OK, rip me. I’ve got a lot to learn about the business end of this business. I admit it.
Contractor owed me about 4.4k for some finish work I did on his remodel job (3k of that was money I put out for cabinets/materials – I know, live and learn. Won’t do that again!). Balked on paying. Has told me he’d pay “next week” several times. Then he took a three week vacation to work on his mansion in Mexico. Got back from vacation, but still not returning my calls. My secretary got through, and he told her “I haven’t been paid on that job yet, so I can’t pay you.” My work there has been done for almost two months. Homeowner is very happy with my work.
Today my wife said We gotta go get a loan. Hated to do it, but today I called the homeowner: I still haven’t been paid on your job, so I’m going to the bank to apply for a loan, then I’m going to place a lien. Or I can come by and you can pay me, and just subtract it from your total (he told me he owes about 23k on final payment of as yet unfinished job – none of the unfinished part has anything to do with me or my work.) He’s a really nice guy. He didn’t want to do it, for fear of pi$$ing the contractor off. I really didn’t want to do it either, but I could care less about pi$$ing the guy off, at this point. I don’t think I’d ever work for him again.
But he admitted: fair is fair, I did the work, and he is very happy with my work and price. So he paid it.
Yay!!!
edited to add: it helped that he just saw a 60 Minutes special on GC’s who don’t pay their sub’s, then the sub’s come back to the H.O., who ends up paying twice.
“…never charged nothing for his preaching, and it was worth it, too” – Mark Twain
Edited 8/18/2006 4:25 am by Huck
Replies
Good for you Huck. As a builder I have been in a cash crunch to pay subs in the past, mostly related to items I want to complete before a draw or lots of capitol out and working for us....we have some quick capitol temporary methods..... I am the one who go and gets the loan. We can usually repay within 30 days with no interest...many subs do not have our level of resources. It is not their burden to carry.
Good subs are a great long term value...I try to take care of them and not do stupid things to lose them. Paying on time is a big part. Also, I was once a sub and thus have compassion.
I make friends of my subs and I know I can call on many of them for help. When Wells Fargo examined our finances, relationships with clients, vendors and subs in order to qulaify us for several home building contracts....my efforts at taking care of the subs paid big dividends.
By the way...did your project involve white washing a fence? You do have a reputation for being a hustler. Have you paid Tom for his help?
...did your project involve white washing a fence? You do have a reputation for being a hustler. Totally unmerited, I'm sure. Have you paid Tom for his help? Yep - 2.8k to be exact, plus 200 for materials, which is the 3k out of pocket I referred to.
BTW, kudos to you for good business practice, and smart subcontractor relations. I'm a GC by license, but acting as a sub in this case. Haven't taken on any large GC projects, being mostly a small remodel/repair type contractor. But as a project superintendent in the past, I'm well aware of the problems that arise when the sub's arent' kept happy and paid!"...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
I am sure you know that:
...did your project involve white washing a fence? You do have a reputation for being a hustler. Have you paid Tom for his help?
refers to a section of Mark Twain's writing regarding Huck and his hustle to get others to white wash a fence. It was his task to do, but he convinced them that it was great fun.
Edit: Sorry Huck...you straightened me out on the story. The introduction of mind altering chemicals in my past has clouded my memory. I did not get the story straight. Of course, Huck was probably falsley accused on many occasions.
Regarding your story, live and learn, some of greatest success comes from experienced problems.
All the best to you.
Have you seen Injun Joe lately?
Edited 8/19/2006 12:35 pm ET by txlandlord
Just thought I'd add an update: Got paid on the first job I started this thread with (as I said), and the other job I mentioned (same GC), 5k worth, was paid two days ago...by the owners (some investors from out of town). They volunteered, I didn't even have to ask. All I had to do was tell them why I hadn't been around lately. They apologized for the GC, said they'd work it out with him, paid up, and contracted for another 10k worth of work.
The contractor found out the owners paid me on both jobs - just shrugged and said "Fine with me, sorry I was so slow in paying you, I've gotten behind in my paperwork." Go figure.
Not all stories like this have a happy ending, but I'm sure glad this one did!
Man I gotta get better at the legal/business part of this business!"...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
Man I gotta get better at the legal/business part of this business!
That's my battle cry. Glad it all worked out for the best Huck.View Image
Yea, I am with the pig...spend some time developing some standard paperwork, and it is a cut, paste and edit in Word or Excel for future jobs.
What I see in what you wrote is you do good work, on other peoples terms, and then hope they are fair and pay you. If they don't you go get a loan.
I do good work on my terms, don't need a loan and they pay me.
I charge 10% to get on my schedule, 50% the day we show and the balance upon completion. This is directly for the homeowner by the way. I just had a guy that said he didn't want to pay the 50% when we arrived. I explained I did that to cover my costs and materials and the last payment was pretty much my profit. He still didn't like it and said so. I told him I understood and that many of my competitors would do it without that stipulation, maybe he should call one of them. My terms.
Look, when you go through all that and then have to take out a loan to feed your family you don't own a business, you own a job. Nothing wrong with that if that is what you want but I prefer to have a little in reserve for this type of deal and to make enough and get paid often enough to be able to not sweat it. DanT
What I see in what you wrote is you do good work, on other peoples terms, and then hope they are fair and pay you. If they don't you go get a loan.
