What's your percentage of theft losses (deadbeats, etc.) and other questions and discussion.

The Steam Whisperer

I would like to see where we are relative to others in the the same field. I spent some time talking to Steamhead about this recently as we are looking at changes to help address this. We currently send a bill after the work is complete from the office, since that is much more efficient use of tech time, but continue to have people take advantage by not simply not paying at all ( no dispute at all or the Trump type business practice of betting you won't sue due to the costs involved, like was done with Trump tower in Chicago), invent excuses for not paying, or take months and months to pay. How much is reasonable to just write off as consumer theft losses as part of basic business expenses? We have already instituted that all sorts of additional documents have to be signed before any diagnostics or work begins quite clearly showing all labor and material rates ( we are time and materials for service/repairs) and all the state required consumer protection law documents ( and where are the contractor protection laws?). Of course I have already had someone claim that they were told something else and the documents they signed don't matter.
We are contemplating requiring payment immediately at completion, which would involve providing everyone with material cost lists, probably lap tops and credit card programs in order to accept payments and a bunch more tech time in the field. I wonder how much tech time will be lost with people trying to argue about the bill while the tech is standing right there. And, of course, there is the problem of condos and corporations than simply are not set up to pay bills in that fashion.

I suspect someone will say we should go flat rate, but that is a huge disservice to our clients that take good care of the thier equipment as ongoing repairs and service costs are actually much lower than those that don't take care of anything and only call when they don't have heat. Things such as what needs to be serviced annually is not the same every year, and boiler rooms with no floor drains, poor or no lighting, etc jack costs way up, so flat rate wouldn't even work for annual clean and checks.

DZoro

This issue is probably the hardest part of our industry. We have lost a extreme amount of monies over the many years.
I don't pretend to have the answer, and look forward to hearing the discussion.
We currently do this.
a) tech calls in parts used, owner writes check or cash. Tech leaves with payment. (currently not set up for portable card services)
b) No one home, secretary has credit card to be used on file, owner contacted, and card billed. It is made clear we are to be paid before leaving the job. If that is a issue then we don't go. This has helped tremendously, unfortunately, or fortunately, we may loose a few clients, but really don't want those anyhow....

All furnaces / boilers installs are paid up front, no exceptions.
The days of "I'll be in tomorrow with a check are gone."
Financing offering works very well. Not all people are prepared for a loss of their heating system in a moments notice. With financing a phone call and the homeowner is either approved or not.

New construction 1/3 upon confirmation 1/3 upon start 1/3 upon completion. Sometimes the final completion check a small percentage is left out depends on the situation.

These terms were hard for a trusting old timer to get used to, but this is where we are in todays society.

D

clammy

i find that dead beats will never change and when confronted with them i do the following .Im totally upfront with my labor rates per hour and give them a good idea of the cost of the service required and that i will be requiring payment upon completion .I give them a service ticket with the time in and out and itemized cost of parts.When comfronted with non payment i hassle them w constant calls until they realize that i will continue to call and finally i tell them i m sending the bill to my collection agency who shall intern ruin there credit ratings and i will get paided but at a cost and also that i will no longer want there bussiness .I referee them to the highest price competitor who i know never leaves until payment and will put them to collection within a week ,also he is the highest charging per hr outfit with the most unskilled labor force around who know one thing just sell sell sell and do the worse work in all fields concerned plus i love the fact that theres a constant help wanted sign on his bussiness and his trucks they operate a revolving door of service and install tech basically they suck . i loving giving dead beats some thing to complain about .And after the jokers get done screwing things up they call me but not to there knowledge im done w them never to return maybe just for giggles but never to provide them w service .Im a huge go w the gut feeling and when my gut is turning i just say i have to get a bigger screw driver and get in the truck and leave they usually get the meassage . i always let them know costs way up front and explain that i am in business not charity and being i do not advertise u got to me by referral so ur only getting one chance otherwise like small fish u will be tossed to the sea and i ll be done w u forever and u can deal with the idiots from now on .It seems that those w the most money are the ones who stick it to u always and those struggling will always make it right i guess cause they to are used to getting caught on the short end , dont let the losers get to u just get even by referring the most expensive and worse flat rate co its what they deserve crappola peace and good luck clammy

