Struggling to get payment from a client.

[peter halle]

Wayne,

Glad you consulted with an attorney.  I was worried that there would be time constraint / statute of limitations, etc.  I am also glad that you have received some payments.  I am sure that your attorney gave you advice about conditional payments and carefully examining any payment you receive to make sure that by acceptance of it you are not acknowledging that that partial payment is a final payment when it isn't.  If not - ask him / her.  The payments already received as already mentioned here that do lead to prior practice and acceptance of satisfactory completion.  Willingness to wait, weighing costs to collect faster, etc. is only something that you can decide on based on your situations.

Perhaps the phrase "cash" is used synonymously with "payment" in your neck of the woods, but as others have said if you really mean physical currency I can see you eliminating many / most of your customers in advance.  Cash is a dying form of payment and like huge deposits in advance tends to set people on edge.

Someone else mentioned charging interest.  Usually you would need to have that spelled out in advance in any written agreement for it to be binding.  Going forward you should consider it just in case.  Usually there are limits to what that can be and the phrase "or the maximum allowed by law" is inserted.  Then when there is a late payment you are protected, charging interest is no longer a personal thing, it is just business and the other party knew about it in advance.  Also talk to your attorney about inserting verbiage about the collection of legal costs in case of a dispute / collections issues.  The legality of that will vary based on locality.

We don't live in a perfect word.  Many laws have been written to protect the consumer from the actions of unscrupulous contractors also.  There is always the risk of performing work and then not getting paid in full - my worst story is about a relative.  All you can do going forward is do what you can do to limit your exposure to that, have the wording of agreements going forward reviewed by a local attorney and try to have it worded to both protect your rights, establish the responsibilities of BOTH parties, and make it easily understandable by your customers.  Then you do your thing once the conditions to start have been met by the other party, then complete the work.  And you do that every time.  If there is an issue along the way, document it promptly and notify the other party.

Where you, me, and every other contractor runs the risk of getting into trouble is when we deviate from agreements and procedures.  The risk to collect will always be there, we can't eliminate that, but the chances to successfully collect improve dramatically if there is consistency with following established procedures - especially if the other party agreed to them in advance.

Buddy,  sorry for the sermon.  Hang in there and you are right - keep looking to the future!

Peter

 

[waynelang2001]

Sorry things have worked out so badly for you.

I've had work done on my house by contractors as well and no way would I pay cash in advance. That does send up red flags for me too. I'd be willing to post date a check or pay with credit card but asking for cash to me means they are trying to do something under the table.

I'm not a contractor.  Things may be different there but  I've paid contractors $10's of thousands in the past couple years for stuff I couldn't or didn't want to do myself like roofing, tile, well drilling etc, etc. and not one proposal said cash only.  Final payment due at completion sure (though many say that in the proposal, then say "mail us the check" that day) but if a contractor was only willing to accept cash that would be a red flag in my mind.

Agreed, i would never ask for cash in advance. I will however ask for cash on the day the job is done and has been signed off by the customer. I dont see how that could be a red flag?? The job would be finished and payment due. Im not a contractor either, I'm just a cabinet maker and do every part of the job myself. I dont offer customers other services by other tradesmen. That is totally up to them to find what else they need ie, plumbers, painters, tilers. I learnt very early on that if I cant gaurantee someones workmanship then I will never have them do work for or through me.

 

[harry_]

Wayne,

Sorry if I sounded harsh. I did not mean it that way. Like Peter I too am concerned about any 'statute of limitations'. If it were me, I would file something in the courts. For three reasons:

1). It will state in no uncertain terms to him that you are done 'playing'.
2). It will provide you with a 'fall back position'
3). you will be well into the queue to support #2, should it come to that.

Executing #1 will in no way inhibit you from accepting any payments he makes between the filing date and the court date. If he had paid you in full by the court date, you simply withdraw/dismiss the matter. You should be able to do small claims on the cheap as posted up thread.

Demanding CASH up front is something I do not do as a contractor, nor do I allow as a customer.

As a contractor, my bids/terms have provisions within them that make sure that I cannot get screwed on any outlays of money (materials, equipment rentals, etc) via deposits. On larger jobs I make sure to include a clause for either a 'draw' at regular intervals or by milestone/phase completions. Also there is a clause that states that should a check be returned for 'insufficient funds', I charge 'the maximum fee allowed' and that all future payments MUST be made with CASH or 'certified funds'.

