# Customer says they won’t give you a down payment on their job



## Mike Finley (Apr 28, 2004)

More Mikey Stonsie:

*Customer says they won’t give you a down payment on their job * 

Walk away. Money changing hands means a commitment has been made. You don’t buy a new or pre-owned home without an earnest money agreement. Note the term “earnest.” You don’t order a new car without putting the green stuff on the table. Attorneys demand a retainer before they will take on your case. You don’t enter into a contract for work to be done on a home or building without money changing hands. This is a warning flag pilgrim, pay attention. 

*Customer wants to cut the down payment amount in half * 

Back to setting your own parameters under which you are willing to work. If you negotiate your down payment, they may believe you will negotiate every payment from that point on. Additionally, they will start making payments late and expect you to keep the job going. Then they will start asking you to make changes without paying you. The list of things customers will try to get you to agree to that are a “no win” for you and your company are endless. You must be on your toes at all times. 

*Customer wants to change your payment schedule on your contract * 

Consider their request. It may be that they have income they are depending on to pay for the job and it only comes in on certain dates. Ask why before you decide. 

If they want to change the payment schedule for other reasons, however, just changing the parameters so they gain some kind of an edge or control over you, then your answer should be no. 

But in all cases, specify your payment schedules in such a way that you are using the customer’s money, not your own.


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## Teetorbilt (Feb 12, 2004)

Tee Hee!
You can smell the rubber from my shoes on my exit. NEVER put YOUR money into someone elses property/project.


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## Grumpy (Oct 8, 2003)

On straight forward easy jobs where permits are not required I will be slightly flexible on my down payments. SLIGHTLY being the key word. 

I will not start a job valued over $1,000 unless I have a down payment, but I might allow the customer to write a post dated check or pay me at material delivery.


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## Todd (Aug 24, 2005)

*Money Down?*

In my state the amount of down payment is limited by law. Before, they had a problem with suposed contractors taking full payment and then vanishing.


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## Humble Abode (Mar 19, 2005)

Todd said:


> In my state the amount of down payment is limited by law. Before, they had a problem with suposed contractors taking full payment and then vanishing.


Is that Alabama or Arkansas? Just kidding...

Seriously how stupid do you have to be to pay in full before any work is performed? I think it's a miracle I can get 33% down before we start. No one fully trusts a contractor....


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## mdshunk (Mar 13, 2005)

I've almost never gotten a downpayment. Maybe I'm screwing up, but it's been working for years. Bill at end of ruff, and bill at finish, and that's it. I'm not passing this along as sound a business practice, since I know it's plainly bad advice. I have to only send two or three people to collections each year, and I budget more than that in as bad debt overhead anyhow.


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## Teetorbilt (Feb 12, 2004)

md, you are a very trusting guy and even have a 'burn' ratio. I was that way until I started dealing with more yankees, the town also grew to where the 'embarassment factor' was lost.

Today, nothing other than labor may be invested in someone elses project and I try to avoid that. About 20 years ago I discovered that getting burned on $12K was about the breakeven point on a lawsuit, I'm sure that the figure is higher now.


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## mdshunk (Mar 13, 2005)

Teetorbilt said:


> the town also grew to where the 'embarassment factor' was lost.


That's probably why it's working for me. Everyone either is indirectly related to or indirectly knows everyone. I see about 1/2 my customers from time to time at the grocery store, wal mart, or one of the local restaraunt lunch counters. I'd be a spectacular failure at business in a larger market.


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## Teetorbilt (Feb 12, 2004)

You'd be dead meat in the south counties, Dade, Broward, Palm Beach.


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## shopdust (Apr 9, 2005)

My rule in the cabinet biz "Never cut your own wood". The down stroke has to be 50%, no exceptions.


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## Grumpy (Oct 8, 2003)

Interesgting fact... if I feel a customer is off, I will require 30% at signing and 30% at material delivery. Like shop said, never cut your own wood.

One of my sales guys is in the middle of a strage customer... when he walked up to the guys house the first thing he said was "I'm only dealing with company owners." Myh salesman was able to squash that, but that's just giving you a little background. Here is some more background. He asked my sales guy how he was paid and my sales guy told him commission. He instructed my sales guy to lower the price and that he would pay him directly. LOL OK now here is the kicker. After we gave him our proposal he tries to re-negotiate our 6 year warranty into a lifetime warranty, he tries to slip past a more expensive siding, and he wants to change the payment terms from 1/3 1/3 1/3 to 1/3 2/3. I squashed that and told my salesman to use the take-away close and raise his price. I'm scared that we might even get this one  I hope my salesman mis-speced so I can deny the contract :/


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## Mike Finley (Apr 28, 2004)

Holy sh#t grumpy, there is only 2 ways that I would take that customer on -

1) Have him sign my contract in front of a notary.

2) Tripple the estimate. That way I might be lucky to see my normal amount since 1/3 is going to be gone when he refuses to pay part of the bill and the other 1/3 will be gone in attorneys fees when he sues you for something he will surely think up.

