# Pay when you get paid?



## Safleysteel (Nov 12, 2010)

I am a subcontractor. Every contract I sign has the wording in that I will get paid when the contractor gets paid. I do not know how the General Contractors are getting away with this. This seems like such an obscene unjustice. I put up all the money for labor and materials for a project and then I cross my fingers that they get paid so I can finally get paid. I am working on two projects and the owner was 2 weeks late paying so my progress payment was withheld. Pay when you get paid! That just sounds wrong.


----------



## 480sparky (Feb 1, 2009)

Simple solution: demand the language be striken from the contract.


----------



## jlhaslip (Dec 31, 2009)

A buddy of mine has a 'friday' invoice/payment clause.
He invoices on Friday. 
The customer pays by the following Friday or the crew doesn't go back on the next Monday.


----------



## BPWY (Sep 21, 2009)

Safleysteel said:


> I am a subcontractor. Every contract I sign has the wording in that I will get paid when the contractor gets paid. I do not know how the General Contractors are getting away with this. This seems like such an obscene unjustice. I put up all the money for labor and materials for a project and then I cross my fingers that they get paid so I can finally get paid. I am working on two projects and the owner was 2 weeks late paying so my progress payment was withheld. Pay when you get paid! That just sounds wrong.







Like has been said I'd strike that from the contract.


Its wrong to have that in the contract. Your contract is with the GC. Not the GC's client. So if the client doesn't pay the GC feels that its OK for him to never pay you? That is wrong.

What happens if you have a soft and weak willed GC that allows folks to take advantage of him and won't push for collection? There isn't much that the 3rd guy down the line can do.


----------



## greg24k (May 19, 2007)

You asking how they get away with it?...Very easy, you let them get away with, because you signing those contracts. Simple as that.

We have contracts for a reason,they're not only to protect the other party, they must protect you as well and that is why we structure them,or the contracts that we sign, we must makes sure we're protected... If we do just that, then we don't need to include/sign contracts with clause like "If I don't get paid,you won't get paid"...that is a bad business practice.


----------



## loneframer (Feb 13, 2009)

I've worked for contractors that operate in that manner, whether it's in the contract or not. Every job is treated as a seperate account. If the money is there, you get paid. If the money is not there, you wait.


----------



## DPCII (Mar 14, 2010)

Safleysteel said:


> I am a subcontractor. Every contract I sign has the wording in that I will get paid when the contractor gets paid. I do not know how the General Contractors are getting away with this. This seems like such an obscene unjustice. I put up all the money for labor and materials for a project and then I cross my fingers that they get paid so I can finally get paid. I am working on two projects and the owner was 2 weeks late paying so my progress payment was withheld. Pay when you get paid! That just sounds wrong.


 
If you don't like it, then don't sign it. They get away with it because you let them by signing and agreeing to it. To the GC it is not unjust, it is rather simple, they are using you to fund the working capital needs of the project.


----------



## 480sparky (Feb 1, 2009)

_No one can take advantage of you without your permission._ -----Ann Landers.

As has been said, you're letting them take advantage of you and you're submitting to it. Stand up and request they remove that language from your contracts and replace it with something more to your liking.

If I can't get a contract that even somewhat protects MY interests (i.e. , language from MY contracts, not just the GCs which is designed to protect HIM and HIM alone), then it's not a job I want.

I have only one GC in which I allow pay-when-paid, and it's because of the language he has in his contracts with the owners. He submits a bill every other Friday morning (which happens to be today, actually!), and expects payment by the end of the day. If he's not paid, all work will cease until payment it made, then the customer starts a pre-pay phase.

I submitted my bill to him last night, the customer will receive an invoice from the GC about 8AM today, he'll get a check by end of today, and I'll have a check middle of next week.





loneframer said:


> I've worked for contractors that operate in that manner, whether it's in the contract or not. Every job is treated as a seperate account. If the money is there, you get paid. If the money is not there, you wait.


So what happens when the customer doesn't pay the GC? You're willing to take it in the shorts?

Sorry.. I don't go out and work in the heat / cold / rain / mud / wind / sun / mosquitoes and deal with bitchy-whiney customers and unrealistic inspectors and late deliveries and designers who can't make a decision to lolly-gag around waiting to get paid. I get paid either at the end of the job, or at some written milestone. If the GC can't manage his business and his finances with enough operating capital to pay the bills when they come due, then I'll lien the property, file a court claim, whatever is in the contract.