If a customer should happen to be `difficult` about payment along the way. I use that as a red flag. If the flag goes up, tools are packed at the end of that day. When the customer comes home in the middle of a job after having missed a payment, it is amazing how fast the phone will ring asking: "are you coming back?". Historically, I have been able to handle this with a simple phone call asking if they forgot and that is usually the case. Only once have I had to pack up.

In short, "Bill early, bill often".

Wayne,

I would like to thank you for sharing this with us. I think that anyone that reads this thread can gain something from it, regardless of which side of the customer/contractor fence they sit on. I hope, as I am sure we all do, that you get this all resolved. Sooner, rather than later!

 

[waynelang2001]

Wayne,

Sorry if I sounded harsh. I did not mean it that way. Like Peter I too am concerned about any 'statute of limitations'. If it were me, I would file something in the courts. For three reasons:

1). It will state in no uncertain terms to him that you are done 'playing'.
2). It will provide you with a 'fall back position'
3). you will be well into the queue to support #2, should it come to that.

Executing #1 will in no way inhibit you from accepting any payments he makes between the filing date and the court date. If he had paid you in full by the court date, you simply withdraw/dismiss the matter. You should be able to do small claims on the cheap as posted up thread.

Demanding CASH up front is something I do not do as a contractor, nor do I allow as a customer.

As a contractor, my bids/terms have provisions within them that make sure that I cannot get screwed on any outlays of money (materials, equipment rentals, etc) via deposits. On larger jobs I make sure to include a clause for either a 'draw' at regular intervals or by milestone/phase completions. Also there is a clause that states that should a check be returned for 'insufficient funds', I charge 'the maximum fee allowed' and that all future payments MUST be made with CASH or 'certified funds'.

If a customer should happen to be `difficult` about payment along the way. I use that as a red flag. If the flag goes up, tools are packed at the end of that day. When the customer comes home in the middle of a job after having missed a payment, it is amazing how fast the phone will ring asking: "are you coming back?". Historically, I have been able to handle this with a simple phone call asking if they forgot and that is usually the case. Only once have I had to pack up.

In short, "Bill early, bill often".

Wayne,

I would like to thank you for sharing this with us. I think that anyone that reads this thread can gain something from it, regardless of which side of the customer/contractor fence they sit on. I hope, as I am sure we all do, that you get this all resolved. Sooner, rather than later!

Thanks for the advise harry, just one thing people have said it a few time here that they will not demand CASH up front, thats not what i plan on doing in future, CASH on delivery is what im after. If that is in the first quotation and the customer accepts it then I see no problem with it. Am I missing something here ???

 

[Eli]

If customers don't like that idea then they are most likely the people I'm trying to stay away from.

Like the others have said, not so sure about cash, that will likely put people off. But 45/45/10 is a good plan. Good that you are developing radar for bad customers. Another strategy for potential difficult ones is to raise the price quoted and invoiced but give them a discount if they pay within 7 days of completion. A lot of people will jump at the chance to 'save' money. Of course the problem children are going to be a problem no matter what you charge. You should also find out what interest you can legally charge for late payments and state that it will be charged on your bill.

 

[tjbier]

Wayne I hope you get all that is owed to you. You have far more patients than me. I think I would rent a backhoe and show up and give them 10 min to pay or see what happens. Joking aside, have you or can you place a lein on their home to get the homeowners attention?

 

[harry_]

I have seen a lawyer, and after a long talk we decided to wait it out to see what happens. If I take the legal route it might take to long and end up costing me just about as much as im owed.
The best thing for me now to stop with the back and forth and carry on with life and work as usual.

I will also be updating my quotations stating that the balance owed must be waiting for me on delivery/installation day in CASH. No cash, no installation. If customers dont like that idea then they are most likely the people im trying to stay away from.

Wayne,

I will let the others speak for themselves but I think this is where I got it from, obviously in error. I apologize to you for my confusion.

