deposit for materials

[wheeler-dealer]

i have been asked to quote for a job that is worth £8000 but the problem is the amount for the materials comes to £5000, i was thinking of asking for a deposit of about 1/3rd up front so i dont over stretch myself with finances,the only issue i have is would it make me look amature because we dont have a large bank balance, just wondered if this kind of thing is quite normal.

 

[S-Marketing]

i have been asked to quote for a job that is worth £8000 but the problem is the amount for the materials comes to £5000, i was thinking of asking for a deposit of about 1/3rd up front so i dont over stretch myself with finances,the only issue i have is would it make me look amature because we dont have a large bank balance, just wondered if this kind of thing is quite normal.

What type of business mate?

 

[wheeler-dealer]

i'm in the joinery business

 

[S-Marketing]

I'd say yes. definately take a deposit. One way I used to put clients minds at rest was to tell them they had to pay upfront for all materials, but didn't have to pay a penny until the materials were actually on site.

IMO this is the best of both worlds. The client knows you aren't going to do a runner with the deposit, as they only pay when materials arrive, and you get good cash flow and dont have to wait to be paid for costs.

Get at least 7-14 days credit from your suppliers and you never outlay a penny.

 

[wheeler-dealer]

thank you for your reply, the only issue i have is with it being joinery products (making staircases) i will have to have the materials at my workshop first to manufacture them before they go to site, so i guess it will ultimately come down to trust.

 

[estwig]

In your quote, set out clearly when you require stage payments, and what you have to achieve to reach those stages before getting paid. Take a deposit and a final payment on completion.

If the punter doesn't agree to this, you'd probably do well to walk away.

 

[S-Marketing]

I see your problem, thats slightly different isn't it. We used to get all materials delivered and used on site so it was a bit easier.

Must be some pretty special timber you are using if its going to set you back 5K for an 8K job.

I've got a client who's a joiner, he mainly designs and builds bespoke windows, but the principle is the same, ill ask him tomorrow how he scales his deposit payments for you.

Do you need to get all the materials to your workshops before anything can be delivered to your client? Would it be possible to break the job down into smaller sections so you could charge interim payments?

 

[wheeler-dealer]

the timber is solid oak which is why its so expencive, i will need to have all the materials first as it all needs to be maufactured before delivery.
i would appreciate you asking your joiner friend how he works with his payments,

 

[Bri]

not a problem, agree that they will pay you deposit on delivery of materials and when they are delivered to your workshop inform customer that issue of the invoice.
Taking deposits for a job are commonplace now, we explain its insurance against firms going bust, although I take it yours is a domestic, same rules apply.

 

[S-Marketing]

the timber is solid oak which is why its so expencive, i will need to have all the materials first as it all needs to be maufactured before delivery.
i would appreciate you asking your joiner friend how he works with his payments,

Will do mate. Ill post back on here after seen him tomorrow.

As estwig said, detailing exactly when you want payments is best, based on fixed and agreed points during the work. However, in your case its difficult as I assume the client wont actually see anything until you turn up with the staircase ready to fit. Unless you could invite them to your workshops to see the project take shape. If its a bespoke service for domestic clients, this could work quite well. They would probably find it quite exciting.

 

[wheeler-dealer]

thanks bri

i just wanted to get a feel of how common it was to take a deposit first on a larger jobs

 

[KM-Tiger]

....the only issue i have is would it make me look amature because we dont have a large bank balance, just wondered if this kind of thing is quite normal.

Yes, it's normal.

It's nothing to do with the size of your bank balance, it's the risk that you fork out the money for materials and then don't get paid. A client worth dealing with will understand that and be happy to pay some money up front.

As Estwig says, set out your stages clearly and stick to them. Don't expose yourself to too much risk, but leave the client with the comfort of a (small) retention until you have delivered.

 

[MikeJ]

I'll just add I'm getting a house extension done at the moment, and paid a 10% deposit when we signed the contract. There'll be stage payments throughout the job. It's really quite common.

If you can't do the job without stage payments, then you're better off not taking it anyway - don't break your company for one job.

 

[avantime]

Take a deposit. A joiner friend of mine takes 50% up front. Also making £3k on an £8k job sounds a little thin on the margins to me. Either that or you're paying too much for your oak.

 

[crossdaz]

i have been asked to quote for a job that is worth £8000 but the problem is the amount for the materials comes to £5000, i was thinking of asking for a deposit of about 1/3rd up front so i dont over stretch myself with finances,the only issue i have is would it make me look amature because we dont have a large bank balance, just wondered if this kind of thing is quite normal.

Someone once asked me why it was so difficult to get anyone to do a job for them when everyone complains there is a lack of work?
Your problem is very common and is the main reason why people don't bother to quote, price themselves out or, at worst, take the job on and disappear to do other jobs at the same time.
Just be honest and explain the situation - as Keith has said - if they don't go along with it then you are best steering well clear anyway.

 

[wheeler-dealer]

Take a deposit. A joiner friend of mine takes 50% up front. Also making £3k on an £8k job sounds a little thin on the margins to me. Either that or you're paying too much for your oak.

there is good profit for the job about 1 1/2 weeks work for one man so thats not a problem its just a high spec job thats why the materials are so high.

 

[Bri]

As you pro forma the materials it would be in the suppliers interest to give you a little more discount if your getting any at all.I know Howdens can be generous on their discounts, however I dont know how far off list their goods are not being in your trade.

 

[avantime]

there is good profit for the job about 1 1/2 weeks work for one man so thats not a problem its just a high spec job thats why the materials are so high.

Are you making from scratch or are they ready-made components? I was paying c.£18 per cubic foot for FAS American oak.

 

[wheeler-dealer]

yes i am making it all from sawn timber i usually pay £1600 per cubic meteramerican white oak

 

[avantime]

yes i am making it all from sawn timber i usually pay £1600 per cubic meteramerican white oak

That's £45 per foot. You can get it far cheaper. Where abouts in the country are you? How many metres do you need?

 

[wheeler-dealer]

we are based in norfolk, i havent got the details in front of me to say how many meters we need but as you can imagine its a far bit to make 2 complete staircases including all the balastrading

 

[Bri]

I know of people who get supplied stuff( not timber, just a comparison for you) from Ireland including shipping to the UK cheaper than they can get it from a UK supplier.

I know its not my trade and such, but Ive been taught how to select timber so I understand the need to stay local, so here must be somewhere within at least a 10 mile radius you can source a bargain.£45.00/ cm3 phew!