County Connecticut

POOLMANinCT

well you know who wants to be president.....

dirt diggler

exactly.

if you're not getting a down payment --- then you must be floating materials. That is a risk and one that could potentially wreck you

Most people are going to understand this.




Either way --- do not put yourself in a position where you're making purchases towards someone's project without having [THEIR] money first.