GroundUp

I'm just a small, one guy construction operation with nowhere near the workload most of you guys do but am interested to hear how you go about this. I tend to be a pretty good judge of character after being screwed around for years in my rental/landlord gig, so there are a few jobs with those I think may be sketchy where they pay 25% when I schedule, 50% when I arrive, and 25% when complete. If they don't like that, I walk away. Typically is 50% on arrival and 50% on completion unless it's someone I know is good for it like a couple local general contractors I work with, they just get 100% on completion. I've only had one person ever stiff me, and that was due to my own stupidity for even taking the job in the first place but I was young and hungry. Chalk it up to education.

The rental business I know quite well and the rule of thumb there is to account for 10% loss, although I've been lucky enough to keep that down around 3%. I know an HVAC service contractor in my area accounts for 5% after 30 years in the trade, I like to think that's a calculated percentage after that many years. He spends a lot of time in court for unpaid service tickets but gets most of them back

RayWohlfarth

@The Steam Whisperer (Formerly Boilerpro) It is one of the most frustrating parts of running a business. We gave up doing residential because of the aggravation of getting paid and then being second guessed on the prices. We ask for half down and the balance upon completion now. One thing I learned is something a wise sales trainer said, "Its not Christmas." When I get a call from someone out of the blue asking for us to do their work, it sends off the alarms in my mind. I had a "Real Estate Investor" call me and ask for a boiler for "One" of his properties. Turns out he was just starting and graduated from the class on "How to invest without money or credit" as he had neither. It took a year to collect my money and I would have to call several times a month to get a small payment. He called later and asked for a price on another project and I told him he had to pay up front and he was offended. I suggested he contact the most expensive company in the area. We take credit cards on the cell phone and tell the customer we need paid for the service call when we get there. I never ever do work for a restaurant or bar.
Good luck

STEVEusaPA

Long post...ranting...sorry

This is the part of my business that I hate. I've been burned (worse/ most recent) for a lot of money by a business owner I've personally known for 30 years and did business with for 20 years.

----------Collecting money legally---------------------
The problem is 2 fold:
1. The laws protect the consumer, even to the detriment of the provider.
Case in point. In PA, you (technically, legally) have to get a customer to sign a contract before you start any work, either giving them the cost and the terms, or having them sign the part that waives their 3 day right of rescission as this is 'emergency work'. If they didn't sign that, they simple don't have to pay you. You go to court, you lose.

2. If someone doesn't want to pay you, despite you taking every legal step the best lawyers you can pay advised you to take, you can't force them to pay you, because (PA scenario):
---If they're savvy---
a) You win your court case-you put up the money and wasted your time (they probably didn't even show up).
b) They can appeal, most don't because it costs them money.
c) With your judgement you have 2 options:
i. Put a lien on their property, IF, they own it and IF you want to spend the money to renew that lien to keep you at the top of the list, after a mortgage. There is no guarantee that even if they sell the place you'll get your money. And if their is a foreclosure, you'll lose-so you wasted more money. And if it's an IRS lien, they always jump to the top, so you lose again.
ii. File a lien for personal property (Sheriff Sale of Personal Property). Pay to have the customer served and so the Sheriff can inventory their personal property. If the customer doesn't answer the door and let the Sheriff in (3 alleged attempts), you'll have to pay the Sheriff again to come back with a locksmith for a forceable entry.
Ok so now the Sheriff is in (all told, since first filing in court, you're out about a grand). If that person walks around with the Sheriff and starts saying, "That isn't mine. I'm letting my buddy store it here...etc" or basically claims nothing is his, the Sheriff just leaves. There is no burden on the customer from the Sheriff to prove/disprove ownership. So you end up with nothing in a Sheriff Sale except rakes, broken lawnmowers and crap they want to throw out.