----------



## fast fred (Sep 26, 2008)

jlhaslip said:


> A buddy of mine has a 'friday' invoice/payment clause.
> He invoices on Friday.
> The customer pays by the following Friday or the crew doesn't go back on the next Monday.


 
Some one stole that from my contract?????

Works like a charm, protect yourself...............

I get that phone call that asks where the heck I am? I always want to say "Well...... I've got another job that pays better, maybe you should work on that check writing hand." but I don't.

I just remind them that the payment is past due according to the contract. I will be there as soon as the check is in my hand.

My other fav. is at the end of the job I occasionally get asked "when are you going to clean?" (I leave a the job clean, broom clean and shop vac clean) The contract states that you will need to bring in a subcontractor to perform a profesional cleaning job. 

I swear they do not pay attention, I go line by line with them over the contract, I ask if there is anything they feel is unfair or would they like to change. Like payment scheduals or me subing out a cleaning crew.


----------



## griz (Nov 26, 2009)

When I was a GC I paid a sub within a day or two, or sooner, of his invoice. How, when & if I was getting paid has no bearing on the sub. He shows up, does his work, gets paid & moves on. But this also why I got excellent pricing & subs that would show up on a moments notice if needed. You can do it one of two ways, Operating Capital (Cash) or a line of credit. Now as for the argument "Hey I'm a GC not a bank", well if you want to keep operating & keep a job moving sometimes you will have to act like a bank. So you don't get paid, you going to tell your crew no checks today, I didn't get paid. Ya right.


----------



## Safleysteel (Nov 12, 2010)

*Not so easy to turn down.*

It is easy to stand on your horse and say I will strike it from the contrace, turn the work down or use it against the contractor during the job. I am not trying to be rude just realistic. What I want is enough people to agree that the wording is wrong and should not be allowed in a contract. The only way I could make a demand on a contractor to make changes in their wording is if I bid the job so cheap they could not replace me. The next person in line will take the job guaranteed. I even heard a housing developer is doing this to his subs and actually found subs to build his houses. Whith these desperate times everybody wants to stay in the game of work even if it means taking the risk of not getting paid.


----------



## Safleysteel (Nov 12, 2010)

*Not so easy.*



480sparky said:


> Simple solution: demand the language be striken from the contract.


I work for many large General Contractors and it is in all of there language now. Turning down wor during these econimic times is unrealistic and there are many others that would leap to take your place.


----------



## griz (Nov 26, 2009)

Safleysteel said:


> ... With these desperate times everybody wants to stay in the game of work even if it means taking the risk of not getting paid.



I always tried to evaluate how much money I would make on a job. You're looking at jobs and evaluating your risk of getting paid or not. Why would you even bid on a job if "are we going to get paid" is one of the criteria. You'd have more fun at a Crap Table, might make more money also.


----------



## 480sparky (Feb 1, 2009)

Safleysteel said:


> I work for many large General Contractors and it is in all of there language now. Turning down wor during these econimic times is unrealistic and there are many others that would leap to take your place.



Who says you're turning down work? All you're asking for is a _revision of the contract language_.

If they're such a good customer, and you do good work, there shouldn't be a problem. If they flat-out refuse, then YOU HAVE A CHOICE..... either continue to allow yourself to finance their work (in which case, my price would go up!), or look elsewhere for work.


----------



## Mike's Plumbing (Jul 19, 2010)

You just need to work for the right GC's that's all.:thumbsup:

Just remember that a good GC that pays right away usually have the best subs, that's the trade off, it works both ways. The few subs I have pay my immediatelly out of respect and because of this I will do anything they ask and do it quickly. If I screw up or am lazy they don't put up with this....and why should they.

Success in being a subcontrator is largely a matter of alighning with the right people. The right people tend to be TOP notch in everything they do...including paying the bill.

That's my two Yen

Mike


----------



## Mrmac204 (Dec 27, 2006)

I make sure I've got the $ in the bank just in case. It rarely happens that I need someone to help, but when I do I make darn sure that I pay them on time. My problems are not their problems.

I like the contract ideas suggested on this thread.


----------



## DBBII (Aug 28, 2008)

Commercial construction has been this way forever. Is it right? It is as long as it's in the contract.

Part of this is due to bank funding. The bank usually only funds once a month (again, think COMMERCIAL).

