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Discussion Starter · #1 ·
Okay I have a "Fairly" successful Kitchen & Bath firm in Knoxville Tn, now we are 5 years new to this venture coming from the other side, builder/GC. My question is do you put deposits on your kitchens or just call your "guy" and tell him to come measure and get them ordered. When I was on your side I ALWAYS drop 1/2 material draw at the time of order even building spec. What I gettting none of the builders "want" to do this but with the way builders have been dropping i have NO choice I do it on all kitchen over 4000.00. Do you feel this is a unfair action and is would this make you NOT want to order with us. Please do not get me wrong we have accounts with all manufacture we sell and do get 30 days BUT its the fact more guys going bad lately. Thanks for your time
 

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Builder/Remodeler
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50% down is standard for whomever we're ordering from. Most suppliers are very very leary about extending 100% credit on special order items these days, so I don't blink or question it when I'm asked to put money down. Everyone needs to CYA right now.

If I were you, I'd make it policy to get a deposit on anything other than a small order. Too many GCs are going under, and will continue to do so over the winter, to risk getting stuck for the bill.
 

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If none of your builders want to pay the 50% deposit that is all the more reason to ask for it.
In our area that has also been the standard practice for anything other than cheap spec home boxes bought from the lumber yard, even then you have to have a strong credit account.
The builders aren't building with their own $ why should you? Most clients are Ok with the deposit especially if they are expecting it.
They have to be taught how the job has to be put together, and payment schedules are a key component.
 

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Thom
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But, of course, the builders are wondering if YOU will be around or if their "Deposit" is your going out of business money.

Most of the time I paid a deposit. You should accept credit cards and allow them to put it on their card. If you don't deliver they can contest the charges.
 
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Yes 50% deposit is standard stuff. The guys I do lots of work with don't even ask for it any more. I tell them that it's a go and they put it in production. I send them a check as soon as I get the draw but usually it's already in production. I guess what I'm saying is you might give a little on guys you are comfortable with but I think I would be careful and trust your gut.
 

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But, of course, the builders are wondering if YOU will be around or if their "Deposit" is your going out of business money.

Most of the time I paid a deposit. You should accept credit cards and allow them to put it on their card. If you don't deliver they can contest the charges.
Good point
 

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Discussion Starter · #7 ·
Yes we do accept CC and I offer that to al customers, and your right "how do they know if we will be here". I try to show good business a soon as we have a confirmation I fax/email that to the builder along with a copy of a paid invoice, see when I order with a job that takes a deposit I pay them when I order so they see where their money went.
 

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But, of course, the builders are wondering if YOU will be around or if their "Deposit" is your going out of business money.
RR,
Thom brings up an interesting point, in these economic times there's fear on both sides that the other party could vanish or misuse the funds. If I didn't know you well, I would have a very tough time giving you $xxxx.oo down. I've seen way to many homeowners get the shaft doing that. All too often the down payment goes to pay some old creditor and is not applied to the current job.

In the old days (60's, 70's) people used "escrow account" for various reasons. I haven't heard that term recently so I did a quick search... here's the partial answer:

An escrow also refers to a writing deposited with someone until the performance of an act or the occurrence of an event specified in that writing. The directions given to the person who accepts delivery of the document are called the escrow agreement and are binding between the person who promises and the person to whom the promise is made. The writing is held in escrow by a third person until the purpose of the underlying agreement is accomplished. When the condition specified in the escrow agreement is performed, the individual holding the writing gives it over to the party entitled to receive it.


Boiling all that down, ask your bank if they can set up an escrow account (if they say no, get a new bank) where you can escrow the down payment the general contractor gives you until a certain phase is completed. You may have to furnish a document for the contractor to sign, to release those funds to verify the event has taken place. On the other hand, you can just set up the account and tell the contractor you will escrow those funds until some agreed upon event takes place and handle the details yourself.


Done properly, this will resolve the fear of them losing their deposit and prevent you from losing jobs for that reason. In fact, if you present this as an advantage, it can land a few more sales because they will feel more secure with you.

Simply say something like ..."as you know, in these times a lot of small businesses are being stressed to the point of going out of business. When you do business with us you can feel really good because we escrow your deposit until x happens, so you know you'll have your cabinets without any worries. Make sense?"

This needs more work to fit your situation, but you can use the concept to take away fear of the general losing his deposit.
 

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bathroom guru
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My cabinet guy I use now does not require a deposit on anything.

The last guy - you had to make a deposit - OK

But then he wanted paid before they did the install - NOT OK

As it turned out I'm glad he wasn't paid before completion - there was issues that probably would not have been resolved.
 

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Superior Firepower
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True story.
Worked out a plan for several wall units at Doctor W's house with A**** cabinet guy. Gave him a $5K deposit.
Waited 6 weeks and nada.
Went to his modest shop and found him sitting at his desk, smoking a fatty.
2 weeks later he came to the job, said he had spent the deposit and could not proceed with out more money........
:censored:
 

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Dave from Macatawa
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Been there, seen that.............same type of thing. I became the guys partner for about 2 weeks to get thru it. He had established a "work free drug place" instead of laminating.:censored:
 
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