So there you have it. 2 ways to try to get your money legally.
Either one works about 10% of the time.

I've switched to a more personal method.

But more to 'what to do now', first make sure you are doing things by the book.
1. For installs, full agreement with payment and performance terms spelled out.
Oh by the way, here's a new twist for a few municipalities (2, I know of for sure). If you sign a contract and take a deposit, let's say the job is to start Monday and be done by Wednesday. Regardless of any reason-weather, equipment delivery, illness, last job ran long, etc., and you don't show up by Wednesday, even if the customer said it was ok, the customer can call the building department, file a complaint, and they will have the police arrest you for fraud, exposing you to up to 3X the cost of the contract! How 'bout that? And what's your protection against customer fraud (See above)!
2. For service, here's what I switched to doing. When the customer calls I advise them (most know now by newsletter or previous service) there is a $xx.xx diagnostic fee. After I diagnose the problem, I will give them a written estimate of the amount to repair that particular problem. The agreement also states that this repair may be needed/ or may uncover more work that may need to be performed, at which time I will involve them in the process with another agreement. Usually I waive the fee, if all goes well. They sign it and the waiver for right of rescission.
-It's a huge time waster, but having this on an iPad helps speed things up. My iPad also has all the equipment info/history, so I'm using it anyway Plus, because I'm a small boutique-type full service oil company, I know every customer, and rarely take on new business without a referral.
-I take credit card payments on my iPhone with Intuit Go Pay.

That being said, I really don't bother suing people under $300.00. I'll collect it personally and relentlessly.

I'd say year to year, about 2% is lost-most of it money well spent to never have to deal with them again.

Bottom law, protection/consumer laws need to be changed to be a fair 2 way street (or bring back Debtor's Jail?).

Edit: wanted to add...
For larger install jobs, especially commercial and churches, get a personal guarantee signed, and have them show proof of financing, set aside, for the cost of the job.
I also do no work for landlords, unless paid up front (they have to meet me there, with cash/check/CC, and stay until I'm done, and I don't do any work for attorneys.

Danny Scully

Sorry if I’m repeating anyone, but @The Steam Whisperer (Formerly Boilerpro), if you’re asking my opinion you should switch to flat rate and request COD. T&m is more of a disservice to your customers than flat rate, as t&m is only beneficial to the contractor. Flat rate is mutually beneficial to both customer and contractor. But to your main point, you need to request payment upon completion.

EBEBRATT-Ed

as @STEVEusaPA mentioned laws are written to protect consumers. An old saying I herd once was if a contractor inherited some money what would he do? "stay in business until it was gone"

I just fixed an electrical service for a relative in an adjacent state who just sold their house. "Has to be fixed so we can sell" Big rush, has to be done right away, had to get permit and POWCO involved. Got It done a week before closing, all inspected and 100%

"Thank you, thank you, thank you. We don't know what we would have done without you!" Done, gone, moved away, got their money from the sale.

I am still waiting

hot_rod

A few policies that worked for us.

When the call comes in we set up a time for the service, and asked " will you be paying with cash, check or credit card today?"

At the very lest get paid for the trip charge.

It's pretty rare to find anyone that doesn't have a credit card or two, you can use your phone now, take a picture of the card, enter some info and you are paid instantly and they get an e-mail recite instantly. You no longer need a scanner on the phone.

If it is a loyal, long time customer you may set up a billing, property managers for example. We worked in a resort town so property managers sent a lot of work to us. The management company paid us, they billed the HO.

We had CC numbers on file for some of the out of town, trophy home owners, they trusted us to do the work and bill fairly.

New construction can be a tough go, hard to make money to begin with, it becomes an auction process when you bid We only worked for GC's we knew and trusted.

How many services that you use expect payment at time of service?

Doctor, dentist, car repairs, grocery store, etc. it's not un-reasonable to ask for payment at time of service. Banks and CC companies love to finance purchases, try to stay out of that business.