As for demanding CASH as final payment, that's a personal choice. For many (at least in the states) in this day and age, cash is nothing short of a pain in the backside. It shouldn't be a huge problem though, if handled cordially. Very rarely do I have cash enough in my pocket for as little as a cup of coffee. Some jobs I will offer a cash price. Mostly I don't care what method is used to pay me, as long as I get paid.

I have a few customers that I don't even bother asking for a deposit unless I have to special order something. From a technical business perspective, not the best idea going but they are long standing customers and I do not question their want or ability to pay. The bulk of the work that I do for them are one day jobs and it seems silly to me to ask for a deposit in the AM and final payment in the afternoon. This includes a customer that has bounced a check to me.

In the end, your quote/contract is your safety net. Constructing it poorly can/will leave a hole big enough for your customer to 'escape' from payment, nor will it 'catch' you when you fall from the customer not making the payment.

---

People can be funny,.... Some will have a fresh pot of coffee and breakfast pastries waiting for me. Others I wonder if they found me prone on their walkway would they bother to kick me to see if I was still alive.

I had a customer that I did some work for about 6 years back. While there I did the take-off for potential future work. At the end of the job he stiffed me for about $150. As an act of civility, I did not make a stink about it. I did however make adjustment to future contracts so it couldn't happen again.

Some 4 years later he called asking for a quote on that other work. So I sent him a quote/contract as requested. He called me a few days later saying how he would like to go forward with the work. I said "Sure, send me back the signed contract with a check for the $150 you owe me and I can get started on such & such date".

He was not happy that I brought up that $150 from days long gone. So I told him to go with one of the other quotes. "But the next best quote is $1500 more!".  [laughing]

Yeah, I may have cut off my nose to spite my face. I lost out on about $2-3K of potential profit turning away that job. It was SO worth it!

 

[woodguy7]

Nice story Harry, every dog gets its day  [thumbs up]

 

[Nigel]

What's wrong with cash at the end of a job - nothing suspect about it, he's not stealing, he's getting paid for work done.OK some folks might not want the hassle but that's just personal choice.

 

[waynelang2001]

What's wrong with cash at the end of a job - nothing suspect about it, he's not stealing, he's getting paid for work done.OK some folks might not want the hassle but that's just personal choice.

Thats what I'm saying Nigel. What other way can I get payed on the day i finish work??? EFT ??? Cheque ??? Both of those options could put me in the exact same situation I'm in now. I dont see anything shady about getting cash, when I worked for a boss i got payed cash at the end of the week. I liked it that way. It would also help me now because I could pay my guys on the same day and put the rest in my account so it will be cleared right away. None of this waiting 3 working days for money to clear in my account.

 

[Alan m]

there are a few problems like that with cash but i wouldnt have any problem with cash. its fairly normal here too.
demanding it might not go down well. but any problems with payment here are usually total refusal rather than bounced cheques

the way i usually work (for customers i not 100% trusting off, ie slight history,new customer etc)

if its a big job i get payments  everyweek(materials for next week and labour for past week) that way the materials are payed for and are mine so if i get screwed im not too bad because the materials are paid for from the last week. 1st week just materials

small jobs.
are just all in unless its like a kitchen etc then its either they supply or a deposite

 

[Tinker]

I agree with what Peter and harry have said above.  when i was in the mason biz, Often, my materials at the start of the job would be in the 1000's of dollars.  any time i was doing a job of that magnitude, i would have in the contract that 1/3 down before materials would be delivered. A point in the job when another 1/3 had to be paid and the final 1/3 to be paid within 10 days of completion.  The competition were usually all bidding to the same sort of pay schedule.

I almost NEVER take cash.  If i do take cash, I make out a receipt and have the customer sign it.

I did have one customer early in my experience who i discovered loved to haggle over bills. He also liked to come around and ask for extras to be done.  Some of those extras were performed without giving a price in advance.  I had discovered that nearly every other contractor on the jb was complaining about poor pay or being gypped out of money.  I would give him a bill for all of the extras at completion of the job.  He would come around in the afternoon and ask me to come to his office ASAP.  I would leave my helper with several tasks to complete and take theshort ride to the office.  As i woulld walk in, there on his desk was a bottle of scotch and a couple of glasses.  i figured he was trying to get me bombed, but i would take a shot anyhow.  After eachof us had dad a friendly drink together, he would start in with the attacks.  anything he pointed out, i would, usualy, not budge on.  But as i would not budge on the items he would point out, i would go down the list and point out that we probably should have done another on the list a $100
cheaper.  we had spent too much time.  By the time we got thru haggleing, he had chopped me down maybe $150 altogether.  I had snuck in about the same amount of "not really cheating" to the original billing.  He was very happy to have chopped me down and would pay me in full on the spot. I was happy that i had really gotten all i wanted for the job.

