# Do you charge late fees?



## Jaws (Dec 20, 2010)

Californiadecks said:


> I don't use my money for anyone's job. I don't need to give anything away to get paid day of completion either.
> 
> It must be a hell of a way to live your business life, worried about your clients ability to pay. It never really crosses my mind.
> 
> ...


Depends on what you do.

Rarely heard of a home builder who is not out some money on every job at some point. 5 -7 draws on a 700k house, rain for weeks, slow selections ect... slow down draws but doenst slow down paying subs on Friday. I'm usually ahead by draw 4. 

Commercial stuff you will be out money unless it's a remodel or something. I do net 45 all the time, usually done with the job by the time I get my second draw. Knocks a bunch of boys out of the race before it starts so I dig it. Better margins too especially for time frame of the project. 

Small projects to say 75k I'm ahead from the beginning usually. 

As far as a hell of a way to live it's just part of the business im in. Some people are built to handle the stress well others don't. 

My buddy does site work and utilities, makes probably 700k + a year, multi millionaire by age 35 and has a million dollars of his money out on bonds or payroll all the time. But worth the risk if mitigated properly. He is used to it just like I am on a smaller scale. 

I have had one customer take about 28 days to pay a $90,000 draw, I'm not sure what the issue was but she paid it. I had another one not pay us $85,000 so for 3 months, commercial work, I felt exhausted when I got the check in the mail, I sat down on the curb.:laughing: Other than that when we finish and pull off the office will send a bill within a couple days and we get a check within a week usually.

I agree with you on giving stuff away, if I give something up I like the people and it's just a thank you not a buying myself a last check.


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## Calidecks (Nov 19, 2011)

Jaws said:


> Depends on what you do.
> 
> Rarely heard of a home builder who is not out some money on every job at some point. 5 -7 draws on a 700k house, rain for weeks, slow selections ect... slow down draws but doenst slow down paying subs on Friday. I'm usually ahead by draw 4.
> 
> ...



By the time a sub is ready for a draw I've collected from the HO. All my material is put on an account opened on the property owners name. I can Finish a substantially large job without spending a dime of my money. And it's easy. Long rain days means subs aren't working means I don't need to pay them. Rain days are not a reason to use your own financing. Simply put if subs are working I'm getting paid. If they aren't they don't need paid because they haven't completed the term of our agreement. 

This being residential of course.



Mike.
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## Calidecks (Nov 19, 2011)

The beauty of being the prime contractor in res is I get to make the rules of payment. 


Mike.
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## Jaws (Dec 20, 2010)

Californiadecks said:


> By the time a sub is ready for a draw I've collected from the HO. All my material is put on an account opened on the property owners name. I can Finish a substantially large job without spending a dime of my money. And it's easy. Long rain days means subs aren't working means I don't need to pay them. Rain days are not a reason to use your own financing. Simply put if subs are working I'm getting paid. If they aren't they don't need paid because they haven't completed the term of our agreement.
> 
> This being residential of course.
> 
> ...


You won't ever get those terms doing commercial. If you do kudos. I'm just small time 100k-1mm on commercial and still have a hard time on net 45 to not.finance it. You'll also need capital for the bond

Very tough if there is a bank involved on a new custom to be very far ahead on the first couple draws. It is the goal, but most Builders are putting a little cash out on the first few draws.

Awesome you have your system working well for what you do. That's the goal



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## Calidecks (Nov 19, 2011)

Jaws said:


> You won't ever get those terms doing commercial. If you do kudos. I'm just small time 100k-1mm on commercial and still have a hard time on net 45 to not.finance it. You'll also need capital for the bond
> 
> Very tough if there is a bank involved on a new custom to be very far ahead on the first couple draws. It is the goal, but most Builders are putting a little cash out on the first few draws.
> 
> ...




I've made it clear I was talking about residential. You've moved the goal post. 
.


Mike.
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## Jaws (Dec 20, 2010)

Californiadecks said:


> The beauty of being the prime contractor in res is I get to make the rules of payment.
> 
> 
> Mike.
> _______________


I agree but I'm usually not going to be a dick to my Mason if he is 80% done with the job and it rains, same for the framer if I happen to sub that out. Same for the roofer. I generally will pay them to the point they are at so they can pay their Crews. That is a personal decision

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## Jaws (Dec 20, 2010)

How many Custom Homes have you built involving a bank? Serious question. on privately finance jobs, which most of mine are it's a lot easier.


Californiadecks said:


> I've made it clear I was talking about residential. You've moved the goal post.
> .
> 
> 
> ...


