Response to deposits - November 2004

Eric Dittmer

I am replying to the article dated 11-2004 "Do You Take Deposits?" Well out here in California we have a thing called the Contractors State License Board. It issues licenses to supposedly proffessional trades people (Which can be questionable). As per Business & Professions Code 7159 (e) and (f), for HOME IMPROVEMENT CONTRACT LAW - DEPOSITS "By California law, cannot exceed two hundred dollars ($200) or 2 percent of the contract price for swimming pools, or one thousand ($1000) or 10 percent of the contract price for other home improvement excluding finance charges, whichever is the lesser.)

On an average a General Contractor is dealing with 20 -30 different trades on each job. If every sub was to have their way with deposits, work would not happen. The general (prime) is not the bank! If you guys ever wonder why it appears that generals are looking as if they are slow pay, try standing in our shoes. I believe, that any professional trade has to have some means of fiscal solvency to perform their work. If the sub trade has has consumed their credit limit at their supply houses (vendors), then tough. I have enough problems with interfacing all of the personalities (subs) to achieve building a job on time, so the last thing I want to hear, is whining for money. It is that I do not care, I do, after all we are all in it together. If the sub is not able to function well, it transcends to the good subs and causes difficulties which in turn turns off the good players (subs). Besides, most trades do not know how to manage their money very well. So getting large deposits on jobs doesn't make the sub trade any more aware of their poor mangement skills. When it gets down to the nitty gritty, (Which I have been their many times) it MAKES YOU THINK! So be professional, everything is negotiable including the terms of a sub contract agreement. After all, you are the other half of the agreement. With out you, there wouldn't be one. It sounds simple, maybe degrading, but I assure you this is not the intent. Most of my subs are great and I have good things to say about them and it is because they take care of their affairs and don't make their problems mine. Best of a good year to you folks, Eric

Weezbo

I would say that any unwillingness on a GC to trust me...

and they can find someone else.and if they cannot put their dollars up on a fraction of the job...i not only would not work with them i/d tell my friends that they could not be trusted. seen the people with the I'm aGonnas And the I'm a Wannas...They are from the same tribe. take that to the bank and whatever sniveling clauses you have in your contract documents.

Ted_9

Eric Dittmer, that may have been my post here on the wall. I professionaly disagree with you. We as plumbing, heating and cooling contractors are not finance companies and do not have the same rights and protection the banks and lenders have. Why should we put all of our credit and capital in everyone elses projects and hope to get paid. Maybe in CA subs have more protection, but I dont run a business there.

PATRIOT HEATING & COOLING, INC.

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Rick Kelly_3

Getting Paid

At one time long ago, half down and the other half when complete was an arrangement that on the surface seemed agreeable. Chasing that other half after completion ended up becoming a job unto itself. Never again. Now, a given job is broken up into specific functions and each of those segments are paid for at the start of that sequence. If the customer (or GC) starts having cash flow problems, we are able to finish the segment that we have been paid for and be ready to resume again once the well has been replenished. Any GC that does not collect enough money for the work that has to be done is just putting his current client ahead of the needs of his subs and digging himself a hole that hopefully doesn't become the foundation of financial failure.

Weezbo

Clear and concise. Mr.Kelly.

Phil_6

The general (prime) is not the bank!............lol

Then who is the bank? Someone has to be the bank.

"any professional trade has to have some means of fiscal solvency to perform their work"

"If the sub trade has has consumed their credit limit at their supply houses (vendors), then tough"

The way I imagine most of us subs try to maintain our solvency is to GET MONEY UP FRONT to the best of our ability. And the credit limit at the supply house isn't so much the problem as the inability to blow off paying the workers, insurance and taxes. If my employees and insurance company and the government were as nice as the supply houses, then I guess we could let the GC slide a little.

The GC also needs some means of fiscal solvency if he's going to start hiring subs. I really don't care a damn bit if the crown moldings aren't what the customer ordered and she's not paying you that 50 grand....I'm done...where's the dough...?