There is a cost for someone to finance the job. Offer a "discount" for some accelerated payment terms. Of course, you need to have the discount built into your base price. Ask for a mobilization payment -- it sounds better than a down payment.


----------



## DPCII (Mar 14, 2010)

Safleysteel said:


> It is easy to stand on your horse and say I will strike it from the contrace, turn the work down or use it against the contractor during the job. I am not trying to be rude just realistic. What I want is enough people to agree that the wording is wrong and should not be allowed in a contract. The only way I could make a demand on a contractor to make changes in their wording is if I bid the job so cheap they could not replace me. The next person in line will take the job guaranteed. I even heard a housing developer is doing this to his subs and actually found subs to build his houses. Whith these desperate times everybody wants to stay in the game of work even if it means taking the risk of not getting paid.


On what legal basis should the wording not be allowed in a contract?

It is very simple, it is a point in a contract and it, like anything else in a contract, is open to negotiation.

You can ask for different terms and have 2 options if they refuse

1) Don't do the job

2) Assume the risk and take the the job.

I for one cannot agree with your premise that the lnaguage should not be allowed in a contract, especially in light of the fact you have provided no foundation for it to be excluded.

If you are afraid to negotiate a contract with a GC, perhaps you should re-think being in business in the first place.


----------



## loneframer (Feb 13, 2009)

loneframer said:


> I've worked for contractors that operate in that manner, whether it's in the contract or not. Every job is treated as a seperate account. If the money is there, you get paid. If the money is not there, you wait.





480sparky said:


> *So what happens when the customer doesn't pay the GC? You're willing to take it in the shorts?*
> 
> Sorry.. I don't go out and work in the heat / cold / rain / mud / wind / sun / mosquitoes and deal with bitchy-whiney customers and unrealistic inspectors and late deliveries and designers who can't make a decision to lolly-gag around waiting to get paid. I get paid either at the end of the job, or at some written milestone. If the GC can't manage his business and his finances with enough operating capital to pay the bills when they come due, then I'll lien the property, file a court claim, whatever is in the contract.


 In the last 16 years, I've never taken it in the shorts, or anywhere else in that general proximity.

The longest I've ever waited for money was framing for a HO, who was contracting his own home. It was written into the contract that I would wait for his bank draw to get paid for the framing project. My business was young and carrying payroll for a month wasn't easy.

It was a burden on my business, but I got my money and ended up doing more work for him on the interior, under a similar agreement.

As for "real" GCs, I've had guys approach me about carrying materials and labor in that manner. I declined to do business with them and moved on.

Other guys get you 80% through a project, then tell you you can't get another check until settlement on the construction loan.:furious: It sucks, but what do you do? Shut down and gaurantee yourself not to get paid, or move forward and finish the frame so the draw gets approved?

It's not likely they will let, say, $7500 keep them from making settlement on what might be a 750K project due to leins on the property. The money will change hands, but waiting for it still blows.

If you get lucky, you find builders who care about those who take care of them and will go to extremes to insure you get your funds quickly.

Others will put you on a 30 day pay scedule from the time they receive your bill.
I chose not to do business on a 30 day schedule.

Most of the builders I've done repeat business with do paroll on Wednesday, so if they have your bill on Wed. morning, the check is in hand on Friday.:thumbup:


----------



## AmeliaP (Apr 22, 2007)

Huh....I've only ever used my own contract as a sub. Is that unusual? 
I have one for customers and one for other contractors. 
Sometimes GCs want a tweak here or there but it's never been a problem for me to set my own payment schedule.
Maybe it's just the culture we have here in the sticks.


----------



## katoman (Apr 26, 2009)

Lots of great advice here. I pay my subs as soon as they invoice, and the work has been inspected and approved.

If the GC can't finance that then HE needs to change the way he's getting paid. Not the subs problem. 

On the odd occasion a GC has proposed that to me I just laugh and walk away. Sorry, I don't finance projects. Residential or commercial, it's all the same in the end.

I tell customers the same thing - I'm in the building business, not the financing business, or the risk taking business. Sorry. :thumbsup:


----------



## Warren (Feb 19, 2005)

About five years ago, I ran into something similar. A contractor wanted me to frame a pretty large house. I told him that we would frame it, provided that we got 3 draws during the framing. He told me "Well you know, thats up to the bank, not me." To which I responded, then we don't want to do the job. He backed off and said he would make sure we got the draws. Low and behold, we commence framing, the first draw comes due, and I turn in the bill. It was due upon receipt. He goes into the whole "the bank determines the draw" routine. I tell him he has three days to pay or we walk. 3 days passes, we walk and start framing another house. 3 days after we left, I receive not just the first draw, but the second draw as well. Only problem was we had to wait three weeks to go back because we were doing the other house.

