To all independants/vendors

[mopar head]

I eek out a modest living from desperate mechanical contractors around the DC metro area. I jumped in both feet since 95. My biggest gripe is having to fight for my money, without pissing off the contractors and burning bridges, several have been apparently burned.
I expect to be paid at least monthly, sometime this stretches out to 2-3 months.
I hate to threaten with words like liens and litigation, that seems to do the job but also burns that bridge.
I feel I do very good work and deserve to be paid in a timely manner.
What do you guys do to keep in good graces yet get paid without fighting for your money? Or is this the norm nationwide and should be accepted as modern business practice?
Like everybody else, My bills are due monthly and are paid monthly. This weighs hard on me mentally. What`s your secret?
Rant over

 

[Oklacarcollecto]

18% APR interest on their bill usually got some people's attention when I worked at the salvage. It seems like that 1 1/2% tacked on their invoice after 30 days would put them in bankruptcy to hear them talk but it did make a lot of the slow payers get their payment in on time.

 

[65cuda360]

I'm a HVAC contractor here in Oklahoma and I've been to court several times to collect from dirtbag "builders" that make you fight for your money. They play the game and will make you starve while they live high on the hog. They get paid and lie to you that they got ripped off and haven't been paid by the owner of the property. If you file a lien, the owner has a heart attack and freaks out. The scumbag "builder" (unlicensed carpenter) has a worst nightmare......an educated property owner! Talk to them and make sure they don't pay the builder until they get LIEN RELEASES from all subcontractors involved! If they don't pay on time eventually no subcontractors will work for them.

 

[mopar head]

18% APR interest on their bill usually got some people's attention when I worked at the salvage. It seems like that 1 1/2% tacked on their invoice after 30 days would put them in bankruptcy to hear them talk but it did make a lot of the slow payers get their payment in on time.

My downfall is that I`m not a smart business man, I have too much faith in my fellow man, heck, I do business agreements over the phone without even the handshake.
They trust me to do the job and I trust them to pay for the labor/all consumables included.
I`ve thought about contract, with the interest deal but I don`t know the allowable amount by law, or really understand it. Most of these contractors are based in MD and VA. I`m out of WV.
Not being very well to do, I`ve avoided consulting a business lawyer as laws could be different from each state. Although that would probably be my best investment.
It`s a fine line, alot of competition could take my place, although most I`ve worked with could`nt hold a candle....

 

[Bad Sport]

My downfall is that I`m not a smart business man, I have too much faith in my fellow man, heck, I do business agreements over the phone without even the handshake.
They trust me to do the job and I trust them to pay for the labor/all consumables included.
I've thought about contract, with the interest deal but I don`t know the allowable amount by law, or really understand it. Most of these contractors are based in MD and VA. I`m out of WV.
Not being very well to do, I've avoided consulting a business lawyer as laws could be different from each state. Although that would probably be my best investment.
It`s a fine line, a lot of competition could take my place, although most I've worked with couldn't hold a candle....

A "good" accountant can answer a lot of those questions for you. The one I used when in business would charge me 60 bucks for an hour consult. Take pen and pad and take notes. He is one of the best accountants in the county here.

Go in with your questions pre-written with a space to jot down the answer, that way you are getting the most bang for your buck. You could also be missing out on a ton of other things that can be done through taxes etc to put more money in your pocket.

There are lots of general contractors out there that WILL take advantage of you.

 

[Oklacarcollecto]

My downfall is that I`m not a smart business man, I have too much faith in my fellow man, heck, I do business agreements over the phone without even the handshake.
They trust me to do the job and I trust them to pay for the labor/all consumables included.
I`ve thought about contract, with the interest deal but I don`t know the allowable amount by law, or really understand it. Most of these contractors are based in MD and VA. I`m out of WV.
Not being very well to do, I`ve avoided consulting a business lawyer as laws could be different from each state. Although that would probably be my best investment.
It`s a fine line, alot of competition could take my place, although most I`ve worked with could`nt hold a candle....

We sold out of state all the time. In our case the point of sale was in Oklahoma so Oklahoma law prevailed even if the customer was out of state as far as the credit contract. The customers we sold to on credit had to sign an agreement to the terms of our contract before they were allowed credit. The form we used covered all future purchases just like a credit card does. It worked as a tool that just helped get them motivated to pay. Those that didn't plan on paying wasn't going to be motivated period.

