Kitchen Project Payment Terms

 
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Old 09-15-2017, 01:36 PM   #1
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Kitchen Project Payment Terms


So I picked up a signed proposal and down payment for a project. 50K for the original SOW. My first proposal asked for 25k down, 10k before cabinets ordered, 10k when cabinets installed, balance due upon completion. The customer asked me to revise the payment terms with a smaller portion down. I then asked for 10k down, with 4k payment on mondays, weekly until 46k total paid, then he could hold back 5k till completion. I picked up an envelope which has my check and signed proposal. I did not look at the proposal till i got home. He wrote in that the payments are starting 2 weeks after my proposed start date.
I just finished a 13k project for him at his second house. Job went well, the clients did not cause any problems. I can afford to wait for the money, but i will end up partially financing the cabinets/countertops(13k allowance)

Here is the question; should i wait 2 weeks for a second payment, or revise the terms again?

This is my first time handling the cabinet/countertops purchase, which makes up such a large portion of the sales price. Also, i am sure the allowance is not going to cover what the wife wants for cabinets now. I assume i will ask for more money when the cabinets are ordered.

I work alone, and am only subbing elec.


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Old 09-15-2017, 01:39 PM   #2
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Re: Kitchen Project Payment Terms


Edit:
Not what should I do, what would you do?

I intend to just accept the terms and get started.

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Old 09-15-2017, 01:47 PM   #3
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Re: Kitchen Project Payment Terms


I would make another copy, have him sign, and stick to your payment terms. If this is how it starts, how many other payments get delayed? Cabinets and counter tops get paid in full before ordering. What happens when they change their mind, your stuck with the cabinets?

Or just change the start date 2 weeks so it matches the payments.
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Old 09-15-2017, 03:21 PM   #4
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Re: Kitchen Project Payment Terms


I would not alter my payment structure. Maybe a conversation about why he is apprehensive and why you set them up the way you do.


When people ask I say "I have altered my terms once in the past and soon came to regret it." I say it that way because it true and more importantly I like to let customers know when they are sending red flags.

In fact if I knew a customer would ask such a question I would screw the payments for even more money on the begging phases and possible even increase price to cover an added risk of a customer who might not make final payment.
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Old 09-15-2017, 05:22 PM   #5
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Re: Kitchen Project Payment Terms


There's a reason they are called terms of the agreement... if he is allowed to re-write them at will, with no agreement on your part, what part can't he re-write?

You already showed good faith towards an existing customer and acquiesced once and agreed to the new terms... BS for him to pull this and IMHO something you should call him out (professionally) on for the very reason you stipulated... you can afford to wait but you're not his bank and affects your cashflow and not what you re-agreed to...

Last edited by KAP; 09-15-2017 at 05:25 PM.
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Old 09-15-2017, 06:53 PM   #6
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Re: Kitchen Project Payment Terms


You cut your balls off (professionally) when you allow a client to change anything in a contract.

Change the scope but not the contract is my practice and advice
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Old 09-15-2017, 07:45 PM   #7
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Re: Kitchen Project Payment Terms


Thanks for commenting guys. I think you've talked me into doing what's right, instead of what's easy.

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Old 09-16-2017, 03:00 PM   #8
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Re: Kitchen Project Payment Terms


If a client thinks they can just write in what they want on a contract, just write in "NOT" in bold magic marker and give it back.
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Old 09-16-2017, 04:24 PM   #9
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Re: Kitchen Project Payment Terms


If that guy went to a car dealership and said he'd pay for the car two weeks after he drives it off the lot do think they would let that fly?
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Old 09-17-2017, 04:45 AM   #10
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Re: Kitchen Project Payment Terms


What seems easy actually wouldn't turn out to be in the end. It's the manner that they started the collaboration. I would do what's right and change the terms to what you both agreed at the beginning.
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Old 09-27-2017, 12:45 PM   #11
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Re: Kitchen Project Payment Terms


Sounds like you're both at opposite ends regarding payment terms. You both need to sit down, face to face, and discuss terms that work for both parties before any more progress is made.
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Old 09-27-2017, 11:26 PM   #12
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Re: Kitchen Project Payment Terms


No matter what the job is if I have to order something that I can't return I collect in full for that item before it is ordered. For a kitchen you could get stuck with $20k in cabinets for a lot of reasons. Other than that I usually write the payment terms where I will be paid roughly every 2 weeks.
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Old 10-21-2017, 08:41 AM   #13
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Re: Kitchen Project Payment Terms


for higher dollar projects we will break it down to 1/3 when work begins 1/3 middle 1/3 upon completion. if necessary for the client.

typically 1/2 at start and 1/2 upon completion the only way to go
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Old 10-21-2017, 09:49 AM   #14
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Re: Kitchen Project Payment Terms


I do a basic breakdown on any job and the # of payments will depend on the job cost. So if its a kitchen the 1st payment at signing of contract will cover total cost of the cabinetry + 10%

So the basic break-up on the kitchen would be in 4 payments and the total job cost (material-labor-overhead-profit) gets paid up in the first 1-3 payments and the remaining balance is always around $500 or whatever you want to leave at the end.
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Old 10-22-2017, 09:55 PM   #15
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Re: Kitchen Project Payment Terms


A lot of good advice. Stick to the terms you made. Payment structure should minimize your liability, not increase it
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Old 10-23-2017, 05:04 PM   #16
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Re: Kitchen Project Payment Terms


This predicament is why I have the customer order their own stuff.
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Old 10-31-2017, 10:47 PM   #17
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Re: Kitchen Project Payment Terms


Hate to say, but it's all on you. I am not sure how you missed him rewriting the terms. When I sign a contract, every page and part is gone over, signed and copies made.

I will also say that I would suggest the following on your terms.

Deposit to hold the schedule: 5% of the project.

Any special order: 100% of the charge paid in full prior to order (cabinets, tile, tops, plumbing). I won't eat their finishes.

Deposit to start: 20% of the remaining balance leaving 80% to be split into four payments.

Progress payment (Define benchmark you need to reach in order to get payment) Usually I do something like the project demoed, electric and plumbing rough complete: another 20%

Progress payment - drywall ready to paint, cabinets installed: another 20%

Progress payment - tops installed, walls painted: another 20%

Progress payment - backsplash installed, plumbing and electric trimmed: another 20%

Final payment - majority completed (sometimes I allow a hold back for small punch list items): Final 20%

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