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## griz (Nov 26, 2009)

Jaws said:


> I agree but I'm usually not going to be a dick to my Mason if he is 80% done with the job and it rains, same for the framer if I happen to sub that out. Same for the roofer. I generally will pay them to the point they are at so they can pay their Crews. That is a personal decision
> 
> Sent from my SM-N920V using Tapatalk


having this attitude will guarantee that subs will be loyal to you and if you get jammed up they will likely be more than happy to assist.

i've done some jobs with very tight times lines, that paid extremely well and i was able to do them because i could count on my subs.

exactly why one needs operating capital...:thumbsup:


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## Jaws (Dec 20, 2010)

griz said:


> having this attitude will guarantee that subs will be loyal to you and if you get jammed up they will likely be more than happy to assist.
> 
> i've done some jobs with very tight times lines, that paid extremely well and i was able to do them because i could count on my subs.
> 
> exactly why one needs operating capital...:thumbsup:


That's exactly why I do it. That, and it keeps the job moving sometimes when a milestone is lingering out there


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## Calidecks (Nov 19, 2011)

Jaws said:


> How many Custom Homes have you built involving a bank? Serious question. on privately finance jobs, which most of mine are it's a lot easier.
> 
> Sent from my SM-N920V using Tapatalk




The last time I framed a custom home I wasn't the prime contractor. Don't get me wrong I have enough capital to take care of any situation. But it's rare I have to use it. I've got unlimited credit that I can tap into and open it in the customers name. So if the customer doesn't pay, the creditors goes after them. What I certainly don't do is pay extra for money I've earned.


Mike.
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## Jaws (Dec 20, 2010)

Californiadecks said:


> The last time I framed a custom home I wasn't the prime contractor. Don't get me wrong I have enough capital to take care of any situation. But it's rare I have to use it. I've got unlimited credit that I can tap into and open it in the customers name. So if the customer doesn't pay, the creditors goes after them. What I certainly don't do is pay extra for money I've earned.
> 
> 
> Mike.
> _______________


What do you mean By pay extra to get money you have earned?

I have a line of credit also but we rarely needed to tap into it, I have Supply accounts and credit out the wazoo. I have good operating Capital would like more

The house I finished a few months ago the bank refused to do a good deposit, during Foundation they paid for the foundation, but I needed to order the framing package and windows, while that was on a credit account I am liable for that personally and would need to have that cash.

On residential I don't come out much often.

Commercial is another story.


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## Jaws (Dec 20, 2010)

On residential I also have past clients that I do stuff for all the time. Sometimes I will be out the entire job, depending on what it is, and just send them a bill


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## Calidecks (Nov 19, 2011)

Jaws said:


> What do you mean By pay extra to get money you have earned?
> 
> 
> 
> ...




I don't pay clients 2 or 3% to pay me what I've earned. As in the last draw. 


Mike.
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## Jaws (Dec 20, 2010)

Californiadecks said:


> I don't pay clients 2 or 3% to pay me what I've earned. As in the last draw.
> 
> 
> Mike.
> _______________


:laughing::no: me either


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## Calidecks (Nov 19, 2011)

Jaws said:


> On residential I also have past clients that I do stuff for all the time. Sometimes I will be out the entire job, depending on what it is, and just send them a bill



If the job is small, I'll collect 100% at completion. I got no problem with that. And yes my guys get paid if that's what you mean. 



Mike.
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## Calidecks (Nov 19, 2011)

My point is, what's just as important as working capital, is a stellar credit rating. 


Mike.
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## griz (Nov 26, 2009)

Jaws said:


> On residential I also have past clients that I do stuff for all the time. Sometimes I will be out the entire job, depending on what it is, and just send them a bill


very true...

the big money people often operated that way and never cared or thought what something costs.

one year i delivered 10m cords of firewood and plowed their drive all winter. bad ass winter also. these were some very cool folks with more money than anyone should really have...

come spring they wanted to remodel a bathroom.

sipping some bourbon with him and discussing the bathroom i casually asked about the firewood and plowing.....

thought the guy was going to chit his pants....

talk about embarrassed. he thought wife paid and she thought he paid.

they apologized for years about that.

in the future years i got a check before winter. 
sitting down


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## Jaws (Dec 20, 2010)

Californiadecks said:


> My point is, what's just as important as working capital, is a stellar credit rating.
> 
> 
> Mike.
> _______________


Yep. I knew I wanted to be a contractor when I was very young, got my first credit card at 18. Lumberyard gave me a line of credit when I was doing side work at 23, had no problems getting concrete plumbing suppliers and light fixture scord to give me a credit account when it was time to go full-time. My old man's credit has been great always also

there have been times I have had to put credit suppliers bill on American Express to float another 30 days:laughing:


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## Jaws (Dec 20, 2010)

griz said:


> very true...
> 
> the big money people often operated that way and never cared or thought what something costs.
> 
> ...


I have many situations that could be similar to this:laughing:


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## griz (Nov 26, 2009)

Jaws said:


> Yep. I knew I wanted to be a contractor when I was very young, got my first credit card at 18. Lumberyard gave me a line of credit when I was doing side work at 23, had no problems getting concrete plumbing suppliers and light fixture scord to give me a credit account when it was time to go full-time. My old man's credit has been great always also
> 
> *there have been times I have had to put credit suppliers bill on American Express to float another 30 days*:laughing:


amen to that...

i used a line of credit instead....


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