Did you read what you wrote?

Wanting to change your payment structure? No F#cking way!

1/3 up front and 2/3 at the end? Why? What does that do for him? The other would be paid attached to work being done, what does he have to lose? He could see the progress himself.

That's way too suspicious for me, moving 2/3 at the end means you probably are never going to see all of it.

You either really need the money, or you are really on top of your game and feeling your oats and ready to strap on the big brass ones for this guy.


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## Cubevan (Nov 24, 2004)

A lifetime warranty on roofing?  .... Many roofing co's and contractors are long out of business before the roofs life expectancy of about 20-25 years.


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## Grumpy (Oct 8, 2003)

It's actually siding in this case Cube... and I'll be in business for the rest of my life. 
Mike I agree with everything you said. My salesman also agrees with you, though he didn't read this post. We had a long discussion and both agreed that we will let him get tired of calling us asking for his quote and he'll go away.


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## Mike Finley (Apr 28, 2004)

Thank God!

That salesman of yours must have caught you in a moment of weakness, thinking about helping him make some money.

Only thing different I would do is tell him flat out you are refusing his business. I don't see any reason to beat around the bush. Tell him exactly why you aren't doing business with him - (Give him a referral to somebody you don't like  ), but flat tell him the way it is.

If for no other reason, you owe it to the rest of contractors world wide not to let this guy just go on thinking there are no consequences to his tactics. Be the first contractor to tell him like it is. :Thumbs: 

The Karma alone is going to come back to you double.


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## Tom R (Jun 1, 2004)

Teetorbilt said:


> md, you are a very trusting guy and even have a 'burn' ratio. I was that way until I started dealing with more yankees


Are you saying most 'Yankees' are 'Dodgers'?? :cheesygri


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## 747 (Jan 21, 2005)

Interesting. When i had my house vinyl sided replacement windows new roof new bay window new entry doors and storms. I asked do you need a down payment. He SAID I don't take a dime until job is done. I also never signed contract. They went start to finish. It was a local contractor who is by work of mouth only doesn't advertise. My house looks great. Oh i purchased all the entry doors and storms at menards and lowes he said just give me the reciepts and i will pick them up no problem. Be advised this is a guy with a excellent small town rep. who like i said doesn't even advertise who goes start to finish and thats why he doesn't need to advertise. Hand shake payment when job completed. I just got home and got estimate in mail for him to build new pressure treated deck to go with the new patio door. Price 2,272.00 I told him if buisness slows down hook me up with a deck when he did the house about 3 monthes ago.


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## jproffer (Feb 19, 2005)

> Customer says they won’t give you a down payment on their job


"Well Mr. Customer, that's going to make it difficult, at best, for us to start your project, seeing as how we'll have no materials. But, on the other hand, since we won't be here to install the material, maybe that would be OK"

:cheesygri


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## Grumpy (Oct 8, 2003)

Mike Finley said:


> That salesman of yours must have caught you in a moment of weakness, thinking about helping him make some money.


 Mike, I'm not sure what ya mean. I think it was honest of him to tell the customer "I can't do that" in regards to taking an under the table bribe... I think it was even more honest of him to tell me the customer offered.


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## Mike Finley (Apr 28, 2004)

747 said:


> Interesting. When i had my house vinyl sided replacement windows new roof new bay window new entry doors and storms. I asked do you need a down payment. He SAID I don't take a dime until job is done. I also never signed contract. They went start to finish. It was a local contractor who is by work of mouth only doesn't advertise. My house looks great. Oh i purchased all the entry doors and storms at menards and lowes he said just give me the reciepts and i will pick them up no problem. Be advised this is a guy with a excellent small town rep. who like i said doesn't even advertise who goes start to finish and thats why he doesn't need to advertise. Hand shake payment when job completed. I just got home and got estimate in mail for him to build new pressure treated deck to go with the new patio door. Price 2,272.00 I told him if buisness slows down hook me up with a deck when he did the house about 3 monthes ago.


Yep, small town rep is the key. He has a reputation, and because it is a small town, guess what, he probably knows everybody else's reputation too!

It's a nice way to do business depending on who you are doing business with. There are parts of town where I'm sure that guy would want 100% up front too.


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## ApgarNJ (Apr 16, 2006)

I always take a deposit, unless it's for someone i really know and i have done business for in the past(small jobs that is) for most of my jobs though, they are all on a payment schedule that is signed by both me and the customer, each job i say i'm going to change the payment schedule so that i have a little bit more in the middle of the job. anyone else find that no matter how they layout the payment schedule that they find it hard to keep eveyone paid in a timely manner? i just never know when the subs are going to send their bills my hvac guy has been working since the winter on this job, when he started and is about to finish and still hasn't sent me a bill. or i'll get bills from 4 subs all in one week and it doesn't go well with the payment schedule timing because we need to finish one more step before the next payment. then the subs have to wait for their money. i don't like doing that. i like to be able to pay them within 2 weeks of getting their bills. 
please tell me i'm not the only one that comes across these situations. lol


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