Upfront pricing when possible takes a lot of the price complaint out of the equation. Either a small book for typical jobs, or like Clammy does, build the price for each job, present it, and get to work.

Different strokes for different folks, hard to not get burned every now and then, regardless of how many safeguards you have in place. It's a cost of doing business.

I think it is unfair to equate all flat rate companies with rip off and un-skilled staff. Unethical people do unethical thing, even at the highest level. Government where they can hire the best and brightest, for example.

ratio

Things are a little different in the trade I guess, but when I worked for the family business (power washing, automotive & truck detailing), complaints about cost were immediately met with "Ok, pay me what you think it's worth". This often got the bill paid in full & occasionally a little over. Rarely did we get less than what we billed for. We also had good customers who knew our work & wanted us.

jumper

Residential landlords in the fifties in Toronto circulated a "blacklist" of deadbeats. It was a smaller city in those days.

There also was in my time a service that checked court records. Should be easier in the days of internet. I remember receiving letters from such a service to which I subscribed asking WHY DIDN'T YOU CHECK? In today's humongous greater metropolitan regions deadbeats will find new victims. And bad guys on the other side (service providers) also find marks. Hey it's a business model.

Looking back, another tough cost of business were prospects that would never give me business. Just wanted information, or to waste time, or a free coffee?

hot_rod

ratio said:

Things are a little different in the trade I guess, but when I worked for the family business (power washing, automotive & truck detailing), complaints about cost were immediately met with "Ok, pay me what you think it's worth". This often got the bill paid in full & occasionally a little over. Rarely did we get less than what we billed for. We also had good customers who knew our work & wanted us.

Until you own and run your own business and are the sole breadwinner, most folks have no idea of the cost involved. Just getting a stocked truck with a trained, licensed, insured service person to your door has a cost involved. And that cost is much larger than what most HO and even contractors realize.

A simple exercise, 50 weeks a year, 40 billable hours per week (almost impossible) = 2000 hours.

Suppose you value your contribution to society at a salary of 100K per year.

100,000 divided by 2000 hours = 50 bucks per hour.

That just covers your wage. At the very least you need to pay taxes on that income, a vehicle, tools, insurance, license, phone also.
Plan on retiring some day? better $$ plan for that in your cost. Now what is your billable hour cost?

There may or may not be materials involved to add some mark up. Although most shoppers know you material costs or can find them cheaper online

gerry gill

thats one reason i shy away from landlords and eateries/bars etc. I also shun GC'S like they have a disease.

Erin Holohan Haskell

You could also take this creative route: https://heatinghelp.com/blog/buddys-beaters/

gerry gill

hah,thats a great article! lmao

rick in Alaska

I do t&m. When I am done with a job, I write up the invoice on my laptop, and then print it out with my portable printer, and then give them the invoice. I have it set up on the invoice where it just shows quantity of materials with the description, and the total number of hours. There are no prices after these figures. The only price on the whole invoice is the total. That way I do not get people complaining about my price on a certain part that they can get cheaper at, wherever. I rarely have anyone want me to give a breakdown, and when they do, I ask them if they have the restaurant break down the price of the food bill. Most people understand and just pay the bill.
In 25 years of business here, I have only had maybe ten jobs where I didn't get paid. Most likely it is because it is a small town and people here are really good at taking care of each other.
Also, if it is a renter calling, I make them have the owner call me to verify they are going to pay.
Rick