 

[Bad Sport]

We sold out of state all the time. In our case the point of sale was in Oklahoma so Oklahoma law prevailed even if the customer was out of state as far as the credit contract.

Exactly, I dealt with companies all over the US, and if there was ever an issue, Michigan law prevailed as I am in MI, and the work was performed here. IF I had to take them to court, they would have to come here.

Do you have an official name for your business??

 

[mopar head]

I'm a HVAC contractor here in Oklahoma and I've been to court several times to collect from dirtbag "builders" that make you fight for your money. They play the game and will make you starve while they live high on the hog. They get paid and lie to you that they got ripped off and haven't been paid by the owner of the property. If you file a lien, the owner has a heart attack and freaks out. The scumbag "builder" (unlicensed carpenter) has a worst nightmare......an educated property owner! Talk to them and make sure they don't pay the builder until they get LIEN RELEASES from all subcontractors involved! If they don't pay on time eventually no subcontractors will work for them.

With the economy in the last 14 years, I`m hesitant to get too demanding, Heck last year was my worst yet.
This particular contractor has been the only one here recently to at least throw me a bone, I allways tell all I appreciate the work.
These people came up with so much red tape that I`ve never had to do before. Piddly subcontracts signatures, partial lean releases, etc.
And lastly, which may screw me is they`re wanting my expiration dates for workmans comp. which I don`t have. If they use this as an excuse to not pay me I`m screwed, and will have to drag up off my current job, which they despertly need good fitters/welders. 2 new guys lasted 2 days and quit because it`s so screwed up. I don`t want to get in the Novel that would need to explain this jobsite Drama.
I`d hate to have to go to court to fight for my money, I`m just a man trying to lead a stress free life, go to work, do my job, get paid for my work.

 

[Bad Sport]

These people came up with so much red tape that I`ve never had to do before. Piddly subcontracts signatures, partial lean releases, etc.

They do that to protect them and those they are contracted with, not you.

And lastly, which may screw me is they`re wanting my expiration dates for workmans comp. which I don`t have.

Do you have any liability insurance? Workers Comp isn't that expensive. When I added it to my policy after hiring employees it was a mere pittance. Less than a hundred bucks a year.

..

 

[Oklacarcollecto]

With the economy in the last 14 years, I`m hesitant to get too demanding, Heck last year was my worst yet.
This particular contractor has been the only one here recently to at least throw me a bone, I allways tell all I appreciate the work.
These people came up with so much red tape that I`ve never had to do before. Piddly subcontracts signatures, partial lean releases, etc.
And lastly, which may screw me is they`re wanting my expiration dates for workmans comp. which I don`t have. If they use this as an excuse to not pay me I`m screwed, and will have to drag up off my current job, which they despertly need good fitters/welders. 2 new guys lasted 2 days and quit because it`s so screwed up. I don`t want to get in the Novel that would need to explain this jobsite Drama.
I`d hate to have to go to court to fight for my money, I`m just a man trying to lead a stress free life, go to work, do my job, get paid for my work.

Do you have employees? Laws very from state to state but here if you are the owner or co-owner of a business you do not have to have workman's comp insurance. I agree that you should seek a "good" accountant as Bad Sport said. They can save you a ton of money and give you the tools (information) that can help you become more profitable.

 

[Bad Sport]

Do you have employees? Laws very from state to state but here if you are the owner or co-owner of a business you do not have to have workman's comp insurance. I agree that you should seek a "good" accountant as Bad Sport said. They can save you a ton of money and give you the tools (information) that can help you become more profitable.

That's correct, BUT, what I found out is the state law wasn't the issue, it was their (contractor, business etc) insurance company that was requiring it. That being said, I had to have it for some jobs I did, or I could not do the work.

 

[mopar head]

..

Yes I have liability insurance and have kept it up and never made a claim.
Owner/operators can`t buy workmans comp, it`s only for employees, and around here I`ve heard it`s rediculusly high.
I`ve Had to buy health insurance in the recent past because a general contractor required it. I dropped it because times were bad. 370 a month with a 1000 deductable gets expensive whe your out of work for awhile. I`m at the age where I really should have it and besides it`s now the friggin lawrotest:

 

[Bad Sport]

Yes I have liability insurance and have kept it up and never made a claim.
Owner/operators can`t buy workman's comp, it`s only for employees, and around here I`ve heard it`s ridiculously high.

