You can pay me now or you can pay me NOW

Keeping cash flowing

I know the best way to end a service call is to collect the money due -- all of it. But does anyone ever fudge a bit and let people pay later? Maybe 30 days? I know it sounds stupid and shouldn't be done but I'm sure there are some companies that "let it slide." Problem is, cash is king and the lifeblood of service and replacement contractors.

And speaking of replacements, how do you handle that cash transaction? Do you take a percentage down and get someone to finance the rest? Do you give a discount if they pay the balance all at once? Are you moving around assets to cover the slow cash flow? I know these questions may sound redundant but a lot of small businesspeople just don't understand cash flow. And some of the best service companies go belly up because they don't have a handle on the accounts receivables.

What do some of you Wallies do to keep the spigot open?

I am not a big-box...so I need 50% down. Rest on Acct for me. My contract calls for cash on completion. Summer is more welding & plumbing and currently, replacements, annual checkups and consulting / bidding. Had a guy casually tell me a few days ago how he has his set at 40#. Runs great there, he says. I have an appt Tues to show him what a 30# relief valve looks like. If a big job failed to pay, it would hurt!!

Tim

show me the money

We are a small shop and we collect 50% down at the start and the rest when the job is done. If there is a problem we will work with the cust. first to try to help other wise we'll send to collection.
p.s.
You cant go in a 7 11 and pay 50% befor you eat and come back and pay the other when the rest is gone.

Service and replacement (NM)

Warranties

The part that gets me in trouble is warranties. I do not do new installs...only service...and some of the other contractors have gotten in the habit of having me do their call-backs 'cuz I'm cheaper...even at my "exorbitant" service rate, than cutting a man and truck loose to chase the gremlins down. In this case I bill the contactor for parts and labor...he can try to beat the warranty out of the local rep. I protect this relationship by never competing with him. Same way with an owner install...most warranties are void in this case anyway. Same way with recalls or safety notices by CPSC, customer pays me, they can do the paperwork and wait for a refund from the insurance folks. Same way with insurance work...I am not a bank.

Bankcard acceptance..with all of its issues, makes this part of the business easier as well.

Interesting that this comes up now.

We recently finished a basement heat pump for a local remodeler. As agreed on, I submitted a draw when I got the rough-in completed. "We cut checks on Friday" was the answer when I submitted the invoice on Tuesday. The following Tuesday, I asked about the check "Oh, our printer went out, we're getting a new one."

Red Flag.

I went ahead and finished the job by setting the condenser and firing it up. The new tstat took a dump and started doing funky things. Builder-boy called me and told me about it. "Fine, the invoice you signed states 'No warranty work until the payments are up to date'" His response "The system doesn't work, why should I pay for a system that doesn't work?" I gave him a request for a draw and it was never paid.

I spoke with the homeowner and he told me that builder-boy hasn't been paid off for the job and to let him know if and when I get paid.

I'll never work for this gent again, that's for sure.

Another amazing thing. I saw the lead carpenter for builder-boy in the store last night. He had asked biulder-boy for a raise and builder-boy said they didn't have the income for it right now. Guess who showed up in a new pickup truck the next day?

I feel confident

That the homeowner will pay up if B.B. doesn't.

I could be wrong.....

Thanks Ken

19 points well taken -- which may work for your business -- but not for others. I draw my conclusions not from being a business owner, but from interviewing hundreds of contractors over the years who believe in C.O.D.

collections



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depends on who you tell

If you tell the wrong guy you could end up out more money for defamation of character. How fair is that?

K

Billing

I get 40% down on all installs with either payment upon compleation on small jobs or progress billing due within 14 days on larger jobs(allways a signed contract), on service first time customers are invoiced at compleation of service call and established service customers are billed due within 14 days, I only have had one job that went to collection in almost five years, I consider myself lucky



S Davis

Dude, you rock

I would never has the nads to yank the units... isn't there some laws out there regarding that! I wish i could have need a fly on the wall when the puts saw he was out of ref. That's one of the best sheetrock screw you stories I've ever heard. Sweet!

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right on Jeff

I'll spare the internet world what I really think of builder boys out there; it's not family rated language.

That being said, we still work for very few builders. We're maybe 80% HO.

Only the School of Hard Knocks can develope a keen scent for bad builders. I don't have ESP nor can I read minds, but I know well enough to think long and hard before woring for a builder without knowing a least something about him.

In very basic terms, working for builders means working at wholesale rates. That's for the birds. Work for the HO and change retail rates. Err, this applies to real contractors, not the bottom dudes with their only overhead being their truck payment and insurance premium!

Gary


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I meant

Insurance WE have. I was just trying to point out that some plumbing/heating guys at the bottom of the totem pole don't have any real overhead, making us real companies look like crooks in comparison. But in reality there is no comparison from a business standpoint. Most folks desire a reputable company that's been around a bunch of years.

