Down Payments

[N.B. DECKS 14]

Just wondering what everyones method is for locking down a job. Do you require your customer to put 50% down b/4 any work is done, or do you wait until the entire job is completed to collect the $$? My method is to collect 50% when I do the cleaning of their deck and then collect the final payment when the job is completed.

[PressurePros 248]

That's what we do too, Nate. No deposit to book a job. Gives customers an extra level of confidence.

[FLORIN 21]

Same here. I ask for the deposit after the clean/ strip. I justify it to the customer as money that is going towards the purchase of the stain/sealant.

[big mike 14]

We go 20% on any residential work over $1000.00. I've had too many customers pull out from under a handshake deal. If you have to put them on your calendar for work, they need to come through with the job as promised.

I tell folks that it covers the cost of the stain I have to order (even though I may have 100 gallons of it in my shop).

[RPetry 564]

Good post Nate.

We are a bit different. After showing up to start the job, usually, a job deposit of estimated materials is due. Net payment of the job is due when finished.

If it is a monster sized job, 50% is due on prep. Or, if it looks like showers for the next week!

[Chappy 138]

I collect 25% on deck jobs over $750 to schedule. Never had anyone balk.

[fireandrain 39]

I've never asked for anything as a down payment in 5 yrs. Due in full after job is completed... Never had a single problem/cancellation issues,etc... Going to change that this year though. I like the 50% due the day project begins with projects over $1K. Makes sense. Getting tired of having so many jobs mid-process, material orders underway,etc... Seems reasonable. Don't think I'll ask anything to book though.

[bigchaz 157]

1/3 deposit before work begins

Remainder is due on the last day we leave the property.

[Mathew Johnson 123]

Just wondering what everyones method is for locking down a job. Do you require your customer to put 50% down b/4 any work is done, or do you wait until the entire job is completed to collect the $$? My method is to collect 50% when I do the cleaning of their deck and then collect the final payment when the job is completed.

This time of year we take a $50 deposit to get them is the scheduling rotation for house washed and deck restoration projects. On decks we get about 6o percent of the labor at completion of the stripping and neutralizing component and the balance plus the cost of the stain at project completion

[5 Star Johnny 14]

Every job, no matter the price, is contracted. 15% deposit (minimum $50) with contract. 50% of balance due after restoration. Remaining balance due after finish coating. On siding cleaning, flatwork or other PW, balance due upon completion of job. Commercial work is 25% deposit with contract. If it's a large job $5K - $10K+, we usually work out partial payments through duration of job, with final payment net-10 days after completion.

Have NEVER had anyone balk at deposits or contracts. Our terms allow for better cash flow management, which is one thing I like about residential work.

Here's another cash flow plan we tried this season. We do annual deck maintenance on a 5-year contract with our deck clients, collecting a fee each spring when we perform the maintenance. We had roughly 200 clients set for this spring's maintenance. When we sent out notices in March, we informed we were raising the fee 5%, as allowed in our contract, to cover rising costs. We gave each client the option of pre-paying the annual fee, thus waiving the 5% increase and placing them on the "priority" schedule. We figured a "few" would take this option. 25% of the clients opted for pre-pay, giving us a HUGE cash flow boost through April. That helped greatly for early season purchases and repairs. Of course, there was a cash flow "hiccup" once we started doing the maintenance and putting out payroll. But we anticipated that and managed fine.

CASH IS KING! Almost all contractors in other trades take deposits and payments during the work process. Why shouldn't PW contractors do the same?

[RPetry 564]

John,

I have been a member of TGS for 5 years. Your above post is the best I have seen, by far, concerning business cash management. Very valuable information.

Contributions like yours is what makes TGS such a terrific web site.

[PressurePros 248]

I've known John for a few years now and he is a real business person and good friend. One spin I want to add, John. I take the approach of 'no deposit' and sell it on my website, print advertising, and during my proposals. http://www.pressure-pros.com/index/faq.html (I just noticed a few mistakes on that page as I have not edited that one in over a year.. we now take 1/2 at cleaning time as half the project is complete)

Edited May 21, 2008 by PressurePros

[RPetry 564]

We are in a similar market as Ken. No upfront deposit, ever. Reason being, contractors have a bad rap, and probably deserved. We do not want to be "just another contractor".

Our customers are the best. Most are referrals, and that is the cats meow. But we are small time, pick and choose the jobs we want, and if the karma is not there at the estimate, we both know it.

Those jobs go into the dead file. Many of the others become friends. This is no way to build a big time business, but the customers that we close get the finest service available.

[anthony szabo 14]

We have never asked for $$ down on any job. We have a cleaning price and a staining price. Once the cleaning is done we ask for that payment and when the staining is done we ask for it. I let net30 days go and it also works out just find too!

[5 Star Johnny 14]

I know most of you guys have been in the business a lot longer than I have, and every market demands different approaches. However, business is business. Bills & payroll continue.

Many of the states you operate in require home improvement licenses just to do deck refinishing. That makes you contractors. Why wouldn't you demand down payments to at least cover your material costs? Your cash flow has to suffer by not doing that. Especially at start up of the season. For those of you that don't ask for down payments, do you at least require contracts? IMO that is the least you would want to start a job!

I can only speak for my market as to what might work and what won't. Perhaps certain markets are so convoluted with "less than professional" PW's that your clients are accustomed to "less than professional" approaches. My suggestion......dare to be better!!

If you can survive the cash flow crunch at the start up of deck season by not asking for down payments, and waiting for payment 'til you're done with the work....more power to ya'. If it's biting you in the a**, rethink it! Have a GREAT Memorial Day weekend. Thanks to all Veterans!!!

[Beth n Rod 1,279]

We require a deposit with all booked jobs. Around here, people have been known to call in multiple people, and whoever gets there first does it, then they don't tell you they got someone else you get there, and you are out of luck. If someone wants to hire you there is nothing wrong with them having a little "skin in the game" so to speak.

Beth

[814jeffw 71]

[quote "skin in the game"

Beth

Some call that "Good faith money"

Kinda' like if you look at a used car in someones driveway and you tell them you'll take it. Nothing wrong if they ask for $100.00 to hold it for you.

Jeff

[Greg R 82]

20% down SCHEDULING DEPOSIT on all work under $5000. Over $5000 we do a 30/30/40 split. 30 down at signing - 30 due prior to staining and the 40 balance due upon completion. I always try to get a credit card for the initial deposit as a backup payment source.

To me it's important to get the customer off the "street" sort-a-speak and the deposit does just that. It doesn't hurt to have some extra cash flow either when the weather throws rain at you for 2 weeks straight.