The man never not payed immediately for anything i ever did for him over the course of maybe two years unttil he retired.  Ffor years afterwards, i woulf run into some of the other contractors and would always find the same complaint.  the man had left town owing, sometimes, large sums of money which they never collected.  I told them the builder did not owe me one cent.  And it was true, altho i never told any of them about the haggleing that went on between us.  I have never done that with any other customer, but he just loved the battle and we always kept our humor with each other.

With my landscaping biz, the work is always repeat from year to year.  I figure if they don't like my work, they can fire me.  If i don't like the way they do business with me, i can fire them.  They ask me to do something, i do it.  They pay.  If i see something that needs doing, some, i will ask and give my recommendations.  they either tell me yes or no.  Other customers just want me to do whatever is necessary.  They don't complain.  i guess i might have been replaced by a few when they found somebody to do it cheaper.  I have been pulling back over the past 5 years, but the customers I have left I have had for as much as 30 years in some instances. I must be doing something right, but so are they.
Tinker

 

[Nigel]

Like Alan on a big job I get paid every week no question.

As for materials I mostly open an account with the client and they pay for them from the start. I don't make anything on materials but I don't have any hassle.

Normal to get paid by cheque as it's generally easier for people just to write a cheque - never had one go dodgy. Cash is an option as well depends on the amount. I like cash.If cheques are unreliable what else is there? Like Matt said the client will either go for it or not.

I think we are being lead by the nose to believe cash is somehow dirty or suspicious when only a few years back most transactions were made this way. Now we have cards, transfers and virtual money etc and more fraud than there ever was with cash. Cashless society - God forbid.

Wayne I really hope you find a solution that works for you. I can only advise you limit the time between payments in whatever form to a minimum to prevent you getting stretched.

 

[Tinker]

As i mentioned earlier, when i was in construction, I had huge outlays of $$$ to pay for materials.  I had to write up contracts with designated up front payments.  Such up-front money was necessary.  Every contractor did it that way.  The common requirements were 1/3-1/3-1/3.  sometimes a 10% was held back  (per agreement) from the final payment to cover minor unfinished details until they were completed.

today, i am no longer in construction, but in a far more unpredictable biz. Landscaping can be very unpredictable over the long term.  we are subject to the whims of "The Man Upstairs".  God can operate in very strange ways, especially weather wise.  When i was doing a lot of landscape planting, I often required some money up front as a planting could require $10,ooo or more loaded onto trucks at the nursery.  labor might run even more.  Then, i would take care of the maintenance for a couple of months.  There might be some plant losses during the maintenance period which i would replace for free.  After my maintenance period was finished, i would writeup a maintenance plan for the client.  It was during the clients initial maintenance period after i was thru, that the most losses would occur.  Usually, from too much water or too little water.  the customer often expected me to take care of such losses.  that was the period during which most disagreements would come about.  Such losses had to be a part of my estimate.  We did not add a ton of money to the estimate, but we had to cover our tails to some extent.

Today, i am no longer doing any planting.  I sub that out.  I am doing only maintenance of established properties now. I no longer write up contracts but go with the flow as predicated by the season.  Today, i am starting my write-ups. Every February, and often into March, i sit down and review the past season and continue with my study of the sort of winter we are having.  I review how the past weather and my maintenance operations have been affected.  I tell the customer what my observations have been and what i feel i should do during the upcoming season.  I try to do a very in depth write up, sometimes, giving a humorous account as if i am writing a story for them. (Now, who would ever suspect such an inconsistancy  :  from mee?)  Sometimes, the problems i see might require some source material to be included in my report.  sometimes, i send explanations of my problems to the county/state agricultural dept,s.  Of late, i have sent questions to just about every ag school and state department of ag in the north east requesting info about a couple of weeds that have been appearing that have no biological means for control.  i am bugging a lot of PhD's and other aggies who are smarter than I.  I compress any info i can get from those sources and relay such info to any of my customers who i know would be interested.  The other customers, i try to keep them posted in as simple a way as i can.  sometimes, i will sent many pages of report to a few individuals.

