# "you get paid when the banks pay us" WTH



## home615 (Feb 23, 2012)

Last month my company did an overwhelming amount of work for this company when they sent the approval invoice it was thousands short. WTH their explanation was "you get paid when the bank pays us". They got the wrong one. Looks like its lien time. LOL be careful who you get into bed with.


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## We Fix Houses (Aug 15, 2007)

Ok - so what's a lien gonna do ?

Did you look at the contract documents ? Did say anything about PIP or PWP ? Or this is just out of the blue ?


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## J L (Nov 16, 2009)

That's too bad. Make sure you cross your "T"s and dot your "I"s through the lien process. Give them notifications in writing. And keep adding up all the service charges and invoice them monthly. 

I hate this part of running a business.


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## slowsol (Aug 27, 2005)

What's your contract state? 

Whether you feel it's right or wrong, a lot of companies have PWP or PIP provisions in their contracts.


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## Gary H (Dec 10, 2008)

What are PIP and PWP?


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## Jaws (Dec 20, 2010)

Pay If Paid and Paid When Paid. Only a crazy guy would sign that, imo.


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## summithomeinc (Jan 3, 2011)

Jaws said:


> Pay If Paid and Paid When Paid. Only a crazy guy would sign that, imo.


I agree. Many of my customers are not the owner of the property I work on. I allways make sure we are clear that they pay me usually net 30. Not my problem if the property owner doesn't pay them.


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## Gary H (Dec 10, 2008)

I have never heard of that in a contract. Something to watch out for next time I ever sign one.


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## slowsol (Aug 27, 2005)

It's very common practice in the commercial or large scale construction industry. More often than not, that's the way those jobs work. I'm not advocating it, but it's a common practice.


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## summithomeinc (Jan 3, 2011)

slowsol said:


> It's very common practice in the commercial or large scale construction industry. More often than not, that's the way those jobs work. I'm not advocating it, but it's a common practice.


I can understand pay when paid to a point. I wouldn't agree to it but I understand it. At some point there has to be a cut off date where I get paid regardless of weather or not they got paid. 30-45 days max. For example I might do a pay when paid agreement if at 45 days I was paid regardless. Pay if paid only works if I am a full partner.


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## Jaws (Dec 20, 2010)

Ive signed 45+ day net, never when or if though.

Had accounts recievable $100,000 + with a commercial client for almost 90 days, almost 2 months late. All my subs, employees, and suppliers were paid on time. If we had run out of money we have a line of credit at the bank. You dont have the capitol, dont do the work. 

Its a GCs job to finance the job, not the subs, suppliers or employees. We almost liened the client, but they paid. From my understanding they were used to having the pay when paid deal, which was not part of our agreement.


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## summithomeinc (Jan 3, 2011)

There really is no difference between paid when paid and paid if paid. Either way, they are saying if they aren't paid you don't get paid. The only way I would accept that deal is if I was a partner. I agree with Jaws on everything except, It is the customers job to finance a job. Not the GC.


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## Jaws (Dec 20, 2010)

summithomeinc said:


> There really is no difference between paid when paid and paid if paid. Either way, they are saying if they aren't paid you don't get paid. The only way I would accept that deal is if I was a partner. I agree with Jaws on everything except, It is the customers job to finance a job. Not the GC.


Obviously the client is the one paying, but when your doing commercial, you often will be behind on the progress payments, especially net 30 - 45. There is a lot of risk in commercial and major resdiential, you have to lay a lot of cash out on the table, upfront in my experience, atleast with commercial. You dont want to assume the risk, dont do the project. That simple. Commercial isnt for the faint of heart. :no:

My point is, the arrangements made by the builder should mean nothing for those working for the builder. Their contract is with the GC, not the client. If a sub agrees to pay when paid they are crazy, imo.


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## summithomeinc (Jan 3, 2011)

Jaws said:


> Obviously the client is thw one paying, but when your doing commercial, you often will be behind on the progress payments, especially net 30 - 45. There is a lot of risk in commercial and major resdiential, you have to lay a lot of cash out on the table, upfront in my experience, atleast with commercial. You dont want to assume the risk, dont do the project. That simple. Commercial isnt for the faint of heart. :no:
> 
> My point is, the arrangements made by the builder should mean nothing for those working for the builder. Their contract is with the GC, not the client. If a sub agrees to pay when paid they are crazy, imo.


I agree. Glad you figured out a better way than me to say it.


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## Jaws (Dec 20, 2010)

summithomeinc said:


> I agree. Glad you figured out a better way than me to say it.


Not better :no:, I agree the client should finance, but wanted to clarify that in my experience, many commercial projects the payments are behind what has been done.

Residential, its never happened to my company, but I know several GCs that are generally behind.


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## summithomeinc (Jan 3, 2011)

Jaws said:


> Not better :no:, I agree the client should finance, but wanted to clarify that in my experience, many commercial projects the payments are behind what has been done.
> 
> Residential, its never happened to my company, but I know several GCs that are generally behind.


As an employee I painted hotels for awhile. The boss told me he had to wait 30 days to bill. then 45 days to get a check. About 4,000.00/week labor and materials. No wonder he paid by the room and not by the hour. Was alot of 18 hr days.


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## Jaws (Dec 20, 2010)

summithomeinc said:


> As an employee I painted hotels for awhile. The boss told me he had to wait 30 days to bill. then 45 days to get a check. About 4,000.00/week labor and materials. No wonder he paid by the room and not by the hour. Was alot of 18 hr days.


Not how I would do it, but to each tbeir own. 

He got paid every 45, or he paid yall every 45?


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## summithomeinc (Jan 3, 2011)

Jaws said:


> Not how I would do it, but to each tbeir own.
> 
> He got paid every 45, or he paid yall every 45?


We got paid every Friday. He got paid every 45. Was also a 500.00/day fine for not completing on time. We had to do 8 units every 3 1/2 days. Was a real eye opener for how things work.


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## Jaws (Dec 20, 2010)

summithomeinc said:


> We got paid every Friday. He got paid every 45. Was also a 500.00/day fine for not completing on time. We had to do 8 units every 3 1/2 days. Was a real eye opener for how things work.


Yep, liquidated damages. Been there, done that.


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## summithomeinc (Jan 3, 2011)

Jaws said:


> Yep, liquidated damages. Been there, done that.


He did make it clear that we would be paying it. Not him. Never had to pay it. Biggest thing is it was by the week. Not like you could get behind this week and make it up next week. Looking back on it now I realize the PM had amazing scheduling skills to be able to accomplish what we did.

Kind of off topic but a good example of how it should work. We were subs of a sub. Even though he wasn't paid weekly we were.


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