Hmmm.... that's odd, because that puts you between a rock and a hard place.


Do you have a name for your business??? If not, I would do that because it puts you in a better position to keep more of your hard earned money.

If so, here's what I would suggest.

First and foremost I would become an LLC ( Bart's Welding LLC) for example. This can be done by you through the state (don't let anyone tell you you need an attorney to do it, I did it for 50 bucks) this does a lot for you, as it separates your business from your personal assets, it may also allow you to get the WC insurance. IF something were to happen, and you get sued for example and that could be just driving to the job site and something happens, it keeps your personal assets (house, bank accounts etc) separate from your business.

I would look around for another insurance company that can provide workers comp.

Find a reputable accountant (ask other business owners) and address a lot of the issues with them, their information can be very valuable to you.

If you use a pickup for example, register it and insure it through the business, it then becomes a write off and that is money you won't be taxed on as it's an "expense".. Mileage is another thing allowable through federal taxes, I think it was .51 cents a mile when I was tracking it, fuel, insurance, repairs all become money that you aren't taxed on as income, because you spent it on expenses to operate. Oh, and I forgot depreciation on tools, vehicle etc.

Get an EIN, (again you can do it online at no cost).

Get a DOT number for your truck, it IS required in most areas as you are using it for business, if you are driving to work with a ladder hanging out the back of your truck any DOT cop can pull you over to check you out (most people don't know this) which could open up a can of worms for you. Most times they aren't going to bother you, but they can. You should also have a Chauffeurs license.


I know it sounds complicated and it sounds like a lot of work, but it really isn't, and will benefit you in the end, and you might be surprised just how much.

 

[mopar head]

Hmmm.... that's odd, because that puts you between a rock and a hard place.


Do you have a name for your business??? If not, I would do that because it puts you in a better position to keep more of your hard earned money. Yes I do, have from the getgo, and I`ve had a man who done my taxes for years that was an accountant for businesses, but he just got too expensive.

If so, here's what I would suggest.

First and foremost I would become an LLC ( Bart's Welding LLC) for example. This can be done by you through the state (don't let anyone tell you you need an attorney to do it, I did it for 50 bucks) this does a lot for you, as it separates your business from your personal assets, it may also allow you to get the WC insurance. IF something were to happen, and you get sued for example and that could be just driving to the job site and something happens, it keeps your personal assets (house, bank accounts etc) separate from your business.

I would look around for another insurance company that can provide workers comp.

Find a reputable accountant (ask other business owners) and address a lot of the issues with them, their information can be very valuable to you.

If you use a pickup for example, register it and insure it through the business, it then becomes a write off and that is money you won't be taxed on as it's an "expense".. Mileage is another thing allowable through federal taxes, I think it was .51 cents a mile when I was tracking it, fuel, insurance, repairs all become money that you aren't taxed on as income, because you spent it on expenses to operate. Oh, and I forgot depreciation on tools, vehicle etc.

Get an EIN, (again you can do it online at no cost).

Get a DOT number for your truck, it IS required in most areas as you are using it for business, if you are driving to work with a ladder hanging out the back of your truck any DOT cop can pull you over to check you out (most people don't know this) which could open up a can of worms for you. Most times they aren't going to bother you, but they can. You should also have a Chauffeurs license.


I know it sounds complicated and it sounds like a lot of work, but it really isn't, and will benefit you in the end, and you might be surprised just how much.

Yes I do, have a business name, have from the getgo, But I licensed myself as a service to avoid a contractors license. I`ve had a man who done my taxes for years that was an accountant for businesses, but he just got too expensive.
An LLC, I`ve been thinking about for years, but have heard that this scares contractors off? Again I can`t get workers comp, only a health insurance policy and that satisfies contractors.
An EIN? I don`t even know what that is.
I have 2 trucks that are under my commercial policy, good there.
DOT, yeah, I`ve been lucking out there for 19 years.
I`d like the thread focused on ways to insure I get paid, This put me out of business once and I dont want it to happen again. I`m more or less looking for suggestions/ wording of a simple contract, that would`nt scare off existing or future clients.

 

[65cuda360]

Hand your clients a bid with specific times to get paid (1/2 down, balance on completion etc.), and have them SIGN it. Do NOT go to court empty handed, with no contract. I got my but chewed off by a judge for doing a "trade out" deal with a neighboring business that went sour and ended up in court. If they are not willing to sign, they are intending to dictate the terms in their favor and leave you holding no cards. I used to go jump up and down on people's desks, demanding to be paid, now I simply inform them that I'm filing a claim in court. I've had big blow-hards bellow on the phone " don't you threaten ME like that" and I calmly stated, I'm just telling you what I'm going to do tomorrow if you don't pay me today.