With all of this writing, I conclude with an outline of how i plan t proceed with the upcoming season.  I used to get a lot of feedback from these reports from many customers.  Today, i have cut back on accounts to work with only the customers i have had the best dealings over the longest period of time.  i have never written up any contract for any of my maintenance customers. They all, poor souls, trust me.  I have learned who i can trust and we all get along fine.  I give discounts every month according to promptness of payment.  Those who pay late do not get any discount until the account is brought up to date completely.  The funny thing is, it is ALWAYS the same account that gets the discount and always the same account that manages to stay one to two months late with payments.  This past summer, i finally dropped the last account that has always been about three months behind with payments.  I have one left that manages to stay 2 months behind.  i am debating dropping that one this year. I have one customer who is working thru an inheritance and waits til end of season every year.  i worked for her fatherfor about 25 years and he always paid every three or four months.  Now he has gone, the daughter is even slower. I am goint ofinally drop that account this year. Every customer i have still on the books is a customer (family) i really enjoy working with.  No contracts.  No payment plans.  No hastles.  But i have been in business for nearly 70 years (including the deals i had going for me while i was in high school (i had chickens and sold eggs in the neighborhood and mowed lawns for the same people i sold eggs to.  Also shoveled snow from driveways for those same people).  It takes a long time to sort out the good, the bad, and the ugly as with Clint Eastwood (My wife calls him Eastwood Clinton)

For Waynelang, keep plugging.  There are many more good ones out there than there are bad.  it takes along time to work out all of the problems you will run into.  Learn from each problem. Good luck
Tinker

 

[woodguy7]

One problem in getting paid large amounts in cash is banking it.  In the UK it costs more to pay in cash than a cheque, a set amount per £100.  Crazy but that's one of the ways the banks screw the Business customers in the UK.

 

[Tinker]

One problem in getting paid large amounts in cash is banking it.  In the UK it costs more to pay in cash than a cheque, a set amount per £100.  Crazy but that's one of the ways the banks screw the Business customers in the UK.

They have their sneaky little ways on this side of the pond as well.  my bank keeps trying to get me to open a biz account with checking/savings/credit card and all onto the business account.  I would have to pay an annual sum for that.  my personal account is free for all.  I also found out many moons ago when checks started bouncing all over the place that when credit card is in same bank as checking, they can dip into the checking.  they could not dip into a savings account.  When i found out the reason for my checks bouncing, I pulled EVERY THING out of that bank. That was around 45 years ago. I then opened up accounts in scattered banks and have never allowed any of my credit cards (currently two) to be in the same banking system as either my checking or savings. 
Tinker

 

[promhandicam]

One problem in getting paid large amounts in cash is banking it. 

If you get paid large amounts in cash the last place you'd be going with it is the bank, surely?  [big grin] I'm sure that the only reason why the banks in the UK gave the cheque a reprieve recently was pressure from HMRC who were having nightmares about all the small businesses who would overnight have to be paid in cash because their customers couldn't or wouldn't do online banking.

 

[sancho57]

Any Update from the OP????

 

[waynelang2001]

Still waiting for payment, they ignore my phone calls, emails and sms's...........

 

[Tinker]

Wayne,
By now, i am quite convinced yyou had no agreement in writing at the start.
I am just as certain you have NOT gone to an attorney for legal assistance.
i don't know the time limits in your country, but in my state, by ow, i would be well beyond any hope of collection thru small claims court or thru the lein route.

Perhaps it is time to suck up the hard fact you have lost a sum of money, analyse how it happened and forget about collection.
save your energies and get on with your business.  Maybe even look into some business courses.

I feel your pain.  I think i have told of some of my own experiences, s others have tried to help in the same way. 
Many of us have lost out to foolish mistooks in business.  The main thing is to not make the same mistooks again.

we have a saying:
Fool me once, Shame on you.
Fool me twice, Shame on me.
Tinker