Mark Hunt

Funny thing



You can bet your bottom dollar that the GC got a bunch of money up front. Who's to say he isn't using it to pay off the last project? Or maybe a duck hunting trip to Arkansas?

I will be damned if I am going to allow a GC to hold 1/3 of my money when I am 95% complete.

I work on a 50/40/10 plan. If the builder doesn't like that,tough. I am not a finance company, regardless of how much "solvency" I have.

Ohhhh no. I have seen far too many examples of subs getting stiffed for big dollars by some GC that promised to "settle up at the end".

I pass thanks.

Mark H

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Rely_2

GC are the Bank

to begin with the GC is making a profit on us the lowly sub that has the education to do the job.We have a right to be paid for services we have done.The GC is the middle man for cashflow he has a responsilbity to us the subs to get the cash in a timly matter or we will not complete the work until we are paid.We want 30/30/30 and 10 is left for final walk throughs.The thing the gets under my skin is anyone can be a GC here in Jersey regardless of education but we heating and plumbing contractors are looked down upon by the GC as if we where dogs.Every dog has his day and cash is king

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Sweet_2

Thats exactly

why , after being stiffed for a substantial amount of money by a GC iI shut it down and vowed never again to do New Construction plumbing again!!!! GCs IMHO have tendancy to think theyre /*%t dont stink. Never again will a GC call the shots on me . Its all service work baby. Have a nice day.

joel_19

Huh?

So let me understand this Mr GC . You put up a million dollar house for someone and you wait till the end to get payed. Since the law of your state says they can only give you a thousand up front? Right....
Sure we're all in this together so don't show up at the job in a brand freakin new GMC Denali and tell me I have to wait 2 months more to get payed (yes this happened to me).
My money is invested it makes more money for me in a variety of ways. If you want me to help finance your project for months on end then fine no problem. All my contracts give the breakdown of payment and net 30. If more than that it will cost you 1.5% per month.
If you don't want to pay that much interest than go to your bank and get a loan from them. We are not a free bank.
Why should I have 20-60k tied up in your project for months when i could be using that to buy more rental property or in stocks, bonds, etc. I've seen houses with MILLION dollar HVAC systems . Your telling me to work in your state I couldn't get 1000 upfront on that? Always new California was a different planet .Out here i'd want at least a thousand just to review the plans for something like that, and the deposit better have 6 digits in it or adios.

Grumpy_2

You don't want to pay upfront? OK

If that is your attitude, fine I can live with that, but you will have to do a couple of "other" things before we start doing business together.
1. You will provide unfettered access to your books and tax records for my accounting firm to review.
2. You and your spouse will personally sign MY contract and accept personal liability for the debt. You know, putting your house, and cars, and jewelry, and winter home, and boats on the line; just like we must do when we "trust" that you will pay us when we finance your jobs.
3. You will waive all rights of appeal and/or litigation of the contract until such time as your debt to me is paid in full.
Well Mr. GC do we have a deal?

Wethead7

Payment

We require any new GC or any old GC with patment problems to post a surity bond. The contract is very clear you pay us when paid{within three days of payment} or with-in thirty days, witch ever is sooner. The failure to timely is default. The Bonding Company is the required to pay us the remaining balance. You do not like our rules find somebody else to lose thier money on you.

We have found these actions weedout persons and firms, not willing and able to check out Thier Client.

We will not allow price shopping either. How many of you have been asked to a job for somebody's else's number??
We a trade should not allow this to happen.

I understand some GC's and prime's are outstanding, but we have found in these part they are few and far between. We sometimes think GC's go to some lowlife school on how not to pay the subs. The lates trend here has been GC's preform no construction everthing is sub'd out. This form of GC is nothing but a bank. Oddly these are the wourst at screaning THIER CLIENTS.

Mike