 

[Oklacarcollecto]

Hand your clients a bid with specific times to get paid (1/2 down, balance on completion etc.), and have them SIGN it. Do NOT go to court empty handed, with no contract. I got my but chewed off by a judge for doing a "trade out" deal with a neighboring business that went sour and ended up in court. If they are not willing to sign, they are intending to dictate the terms in their favor and leave you holding no cards. I used to go jump up and down on people's desks, demanding to be paid, now I simply inform them that I'm filing a claim in court. I've had big blow-hards bellow on the phone " don't you threaten ME like that" and I calmly stated, I'm just telling you what I'm going to do tomorrow if you don't pay me today.

I agree ^^^... Without some documentation you are just an open target. I have seen way too many good people get ripped off due to the lack of paperwork. Paperwork sent via fax machines will go a long way in court. Email contact with all the details is better than nothing but some courts won't accept email so you are still not in a great position.

 

[inkjunkie]

Hmmm.... that's odd, because that puts you between a rock and a hard place.


Do you have a name for your business??? If not, I would do that because it puts you in a better position to keep more of your hard earned money.

If so, here's what I would suggest.

First and foremost I would become an LLC ( Bart's Welding LLC) for example. This can be done by you through the state (don't let anyone tell you you need an attorney to do it, I did it for 50 bucks) this does a lot for you, as it separates your business from your personal assets, it may also allow you to get the WC insurance. IF something were to happen, and you get sued for example and that could be just driving to the job site and something happens, it keeps your personal assets (house, bank accounts etc) separate from your business.

I would look around for another insurance company that can provide workers comp.

Find a reputable accountant (ask other business owners) and address a lot of the issues with them, their information can be very valuable to you.

If you use a pickup for example, register it and insure it through the business, it then becomes a write off and that is money you won't be taxed on as it's an "expense".. Mileage is another thing allowable through federal taxes, I think it was .51 cents a mile when I was tracking it, fuel, insurance, repairs all become money that you aren't taxed on as income, because you spent it on expenses to operate. Oh, and I forgot depreciation on tools, vehicle etc.

Get an EIN, (again you can do it online at no cost).

Get a DOT number for your truck, it IS required in most areas as you are using it for business, if you are driving to work with a ladder hanging out the back of your truck any DOT cop can pull you over to check you out (most people don't know this) which could open up a can of worms for you. Most times they aren't going to bother you, but they can. You should also have a Chauffeurs license.


I know it sounds complicated and it sounds like a lot of work, but it really isn't, and will benefit you in the end, and you might be surprised just how much.

Far from an expert on this....but this is what I was told. If the articles of an LLC are poorly written there is very little, if any, protection in an LLC. An LLC is widely used to provide asset protection, and this is what I am thinking you are suggesting an LLC for. I was told that LLC's created by using one of the many on line "do-it yourself" kit are pretty much worthless if an attorney gets involved on the "other" side. Something to at least research, I would hate for someone to lose there house/car etc because they did not spend the $500 or it costs to have professional set up an LLC for them....

 

[Frankie]

We had the issue with over due accounts. When I changed the terms on our invoices, things got much better.
All our invoicing was done at "net 30". Some customers were good payers and others were slow, typical for a business...

When things became tight, I change the billing terms on our invoices, to 2% net 15.
Meaning that the invoice was due for payment in 15 days, however, if they paid earlier, they could deduct 2% of the invoice as a reward for early payment.

When I made hat change delinquent accounts all but disappeared.

2% doesn't sound like much, but on a invoice of $10,000.00, that a $200.00 discount merely for paying before the bill is due.

The 15 day due date also helped get checks into the office faster. At 30 days the account was 'Past Due", AND the "grace period" had expired.

 

[No name needed]

We had the issue with over due accounts. When I changed the terms on our invoices, things got much better.
All our invoicing was done at "net 30". Some customers were good payers and others were slow, typical for a business...

When things became tight, I change the billing terms on our invoices, to 2% net 15.
Meaning that the invoice was due for payment in 15 days, however, if they paid earlier, they could deduct 2% of the invoice as a reward for early payment.

