Cash Flow

[DVS Hardscaper]

Originally Posted by joes169

So what's the downside to having terms extended to the contractor?

Terms are not bad. As long as you have a stash of cash and can manage your money.

Personally, I like to pay for materials on the spot. It's my clients money, I feel I need to use it as intended. Construction is a very risky industry. I get draws from my clients, and I pay for their materials with those draws. I'm not laying in bed 60 days after we've finished the job tossing and turning because I owe 'XYZ Feed And Supply And Welding And Cold Beer, LLC' $8800 for Frank and Helens backyard.



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[DeereHauler]

here in PA according to the new contractor laws, for any job considered home improvement a work contract will be made between customer and contractor and upon signing that contract the customer pays 1/3 of final cost, 1/3 upon start of job, and final 1/3 upon completion. So all cash flow, or money management needs to be based upon that for me. I personally pay for my materials when delivered rather than let a bill come a month later. If your very stern about budgeting, and have an office person to manage your bills, and money it may be easier to have accounts. I'm not a great budget person, so if i pay for it when it arrives, then i don't chance getting into a bind later

[PatriotLandscape]

I felt that during the good times a few years ago contractors used these terms to use funds inappropriately. While I was green with envy they are now out of business because the equipment was repo'd and the suppliers will no longer sell to them. It just makes sense to pay for the material when you get it.

On a side note we also pay with credit cards then pay the bill of daily with all the materials we buy my wife and I go away on 3 vacations a year and pay almost nothing out of pocket. Anyone else take advantage of the points?
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[joes169]

Originally Posted by DVS Hardscaper

Terms are not bad. As long as you have a stash of cash and can manage your money.

It takes diligence and control, but so does running a business in general.

Personally, I like to pay for materials on the spot. It's my clients money, I feel I need to use it as intended. Construction is a very risky industry. I get draws from my clients, and I pay for their materials with those draws. I'm not laying in bed 60 days after we've finished the job tossing and turning because I owe 'XYZ Feed And Supply And Welding And Cold Beer, LLC' $8800 for Frank and Helens backyard.

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You can still pay the account early if you please. I'm also curious how any small business can accrue any kind of business credit w/o strong account history? And, if you ever decide to go after commercial jobs, you're in for a big learning curve. Terms are the name of the game in commercial.

Originally Posted by PatriotLandscape

I felt that during the good times a few years ago contractors used these terms to use funds inappropriately. While I was green with envy they are now out of business because the equipment was repo'd and the suppliers will no longer sell to them. It just makes sense to pay for the material when you get it.

I understand what your saying, and have witnessed the same as to the first part. But, I personally see no benefit in paying COD. Too cumbersome for me harder to track, less control of your company's assets etc... It all comes down to discipline I guess.


On a side note we also pay with credit cards then pay the bill of daily with all the materials we buy my wife and I go away on 3 vacations a year and pay almost nothing out of pocket. Anyone else take advantage of the points?
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We use a credit card, with a few employee cards, that accrues points and gets paid in full monthly. If you can see the benefit of credit extended through a card with 1-2% dividend, why would you dispell the credit extension & benefits from material suppliers?

[DVS Hardscaper]

No sure where you're going joe.

Wanna pay a bill monthly, then great. Wanna pay upon delivery, then great. Whatever makes a person sleep better. Thats what makes America great is we have such freedom.



We do do maybe 3% commercial work a year, only for select people that I know will pay. And even then, the materials bought, I pay for upon delivery. I could spend the next 10 minutes typing how I handle commercial work and why.

[PatriotLandscape]

Umm the money you take in and account for materials is in no way an asset. It is a liability. It's also a lean management strategy bottom line is there is no reason to have an account if you already collected the money for the materials.

As for business credit unless the yards you use report to experian or similar companies then it is just house money and doesn't build any credit. Making a profit is what opens up your credit not having an account with a stone yard. Banks go off taxes.
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[wurkn with amish]

vendors want buying history with them to build credit with "them". Not just little piddly amounts either, has to be at least 5-10k yr minimum.

howd we get so far off the original subject?

[PatriotLandscape]

That happens everytime with DVS.