Why Aren't We Getting Paid?

480sparky

OK, so today is the last Friday of the month.... the day I send out all my monthly statements and invoices.

As I walked out to the mail box, I realized just how many envelopes I had in my hand that contained 'reminder' and 'past due' statements. Even a 'now-or-else" notice.

Granted, most of my customers are good, loyal ones, and the vast majority pay in a timely manner. But increasingly, I've noticed a trend of more and more people letting things like this 'slip by'. "We'll pay it next month", "We had some unexpected expenses last week", well, you get the idea.

I know times are tough, money is tight. Emergency repairs I can understand, because of the economy these days. But I find it odd that even 'well-to-do' folks are just not forthcoming with the funds.

But... what is the real reason we don't get paid? I'm not looking for excuses you've gotten from non-paying customers, I'm after the real reason they just don't feel like paying up. (I hope that made sense)

I have my own theories why we have to spend so much time and effort chasing down our money, but I'd like to hear more.

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Buck Parrish

I have been ripped off more in the last year then the previous ten. I use to never get deposits. Now I have started getting deposits, local checks only, and asked to be paid when I am done. Not in the mail.

I don't know the answer to your question. But I do agree. I know on a home sale. It seems every body gets paid before the electricians.
The realtor the owners the lawyers. Every body has their money before me.

pcplumber

My theory is that people 'want' to put the blame for their problems on the mortgage companies and the credit card companies. This makes it okay for every person to skip paying their bills and it is a societal problem. People keep hearing that thousands of people are losing their homes and the credit card companies ripped everyone off.

This is their attitude.

"Nobody else is paying, so why should I."

In the past 36 years, I sued only one customer and one general contractor. This month, I am filind lawsuits (most are small claims) for six customers. For the first time in my life, I just got bad checks for $2400, $3500, and $1200, and the customers have absolutely nothing to say when I ask them if they are going to make the checks good.

The problem with suing in court is I have to go to court the first time and the customer can appeal when they lose. Then I have to go to court a few more times to try to collect on a judgment. The average number of times we have to go to court is 4 to 5 times and most of the time the customer still will not pay and they often file bankruptcy. I never bank on getting my money, but I feel uncomfortable just leaving their bad account sitting on my desk. I have to try.

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outlaw

I think that some people believe that it is too much trouble for you to pursue. What it cost you to pursue is sometimes less than what they owe.

I had another contractor that asked me to make some metal roof panels and bend some trim. When he came to pick it up, I gave him the bill and he wrote a check. He called me back later and said that I over charged him. Two days later he cancelled the check. What can I do about it? Not much. It will cost more to pursue it than what its worth.

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BobsLandscaping

On my big jobs I like to use John Deere Landscapes Financing. The homeowner finances their project through Deere, Deere puts the money in my checking account within 48 hours. No worries, job is completely paid for before it even starts.

When the HO doesn't want to finance I get 50% when they sign the contract and 50% the day I start the job. Job is paid off before I start. Checks get called in to their bank if I have a bad feeling about the second 50%.

I've been burned too many times, now everything is prepaid. Annual mowing contracts are prepaid 3 months in advance.

Don't give them the opportunity to burn you. Collect your money, then do the job. I also cash the check at their bank then deposit the cash in my account.

mahlere

Outlaw is on the right path. How many of us have legal departments? Try not paying a small contractor for 3 months and see what happens. Nothing. Not even interest. Try not paying your cc's, mortgage, vehicle, etc for 3 months and see what happens.

We are idiots, and people know this. These days if you do resi service, and don't accept cc's and operate COD, you are a dummy.

nEighter

or it could be that they think of you the same as all companies.. oh well I don't have to pay for XX amount of days.. they won't send me to collections for.. XX amount of days. That type of thing more than anything. They think we are much larger than we are, that we can "float" or fund their "small" bills cause we are wildly successful companies and have the money to cover for them.. since they are just poor lil homeowner.

jaros bros.

You have to get the money upfront. Why finance the ho's project, unless you are an obscenely big company and can manage the risk? I get paid at the end of every week now, especially in this economy. If I'm not paid, the tools are in the truck and I'm driving. I'll only ever be out a week of labor and that suits me just fine.

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Josh Jaros www.jarosbros.com Remodeling in The Woodlands, Texas

CScalf

I don't know what the laws are in your area but in Illinois if you can prove that they owe you the money after they cancel the check, you are entitled to treble damages (twice the amount of the check) plus costs and any bank fees associated) Might be worth checking into, I didn't know about that until I asked my lawyer if it was worth going to court over a similar situation.

Tiger

Treble damages in Illinois are for NSF checks, not Stop Payment. There are also rules about the damages. I believe you have to give them 30 days to make good on the check.

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TxElectrician

480, I don't know how your business opperates but I can tell you a little about my experiences. From the mid 80s untill maybe 2000, I had a mid size company doing mostly commercial and Industrial work. It was normal to invoice monthly, and I became accustomed to it. Did not have much problem collecting.

In 2000 I moved my family to a small town and just ran a 1 man show for a few years, mostly doing res. service work, and collecting payment when the job was complete. As I began getting busier I added a few guys and started sending invoices for payments. As long as I sent an invoice within a day or two of the job I did not have any problems receiving payment.

Continued to get busier and just couldn't find time for all the "office work", so I fell behind on my invoicing, only doing it once or twice a month. Payments, even from established customers, started becoming delinquent.

I think my customers felt that if I didn't need the money bad enough to be prompt in sending the invoice they had no reason to rush to send me a check.

Went back to sending invoices within a day or two of completion, calling if I haven't received a check in a week. I still have to hound a few but not many.

TxElectrician

I don't speak Illinois, but in Texan, treble is three.

480sparky

Basically, service calls and such are COD. I get done, and receive a check before I leave. Most delinquent accounts right now are HOs whom I've worked for in the past. They ask me to do something, and leave the house unlocked, or leave a hidden key, or I arrive and they go to work. I invoice them the next day.

But more and more are getting 2-3 months in arrears.

I thought 'treble' in Texan means Mexicans crossing the Rio.......

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Site : the area or exact plot of ground on which anything is, has been, or is to be located.
Sight : The power or faculty of seeing; perception of objects by use of the eyes; vision.
Cite : To mention in support, proof, or confirmation; refer to as an example.

Kuba

You cannot ask for more than 30% from your customer in the state of PA now... They have made new laws that are going into action this June of 2009...

Called the HICPA.. home improvement consumer protection act...

If you do more than 5k worth of RESIDENTIAL work it is manditory that you now have a registration # through the AT Gen office...

If you get complaints they revoke your registration

Penalty for doing work without the registration

3rd Degree Fellony and fraud

jimmys

Kuba, we've had that sort of reg here for maybe 20 years. You need the license to apply for a permit unless you're the HO. At the beginning, the legit contractors paid into a fund so when HOs got ripped off by some bad guy the fund could help them out. I think it was $200 or $300. Haven't had to pay since, nor do I hear anything about anyone collecting from the fund. But you need the license and contract language that tells the HO how to access the fund. You get used to it.
Jim

Magnettica

Let me just write that down here thank you.

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ampman

tight credit markets make it hard to borrow money and the result is sh!t flows down hill

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rbsremodeling

Yep I get a deposit to start and a check the day I arrive. Even if its a service call we take a deposit up front.

Whats this we stuff you got a mouse in your pocket?

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mahlere

nope...but according to my son, i got a duck in my ass

PGD

I've never heard that expression but I know of one from my earlier days with the ladies that sounded something like that!




Oops! I've done it this time!