contractor bankrupt

Steve Ebels_3

When I make a proposal now I offer it two ways.

1. I'll give them a firm price for the job with terms being 1/2 down, 1/4 when materials are delivered and 1/4 when inspection is done.

2. I give them an estimate (notice the word estimate) and offer them a 4% discount off the total package price if they pay the entire amount up front. Then at the end of the job I furnish them with an actual time and materials list and we square up from that. I TELL THEM UP FRONT THAT AT THE END OF THE JOB THEY MAY OWE ME A LITTLE MORE OR I MAY OWE THEM A LITTLE BACK BECAUSE THE PRICE IS AN ESTIMATE.
This seems to work very well. The customer knows exactly what they paid for everything from the final bill, they get a 4% discount and I don't have to worry about cash flow or getting paid. This one thing is helping us dig out of the above mentioned "hole" more than anything.

Give it some thought and see if it would work for you.

shawn_14

Just had another contractor that we do very high end work for declare bankruptcy today. Worked like 3 years for him no problems with him. Now we are out 30 grand. We are a small 4 man shop so it will take a little while to get over this one. But of course to he is inc. So we won't see anything. SO how many other people on this board get burnt by these types of people.

bob young

surely you jest

why would you possibly let some one especially a contractor get so far ahead of you ? you need to enroll in a serious business course pronto or get a hi-salary job if possible instead. business is not for every one. 30 grand .....that is utterly ridiculous.

kevin coppinger_4

happened to ...

me 3 yrs ago...45k...na da. live and learn.

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shawn_14

We actually do alot of jobs for the company. We average about 250-300 thousand per year all of our contracts ar 40% start up 40% rough And 20% completion. How else should you cover your ****. I know you gotta live and learn but what else can you do.

Steve Garson_2

I don't know the law, but aren't you entitled to a mechanics lien on the facility that you did work on?

Anyone know?

mikea23

shawn

We do all highend work last year we made our contracts 10 payments you get smaller checks but it increses cash flow and will only get burnt for a small amount. also dont hesitate to LEIN the home or homes you worked on
Mike A

MechTech_2

Limit?

We do 25% basement tubing rough-in, 25% main & 2nd floor tubing rough-in, 25% when we show up with equipment, and the final 25% on start-up. When you have 5 - 10 jobs going for the same customer, it doesn't take long to get to 100K! Can we insure our receivables? Sorry Shawn.

Al

joel_19

jest not

Bob 30k is not that strange on high end houses. you start talking systems that are 80,100 over 200k$ what are you going to do pick up a check every week?? Good luck with that. He's probably not talking 5 jobs he's probably talking 1 house.

Can you put a Mech lein on the house???? that way when the bank sells it you will get payed by his bank doesn't matter that he was an Inc.

Steve Ebels_3

Been there done that

To the tune of almost 50K on a $150K job. We're still digging out. It'll be another year with a year and a half behind us.

Be like a basketball pal. When you get thrown down, bounce back up. The only other option is to fold up and declare that you have been beaten. That doesn't work for me. I can't let my other customers, my suppliers and employees down. Hang in there. You can out a lien on the place if you have furnished materials or equipment within a relatively short time period. 60 days in most states. After that I think you're past the deadline to file.

shawn_14

Yeah we can put a lien on the property but you just kinda feel bad for the homeowner because they had nothing to do with the situation. They are all just in the process of a renovation. But I ill defintly check on the 60 day period for a lien.
Thank you very much for the info.

Mark Eatherton

Monthly draws...

We have it in our contracts that we will perform progressive billings. We don't ask for any money up front until something (equipment and or labor) are delivered. THey have 30 days to pay our bill before interest starts accumulating.

We are a rare exception to the rule of the trades. Always have been, always will be.

Have yet to get burned to any major degree, and hopefully never will.

ME

singh

Shawn

At least I'm not the only one.

Tough biz we are in. I just got burnt also,but put a Mechanics Lien for the TOTAL amount of contract,(breach of contract) not just what is owed to me.

I took no money money up front on this one , put tubing in slab, they poured concrete on top, and I have not seen a dime. It still hurts small co.s like us.

Hang Tuff, Good Luck.



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GLENN_14

mechanic's lein useless if home owner can prove that the gc was paid..... at least in New York State

Mark Hunt_5

That's true.


I was involved with a project a few years ago where the builder moved to another state right in the middle of the project. POOF! GONE! (About a week after he paid me my required 50% advance)

The lumber company that provided the windows came looking for their money from the HO. He had a receipt from the builder that listed the windows. The builder got paid, he just didn't pay the lumber company.

The lumber company had to try to find the builder in order to get paid. As far as I know, they never did.

I really do not miss that part of the business.

Mark H

Bob Sweet

Same thing happened to me Mark,

took my first business down the tubes (tough lesson to learn, humiliating actually). After a couple of Ellen Rohrs books and 15 years more experience, more than $2000.00 owed (small service company) and I'm pulling out all the stops.

May not be proffesional but it seems to work.

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mikea23

Shawn
60 day period you should look into. In NY we have that law. Do what I did call the customer and tell them you need to service equipment or Just checkup on it. Make a invoice with date and time and 60 days starts all over.

Its stinks to involve the homeowner but lets be honest he probably ows the builder money anyway.

Mike A

Mark Hunt_5

Hi Bob


I will be seeing you in Denver!

Looking forward to it!

Mark H

Bob Sweet

Ohhh Yah

should be fun!!

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Mike Dunn

money

This entire thread reinforces the fact that the money should be handled by a sub-contractor ie. a bank or an escrow company. The general contractor should not be the financial contractor too. I know that there would be extra cost associated with this type of thinking and that this cost would ultimately be handed down to the homeowner, but in the end they're the ones doing the consuming.

Alan(OnVacationInOregon)Forbes

Stick to the book

File your preliminary notice and if the contractor is a late pay, put a lien on the project. Owner has a fit and puts pressure on the GC to take care of it. And I also charge 18% interest; if they don't pay, I don't go back. Getting stiffed feels almost as bad as getting your tools ripped off.

That was one of the reasons I semi-retired; the others are:
1) My insurance no longer covered me for mold claims.
2) My employees were the best, but the stress of scheduling and keeping them busy and not too busy was a burden.

I now do all the work myself, but it's all repair work; one or two hour jobs. The best part is that the homeowner pays right away and they are so thankful.

Wild Rover

Getting Paid

We have a policy of calling for inspections (rough or finish)only after the agreed upon payment has been recieved. We still have all the leverage at this point and can't afford to give it away for all of the reasons listed here. I have found that if everyone knows this policy ahead of time it should not be a problem. I have one builder i have been working for for many years who i still let pay me after my inspections and he is the only one i chase for the money-how ironic.

Wild Rover

Getting Paid

We have a policy of calling for inspections (rough or finish)only after the agreed upon payment has been recieved. We still have all the leverage at this point and can't afford to give it away for all of the reasons listed here. I have found that if everyone knows this policy ahead of time it should not be a problem. I have one builder i have been working for for many years who i still let pay me after my inspections and he is the only one i chase for the money-how ironic.