When I made hat change delinquent accounts all but disappeared.

2% doesn't sound like much, but on a invoice of $10,000.00, that a $200.00 discount merely for paying before the bill is due.

The 15 day due date also helped get checks into the office faster. At 30 days the account was 'Past Due", AND the "grace period" had expired.

I did that when I had my business. Some took advantage of it and paid early.

One large account paid late and still took the discount. Sent them a bill for unearned discounts.
Fair amount of money. Took them over 120 days to pay up, followed with a purchase order.

No thanks your on COD . I hated to have to chase after my money.

 

[Frankie]

Yeah, I think every business owner has that type of account. One of the things I would do for special order materials was require payment for all special order materials and the shipping for them up front. I wouldn't even allow my people to order the SO material until that money was in the bank.

SO material is usually custom or one off stuff, and is ALWAYS none returnable, or carries an exceptionally high "restocking fee, usually around 40% of cost.

We had one customer who would always pay late, and I know the owner of the company personally. I used to put the late fees into his invoice, automatically. Payment was usually 90 days. The oddest part is, this guy had more money than god, and he always paid late.

 

[bighammer]

What do you guys do to keep in good graces yet get paid without fighting for your money? Or is this the norm nationwide and should be accepted as modern business practice?
Like everybody else, My bills are due monthly and are paid monthly. This weighs hard on me mentally. What`s your secret?
Rant over

I always get paid on time, partly because I ALWAYS provide a written quote ahead of time that needs to be signed by both parties. My quote will always be for full-bore priced, top dollar, for the goods and services. But within the contract I offer a discount if "paid within terms" (which is usually 50% down; balance upon completion") If payment is late... No discount. Also, if it ends up in court / small claims, I get to sue for the full price, not the discounted amount.

This way I can be competitive by offering a discount, and my customer can take advantage of the better price "by paying within terms"

Here in my state, any job over $1,000 is required to be in a written contract. Quickbooks makes it very simple to implement these things.

I can only recall one time, in the last 10 years or so that I have been doing it this way, where the payment was made late. When the check came in the mail, it was for the full amount, no discount... and I didn't even have to say anything about it.

You are not the "bank" you are a small business man like myself that needs to be paid fairly and on time. Let your written contracts work for you.

 

[mopar head]

Good info fellas,
My business model is simple, and I like simple.
Desperate contractors are awarded more work than their inhouse welders can handle.
Where I come into the picture, I work an hourly rate, supply consumables, machine, No material.. I`ll never get rich this way, but I accept that.
I think something simple as Net 30 days on the invoice would at least cover my butt in court if it ever got that far. I`m fighting for my money as we speak, Was going to show up at their office, and talk to the owner, called ahead, he`s on vacation:tongue3:

 

[inkjunkie]

Good info fellas,
My business model is simple, and I like simple.
Desperate contractors are awarded more work than their inhouse welders can handle.
Where I come into the picture, I work an hourly rate, supply consumables, machine, No material.. I`ll never get rich this way, but I accept that.
I think something simple as Net 30 days on the invoice would at least cover my butt in court if it ever got that far. I`m fighting for my money as we speak, Was going to show up at their office, and talk to the owner, called ahead, he`s on vacation:tongue3:

sure he is

 

[No name needed]

Good info fellas,
My business model is simple, and I like simple.
Desperate contractors are awarded more work than their inhouse welders can handle.
Where I come into the picture, I work an hourly rate, supply consumables, machine, No material.. I`ll never get rich this way, but I accept that.
I think something simple as Net 30 days on the invoice would at least cover my butt in court if it ever got that far. I`m fighting for my money as we speak, Was going to show up at their office, and talk to the owner, called ahead, he`s on vacation:tongue3:

One customer had a girl Susan that handled payables that was only available Mondays and Thursdays
From 10 till 1 . After non contact on her supposed work days. I went in person to bypass her and go to the owner. Two guesses who the receptionist was.:banghead:

 

[bighammer]

Why do you wan to wait 30 days to get paid?? Sounds like you are waiting even longer than that, based on your original post. 10 days should be more than adequate, and you likely need to raise your prices. Are you new in business? A trip to the Small Business Delopement Center would be time well spent. They offer free help and inexpensive additional training.

Sounds like you're a good welder, but that doesn't make you a good businessman. A little help from the SBDC can make a significant difference on whether you are able to survive or not.