Jack

Pressure does funny things to people. It's been forty years and I'm no longer working, so...I had my business in the Napa Valley and worked on many fabulous "Dream Homes." Their dream frequently turned to a nightmare with predictable results for those of us downstream. I had one guy; very very wealthy, and I did a lot of work for him. He had doubled the size of his house and all the plumbing, mechanical, solar, electrical was done by my company. On my last visit to finish the punch list I fell and broke my foot. 3 yr old and new baby and at the time we were pretty much hand to mouth. I'm on crutches and gave the guy the bill. He laughed in my face and said "if you want it come and get it." On subsequent visits I was trying to reason with the guy and realized that my visits were the highlight of his day. He was having a ball while I was begging for my dough. On my last visit I scared the hell out of myself, to say nothing about how he felt but I got paid. He said, "You're crazy." To which I replied, "Yes, and it is people like you who make me that way." We agreed that he shouldn't call the cops as I hadn't hurt him and one day I would get out of jail..., and then! Net/net, he was right. I was crazy for doing what I did, but as I said, pressure does funny things to people. I also realized that I had crossed a line. Before I got out of his house with my money I knew that the contracting business and I were done. Life is a humbling experience!

jumper

gerry gill said:

thats one reason i shy away from landlords and eateries/bars etc. I also shun GC'S like they have a disease.

Lawyers,their spouses,&family are the ones to REALLY be careful with. Or you end up giving them money.

Best experiences I've had payment wise are huge corporations like Kodak or Campbell's. Outfits like School Boards pay but can drive me crazy.

Tinman

1/3 to 1/2 down, balance due upon completion before I leave the premises. Unless, I know the client really well.

I’m not a bank.

TheKeymaster

I'm not a hvac guy but it's the same in PA for collecting rent as Steve said. Problem is I take people to court and this is what happens every time.

Judge: to tenant: Do you owe this man rent in the total of 1000 dollars?
Tenant: yes (if they say no then the judge asks for their receipts for the rent they claimed to pay which they never have even if they did pay)
Judge: You win Mr. landlord. The tenant owes you 1000 dollars. (no kidding, why do you think I'm here)
Judge: to tenant: Do you have the 1000 dollars to pay the landlord today?
Tenant: No
Judge: to landlord: Tenant owes you 1000. Case dismissed!

or they just don't show up and you win which is the same result. 95% of the time tenants don't even show up.

It's a circle jerk. You need to jump through that hoop to get a piece of paper saying the tenant owes the money that the lease already says they owe you, so you can civil sue them. The same exact conversation as above happens a second time and then all that does is allow you to put a lean on them. Which does zero because they don't own jack squat to put a lean on. Even if you do put a lean on something they might have it could take years to get the money. Plus the lean doesn't last forever you need to keep paying to keep it active. My apartments are cheap and the people that rent those types of apartments have crap credit so they don't care if you report on their credit. Their electric is in their moms name and their gas is in their grandma's name because they don't even have credit to get a utility bill in their name.

You can't get previous landlord references. Those are a waste of time. If someone is renting my apartment and they don't pay or are slow pay and another landlord calls me and asks are they good tenants. I say yes they are great they mail me the rent a week ahead and they are really clean. Why?, because I want them to move! Why would I want them to get turned down from moving out of my place when they don't pay me now.

The best is when I call a tenant or go there a bunch of times to collect rent and they call the police and say I'm harassing them. The police say I can't go there anymore! What? The police will say they will just have to mail me the rent. Yeah right. I wouldn't have gone there 10 times if they would just mail it. That's when I'll just tell the tenant if you move by the end of the week I'll just forget the rest of the back rent you owe me. If I'm lucky they will move. If I'm unlucky I have to evict them and they get to live there for 4 more months for free because that's how long it takes to get the sheriff to throw them out and once you start evicting someone they take it as they don't need to pay you anymore.

At least if you guys don't get paid the people probably own the house so there is something to put a lean on. Still a waste of time. I stopped taking people to court unless it's like 5000. If it's like 500 not even worth it. You'll spend 500 on court fees to not get the money anyway in the end.

The Steam Whisperer

Hi all,

Was out of town for awhile.
Thanks for all your input. I have been thinking of the Buddy's Beaters idea for awhile or something like a reverse Angie's List. Contractor's could post thier list of deadbeats for all other contractors to see ( or anyone else for that matter). I suspect, however, that contractor's would be open to lawsuits for defamation of character in our totally lopsided world.