Gary Wilson


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Tattoo

I'm going to get a tattoo like Jessie James has.When he open
his hands on the palm its says payup.

I been thru the thirty day invoices,stamp the office staff
to type and write the invoices,the polite phone call.all the
running around to get paid.

Its like out of site out of mind.How many system have you guys fix only to hear you know this cameup and then I had to do this yadda,yadda.If you dont reachout your hand when it fresh and there mind then just start adding the overhead of lost time,stamps,envelopes,phone calls....to all your other invoices.

Now your service price as become bigger then your comp and
guess where your so called loyal customer is going to go next time around.

That was meant as

a tongue in cheek comment.

There are a lot of people around here that don't have any kind of liability insurance, much as you mention. I have to sleep at night.

money , money ect.

Just had to throw my 2 cents in lol. Normally all service and replacement is cod, just makes good sense. Not many gas station lets you run a tab, mine does. Not many grocery stores let you put it the cuff, they take plastic and checks with 5 types of identification. Biggest % of charges we have are our older customers that we have had for 30 plus years. Most of them are on a fixed income and normally pay the bil in full with in 45 days depending on the amount.
All of our plants will get you a check with in 10 days.
We stay away from low rent income properties. Good release forms and proper documentation will take care of 99% of them all. But there has been a time when I have had to remove equipment for non payment. Had this slick talking realeste person come into the county 20 plus years ago, tried beating me and everybody else out of money. I caught him one night in the mens restroom and assured him, either he was gonna write me a personal check or he was gonna end up head first in what I just left in the john. After the second dunk he wrote me a check and it cleared the bank.
I was very lucky to have a lawyer who is now a state judge. He wrote most of our release forms and contracts forms, not many local judges after told want to go against that.
You really want to make tose dead beats mad, Send them a 1099 on april 14th. most folks like them have already filed and know will have to refile. Knock on wood, knock knock I have written off less than 2k in the last 5 years.



Peace Be With You


David C. Broome


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Real Business?

Some of the posts above seem to be saying that a company that chooses to keep a lower profile and thus a supposedly lower overhead in comparison with a company that chooses to be larger with the more flashy symbols of "big business" isn't a "real business" and a "bottom feeder" and "lower on the totem pole." I beg to differ. The dollar that I earn, honestly, and forthrightly, will spend just as well as the dollar that you earn. I carry all of the insurances and licensing that is required, plus a significant amount of cushion beyond the law. I provide a valuable service to my customers and community. I choose to do so by myself...no employees translates to direct quality control and yes, lower cost to me. I choose to do so from a van, without the convienience of a store front or shop. If I perform a certain job and charge 500 bucks to do it..and your company performs the same job for the same 500 bucks...and then we sit down to pay the bills...who is the wiser business man? I can't eat signage, inventory, advertising, employees, accountants, fleets of trucks, depreciation on tools and equipment, and all of the costs of doing any legitimate business. I choose to limit those costs, which necessarily limits the size of my business. You choose to place those limits at a higher level...which necessarily increases the size of your business. A pile of paper and a big dollar figure doesn't always translate into results or profit. Any customer that makes a decision to have work done on the basis of the flurry of paperwork is asking for trouble. The most successful business around is the one that is owned by a happy camper who gets to take home money every day whether he has no employees or twenty. We've all worked for companies that did millions of dollars every year, and couldn't afford to put on a decent Christmas party. We've all seen the smiling gentleman at the end of the supply house counter that doesn't seem to be stressed, not in too big of a hurry, and driving a decent rig with his name on the side. Take him to lunch...you'll find out that he probably didn't have to get up at 5AM and have a Rolaid smoothie for breakfast to get to the shop and line out a troop of techs that aren't particularly concerned with his bottom line. You'll also find out that he made enough last year and has every reason to expect that he will this year too. You'll also find out that his business is legal, in demand, profitable, and sustainable. Big isn't always better. I have the utmost respect for a man who chooses to run a large company, do it well, and be useful to his employees and community. I also have the utmost respect for the man who chooses to limit his flash and focus on the basics of providing service and value. I have the utmost contempt for the man who chooses to cheat by not getting legal, not giving value, and basically being a selfish jerk to his employees and community. Any customer who hires such a man, who will work for fifty bucks and a case of beer gets what they asked for. I'm not talking about these true bottom feeders.

This is too long, I apologize...but the Home Owners who check this board looking for answers to their questions need to look beyond the signage, fleets, and store fronts in order to get what they deserve expecting to pay a fair price.

Ya know what? I think I owe you lunch! Maybe someday I'll have the oppurtunity to pay up. I'm sorry for being a bit thin skinned.