Stick to your guns. Don't get pushed around.


----------



## loneframer (Feb 13, 2009)

Good point by Warren. Don't let the GC set the precident. Guys who play games don't call the shots in my book.

I'm honest, I expect those who I do business with to be honest as well.


----------



## RobertCDF (Aug 18, 2005)

This is the primary reason I don't do new construction residential. 
Around here the standard is if you invoice by the 25th you will be paid by the 10th. Most banks around here only pay draws once a month and they usually send an inspector to verify that what is being billed for has been completed. Billing includes all invoices submitted by subs, and overhead and profit for the GC, this has to be reasonable based upon the progress of the project.


----------



## 480sparky (Feb 1, 2009)

RobertCDF said:


> ....... Most banks around here only pay draws once a month and they usually send an inspector to verify that what is being billed for has been completed. ..........



If you have a good working relationship, the GC will have you bill for work _not quite_ completed, but _will be_ by the time the bank's bean-counter shows up. Just make sure you don't f---- up and don't get it done. :thumbsup:


----------



## BamBamm5144 (Jul 12, 2008)

I would not continue work for anyone who doesn't pay according to my schedule. When I invoice, I get my check two days when I sub. I only do some sub work or one company and that's because they pay right away.


----------



## Mike's Plumbing (Jul 19, 2010)

Just have the GC tell the bank the house is done while the hole is still being dug.:laughing:


----------



## Safleysteel (Nov 12, 2010)

*Why is the writing ther in the first place?*

The question I have is why and how the writing in the contracts state pay when paid if nobody does it. Most of the posts are residential. I do commercial projects. The projects I do have many subs and we all end up signing the same contract. It is just the way it is. In my opinion the only leverage you have to negotiate terms on a contract is if you are lower than everyone else or there is nobody else qualified to do the work. That is the reality. In my opinion writing like this in a contract should not be allowed. There is no advantage for a sub to have to sign this. I am also of the opinion that we should not ever have to look at the small print of a contract. If there are contractors that try to slip things into the small print they should not be able to do business. Pay when paid? That just sounds wrong.


----------



## naptown CR (Feb 20, 2009)

like it or not that is the way of business in the commercial world.


----------



## TNTRenovate (Aug 19, 2010)

Safleysteel said:


> The question I have is why and how the writing in the contracts state pay when paid if nobody does it. Most of the posts are residential. I do commercial projects. The projects I do have many subs and we all end up signing the same contract. It is just the way it is. In my opinion the only leverage you have to negotiate terms on a contract is if you are lower than everyone else or there is nobody else qualified to do the work. That is the reality. In my opinion writing like this in a contract should not be allowed. There is no advantage for a sub to have to sign this. I am also of the opinion that we should not ever have to look at the small print of a contract. If there are contractors that try to slip things into the small print they should not be able to do business. Pay when paid? That just sounds wrong.


Sorry brother but if you don't want to bothered to look at a contract, then you don't belong in CONTRACTING? Am I missing something here? :blink:

Read a contract, if you don't like it don't sign it. If they won't take the wording out, then don't sign it and move on. There is plenty of work out there, unfortunately you may have to actually work to get it. I know sucks, but such is life. :thumbsup:


----------



## griz (Nov 26, 2009)

TNTSERVICES said:


> Sorry brother but if you don't want to bothered to look at a contract, then you don't belong in CONTRACTING? Am I missing something here? :blink:
> 
> Read a contract, if you don't like it don't sign it. If they won't take the wording out, then don't sign it and move on. There is plenty of work out there, unfortunately you may have to actually work to get it. I know sucks, but such is life. :thumbsup:


Very well put.:thumbsup:


----------



## 480sparky (Feb 1, 2009)

TNTSERVICES said:


> ...... If they won't take the wording out, .....


There is, however, a difference between outright _removing_ a clause and _rewording_ it to a more acceptable language.


----------



## TNTRenovate (Aug 19, 2010)

480sparky said:


> There is, however, a difference between outright _removing_ a clause and _rewording_ it to a more acceptable language.


Agreed.


----------