STEVEusaPA

The Steam Whisperer said:

Hi all,

Was out of town for awhile.
Thanks for all your input. I have been thinking of the Buddy's Beaters idea for awhile or something like a reverse Angie's List. Contractor's could post thier list of deadbeats for all other contractors to see ( or anyone else for that matter). I suspect, however, that contractor's would be open to lawsuits for defamation of character in our totally lopsided world.

I thought about that too for heating oil customers. My initial thought was if it's a pay service, and it's like a credit reporting service, might not be able to get sued. But like credit reporting service, you'll probably have to mimic their guidelines. Tell consumers about it and allow consumers access to, and be able to dispute the report, add comments, etc.

Also keep in mind, your list of deadbeats may be another contractors opportunity to probably overcharge (exploit), like when a car dealer charges higher prices/interest based on a credit report (not that there's necessarily anything wrong with that).

GroundUp

There used to exist a reporting site for crappy tenants, much like you are speaking of. The defamation lawsuits were through the roof as you might imagine, and the site was shut down. How the opposite is okay though, when folks are openly able to defame contractors and landlords, I'm not sure.

Leonard

From car repairs....... Get 1/2 paid before you start the work. That way will at least cover your parts.

Selling to Lawyers...... Apples and oranges but I sold a large HEAVY used restaurant pizza oven to a lawyer running a restaurant. Told him I need green cash in MY hand before it leaves the building. Few days later on a saturday morning his moving crew of 6 shows up. They want to start taking it apart to move, naturally neither lawyer or cash are there.

I tell them nothing happens till I am paid.....lawyer gets on phone and says he's a lawyer and I should know he's good for it. I say your a lawyer so you should know how business works. 30 minutes later some woman shows up with cash. I gave them a receipt "as-is, as shown, where is"

I figured too easy for lawyer to make up some excuse that it was defective, and drag it on and on in court, at basically no cost to him.

They are experts at making claims that are only remotely true, to win their case. Got to think like a lawyer and legally protect your butt with written disclaimers when selling to them (or the public for that matter)

jumper

Some judges abet what amounts to theft.

Leonard

Dad used to sell cars and leased his couple commercial properties. As a kid I'ld tag along with dad to lawyer when leases were wrote. Learned a lot there. Lawyer said time to see him was BEFORE we have a problem.

In other words..... get the terms of the deal in your favor before the sale, and put them in writing. Too much work and cost trying to enforce a verbal contract, need witnesses and they have to appear in court , $$$$. If go to court want to be able to just drop contract on judge's desk and have it tell the whole story in your favor. Even then, good luck collecting ...... like getting blood out of a rock.

When writing contract good to write specific things that are to be done, that way a judge can easily read it and determine if that was done or not, without any judgment calls or guessing what work was to be performed. Want to make it easy for judge to make his decision in your favor.

If take a deadbeat to court, you can win, but collecting is another thing. Judge will ask him can you pay it all , he says no, judge say what can you pay, he says xx/week. So he may pay for a few weeks then stop, at which point you have to spend $$$$ to drag him back to court and have judge order him to pay keep paying. Forget it, write it off and collect something up front next time.

Dad always demanded CASH when selling used cars, would only accept a check from loan companies/banks he dealt with, after he called them and they confirmed they were issuing a check to buyer. After the sale he would immediately lock up and run to the bank check was drawn on to deposit it, to make sure it cleared.

The Steam Whisperer

I'm thinking of hiring a a collection agency. I've been using an attorney, but smaller amounts just aren't worthwhile pursuing. I figure a collection agency can make the deadbeat's life miserable and kick thier credit rating too and then maybe I'll get some money. Then its out of my head so I can concentrate on the good people. Any experiences you can share will help.

gerry gill

I've had good luck with Amerassist

Leonard

Ask but when I looked into it for backrent when tenant went out of business selling debit to collection agency might only get you 30 cents on the dollar. But it's better than nothing. Not worth the cost to pay lawyer for small debits.

Seems agencys collect by constant harrasment, even when it's not legal. But seems that's their risk not yours.