Half upfront

[w0gga]

Hi peeps, its got to the point where i've picked up some big jobs, the problem is i need to ask for half upfront and half on completion. Whats the best way to word this when making your quote ? I don't want to scare them of :|

Thanks

 

[CKG]

Are your customers businesses or domestic?

If they are domestic you could tie the deposit taking into paperwork for the 7 day cooling off period you are supposed to notify punters of.

At least you can then seem as though you are giving them a bit of an official safety net should they change their mind.

 

[maxine]

If you don't want to use the words "half upfront" then you could say

The payment schedule for this work is 50% payable at the time of booking with the remaining 50% payable immediately upon completion.

Be careful of using the word "deposit" as it could be taken by some people to mean that they could get it back in some circumstances. A better term might be "interim payment" or "payment on account" for "first staged payment"

Just my view

 

[Beachcomber]

I tend to ask for a % "deposit towards material costs"

Seems to do the job.

 

[w0gga]

Thanks for your reply, I think the % will sound better ...

Thanks

 

[DDPlumbing]

I have always taken a 50% deposit, and explained its to cover material outlay and as I am so busy it secures the job in my diary. I explain that I have x y and z customer all wanting it done asap. That way it appears as a good faith deposit and not cash flow lol.

 

[Estimator]

Hi peeps, its got to the point where i've picked up some big jobs, the problem is i need to ask for half upfront and half on completion. Whats the best way to word this when making your quote ? I don't want to scare them of :|

Thanks

So, you have actually secured these jobs? Without stating payment terms.:| Have you received a written order?
And now you want to tell the customer that he must pay 50% up front before you start work.
You need to be careful. Personally, as a a customer, I wouldn't go for that arrangement unless I knew the person very well. And I would be a bit upset that they hadn't put this on the original quote.
Are you in construction ?

 

[w0gga]

So, you have actually secured these jobs? Without stating payment terms.:| Have you received a written order?
And now you want to tell the customer that he must pay 50% up front before you start work.
You need to be careful. Personally, as a a customer, I wouldn't go for that arrangement unless I knew the person very well. And I would be a bit upset that they hadn't put this on the original quote.
Are you in construction ?

Sorry should of made myself clear, i've picked up some big "pricing" jobs and i know a lot of people in the trade ask for half up front and half on completion of the job. I was asking for better ways to word this in my pricing.

I'm a landscaper ....


Thanks

 

[MASSEY]

We usually get half after two or three days work on big jobs.

 

[S-Marketing]

Staged payments are easy for landscaping.

You invoice for labour once the garden is cleared and waste is removed.

You charge for materials the day before they are to be delivered to site.

You then charge for the remaining labour balance on completion.

If it a big job (over 15 - 20 K) you can stage payments further by breaking down the third section into smaller parts, eg fencing, paving, turfing, etc.

That way the client isn't paying upfront before they have seen some action, and you are not leaving yourself wide open to a large bad debt. Everyone's a winner.

 

[Estimator]

i've picked up some big "pricing" jobs and i know a lot of people in the trade ask for half up front and half on completion of the job. I was asking for better ways to word this in my pricing.

I suppose if you are working for private clients, it may be possible to get money up front - but wouldn't that be a bit unprofessional? Commercial clients will be harder, everybody has cash flow difficulties these days and why should they in effect give you a free loan?
And don't get me on to subcontracting - you'll be measured at the end of the month, paid at 30 days (or 60 - check the small print) and subject to a retention clause of 5%. The further down the chain you are the more you will have to wait.
Maybe your mates are not getting as much cash up front as they say.

 

[w0gga]

I suppose if you are working for private clients, it may be possible to get money up front - but wouldn't that be a bit unprofessional? Commercial clients will be harder, everybody has cash flow difficulties these days and why should they in effect give you a free loan?
And don't get me on to subcontracting - you'll be measured at the end of the month, paid at 30 days (or 60 - check the small print) and subject to a retention clause of 5%. The further down the chain you are the more you will have to wait.
Maybe your mates are not getting as much cash up front as they say.

i actually disagree , this is done more often then you think and is common within the trade.

 

[Fenland]

i actually disagree , this is done more often then you think and is common within the trade.

Common with the trade to get 50% of your costs up front- I must be in the worng trade.

In my experience I have never seen a large commercial client pay a deposit to a sub-contractor before work starts. I'm talking house builders, civil contractors here.

Mobilisation and stage payments yes, but not upfront.

Now if we are discussing domectic then for all works over £1k a 15% "deposit" is taken with the remainder due on completion. Over £5k then we ask for another 15% 7 days into the job.

 

[Andy K]

It is important to have a fairly detailed quotation because interpretations of conversations 6 months later can often be different between customer and contractor, especially when things start changing. You will also have a sections on price, and terms and conditions. I tend to have a sub heading under price for payment, and will base the stage payments on my actual outlay ( for example ordering a bespoke kitchen) even though the goods are not on site. Most customers are unwilling to make a payment until they feel that the contractor has started work and is committed. There are too many stories of clients paying hefty deposits and never seeing the contractor again. The advantage of a fully itemised quote is that it is easy to work out a value for what has been done and to agree a value of a payment, but there are many different ways of tackling it and it depends on the type of project

 

[Estimator]

It is important to have a fairly detailed quotation because interpretations of conversations 6 months later can often be different between customer and contractor, especially when things start changing. You will also have a sections on price, and terms and conditions. I tend to have a sub heading under price for payment, and will base the stage payments on my actual outlay ( for example ordering a bespoke kitchen) even though the goods are not on site. Most customers are unwilling to make a payment until they feel that the contractor has started work and is committed. There are too many stories of clients paying hefty deposits and never seeing the contractor again. The advantage of a fully itemised quote is that it is easy to work out a value for what has been done and to agree a value of a payment, but there are many different ways of tackling it and it depends on the type of project

I agree, fair enough if you are doing something which is special and put together off site, at least the client can inspect it at your workshop before he gives you a stage payment.
But, asking for 50% up front with a promise to be on site next Monday ( when the cheque has cleared ) it doesn't seem to me to be anything that a commercial client would accept. Which leaves domestic clients and this is where stories like you mention happen.
There may be people who say - we have to purchase materials and hire skips etc. but if you are an established firm you have monthly trade terms with merchants and plant hire companies.

 

[maxine]

The amount charged upfront and the amount and frequency of staged payments is purely driven by a credit policy on how someone wants to do business and what credit risk they are prepared to take.

It's not for customers or contractors to dictate but finding a balance between what they want and what risk a small business is prepared to take and of course actually winning the work, is the tricky bit.

The thing that really drives the decision on upfront payments, amount and frequency of staged payments is now much money a small business can afford to lose if things go wrong for whatever reason. Sometimes that means walking away from the job if the risk is too great.

This applies across the board for any type of work.

The risk of a bad debt is a completely different issue to cashflow and I would encourage any trades to do what is right for them individually and what they can afford to support

 

[w0gga]

I always have a contract in place and make sure the customer and myself sign and agree to whatever the terms maybe. If i take a % " in this case we'll say 50% " and then i walk away or don't fulfil what the contract states then i'm liable so i always feel the customer is more trusting having a contract, like wise i'm more trusting when i get a % upfront. So many times i've been chasing money so i feel it acts as a safety net as well for both parties.

Lets face it who wants to be 10k into materials and not get payed never mind the full price???