Down Payments

When a customer accepts your proposal to do an installation, do you ask for a down payment? If you do, how much do you ask for?

 

By law, we cannot ask for more than 10% or $1,000.00, whichever is the lessor amount. But, what we do in our contract is spell out definite times and amounts of payment for the rest of the job...For example, Job cost, $12,000.00. $1000.00 deposit taken, balance of $11,000.00 due. Pipe and parts brought on site, $4,000 due. Trenches open, $4,000.00. Trenches closed, system up checked and running, $3,000.00 due. Balance of $1,000.00 due upon completion, we usually do this simultaniously when we show the client his system.

Typically, we do not work more than 3 days without recieving payment for work done to date. If we have not been paid up by the close of the 4th day, we file a 10 day stop order and leave the job until the client gets with the program.

We will do anything any one wants us to, I'll be damned if I allow someone tell me how they intend to pay me...

I like this system for two reasons. It is the fairest for our company, and it is a check and balance system for the client, and very easy to sell them on. People are far less likely to give a job to someone who asks for 50%, or even 33% as they are for one who asks for a small amount until the work begins.


Some do it differently, this how we do...This is how we keep our checkbook balanced and our profit margin high.

 

Believe it or not, we hardly ever ask for a down payment, never on Residential and maybe a small amount on Commercial. Our customers trust us to do the work when we promise and we trust them to pay us on time. It's a system that has worked great for us.

 

ok...call me crazy...i want 1/3 down when contract is signed...balance on completion of project...if client gives me a bad vibe...i want 1/2 down on credit card.

brian (been burned too many times and it will never happen again) klimek

 

1/3 to 50% deposit required before work is started. rest at completion

 

Call it descrimination but I can usually "feel" the people that are going to be a problem paying. There are just certain things about them that leave me feeling uncomfortable and those are the people that I will then ask for a deposit or down payment.

 

As soon as actions back up those feelings we put the 10 day stop out, and file our lien...9 times out of ten, the lien hits, they call screaming, and then pay

 

We usually don't get deposits on commercial, especially if they are going though a general contractor, or if it is a government agency, deposits are not possible.

On residential, we get 1/3 at signing, balance at completion unless other arrangements have been made.

The good customers don't balk at this at all. The ones who drag their feet on making the deposit usually ending up being trouble in the end anyway. The deposit separates the problems up front. Sometimes when they say go ahead, but don't come through with the deposit is because they are still shopping but want to be sure they have someone to do the job.

A few years ago, I had a new homeowner give us a verbal committment to install irrigation, before he even started building the house. He kept asking and asking about our schedulel, but never did come through with the deposit. When the site was actually ready, three companies showed up to make the installation within 6 hours. Fortunately, I was the third, so the fireworks were over before I got there. Actually the second one to show actually made the installation. Apparently he made it clear that he was going to get paid whether he did the job or not.
Fortunately we were busy enough that it didn't matter that mcuh to us.

Doug
Austreim Landscaping

 

We get a third down on residential balance when completed .On commercial we get half down , and make the owner sign a personal letter of guarentee . Final payment when the system is up and running .Irrigation and landscaping are always last and money is getting tight at the end .

 

Law allows us 10%. I try for whatever is required for cost of materials. I've never had a problem no matter what I asked for.