Not quite sure what the point of your post is. Yes, I try to do good work, and yes, I do hope people are fair and pay me. And No, I didn't go get a loan - I got paid. But I would have borrowed to stay afloat, if I had to. I used that fact, and appealed to the H.O.'s sense of justice, to get paid. I figured I'd get paid on this project, eventually. The homeowner had already assured me that he wasn't making his final payment to the contractor, until he had made sure all the sub's had been paid. But I wanted him to see the reality of my situation, so I told him Look, either you pay me, or I gotta go get a loan.
This is a unique situation that I got myself into one time, with one contractor. You can bet, it won't happen again. This same guy also owes me several k on another project I did for him. But he's in the middle of this other project, a large condo conversion, and the owners on that one have also assured me that if he wants to continue getting paid by them, he'll have to pay up what he owes me. If not, the owners have assured me, they'll pay me themselves, and work it out with him. Meanwhile, they've contracted with me directly for more work (they got my ph. # from the G.C.'s super, and with his approval, contacted me directly because they had a project that couldn't wait 'til the G.C. got back from his vacation).
The work I've done for this contractor so far has been very profitable. And both he and the owners have been very forthcoming with praise for the quality of the work. Up 'til recently, my draws have been extremely prompt - sometimes the same day I submitted my billing. Then the contractor and I had a disagreement, which I outlined in another thread http://forums.taunton.com/tp-breaktime/messages?msg=76068.1
Since then, he's been "punishing" me by paying late. This is his latest antic, and it had me strung out pretty thin. Total from both jobs was close to 10k - a situation I normally would never let myself get into. But like I said, live and learn. Everything was going swimmingly until I inadvertently got on his wrong side. Now ego has taken over, and good business practice is apparently out the window. Myself, I'm not into this power play stuff. But I'm gonna get paid for the work I did, if I have any say so. So while I normally don't contact property owners about getting paid for work on their property, when its the G.C. I have a contract with, in unusual circumstances, I will if I have to."...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
Life's too short to work for people like that."Citius, Altius, Fortius"
Heck yeah!"...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
if it's a minor issue with this particular contractor, sit down with him over a beer or three and air it out. From this point of view, it sounds like much ado about nothing. And if he's been a good source of work in the past it might bite you later when other opportunities start to slow down.
on another note, can you get a floating loan for your business? Or a personal equity loan? Something you don't have to pay for but is available for at low rates whenever you need it? We recently got hit with a 17k shocker and were able to put all of it on a line of credit, without having to rush around at the last minute.
Dan thats a good situation you are in with home owners .
Unfortunately its not new construction working for GCs.
A true GC and not a so called one has the most power over purchase of labor and materials. A homeowner has little power even though its their money. The GC enters into a contract with the homeowner but the subs are left sometimes to grub it out. GCs never pay up front money here to subs unless they need gas money and thats the competiton of some subs . While getting that up front money from an owner it simply doesnt fly with a GC. The situations here are different .
The GC has always made his money off the top of others . They watch that money closely. They get the work and over see it but the subs do the building . They only get paid on draws of completion normally and in turn pay their material and labor bills. The banks want to see the results by inspection of completion before they release draws. I think Mike stated he required the owner to chip in an amount to start but the bank wont do it . However MS doesnt have a housing addition going where hes handling several new houses. I like you and Mikes method of operaton dealing with owners . The sad truth is the subs dont have that leverage . The point to note is this is a subs thread in this case. A GC has access to a lot of subs and can pick and choose one he can borrow funds from if he wants to operate that way.
Some subs are fortunate and some arent depending on which job of completion they are doing . Theres always a framing draw for instance so the framer can get quick money normally with in a few days after completion . Some times the next morning if an inspection is preplanned. However , the roofer may be on the start of the next draw as well as the exterior trim guys.
It is true though that the best GCs are often the ones that handle their money timely. Or should I say the ones that have the best subs sometimes.
Tim
Edited 8/18/2006 11:06 am by Mooney
My point was not how I handle my customers, billing or who I work for. My point, and trying to be tactful failed apperantly, is if you make enough money, budget it, save a little a one time bump in the road will not force you to borrow money.
If your business hinges on a single job payment as far as whether or not you need to take out a loan to feed your family then in my opinion it is not much of a business. If it was a payment for trimming out a third of the empire state building that is one thing but for a single house that in my my mind is an entirely different matter. That was my point. But hey, I could be wrong. DanT
if you make enough money, budget it, save a little a one time bump in the road will not force you to borrow money
10k held up for a couple of months is a big deal for me (one-man operation). That would be great if I could just blow it off as a little bump in the road. Maybe someday I'll get better at making and budgeting money. Like I said, I'm still working on the business part of this business!"...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
And your tact was fine .
Tim
I gotta ask, Mr. Dan T. Are you aware of the distinction here? Huck did his work as a sub to a GC.
How many of your GC customers accept your terms? You'd be sellin' hot dogs here, because no GC would deal that way with you.
Hey, but what do I know? Maybe where you are, there are GCs everywhere willing to give you an advance payment to get you on their schedule, then a big paycheck as showup money. Is it that way in central Ohio?
You must not have read the second post I put up. What I am saying has no difference as to who you work for. It has to do with how you run your business. DanT
Look, when you go through all that and then have to take out a loan to feed your family you don't own a business, you own a job. Nothing wrong with that if that is what you want but I prefer to have a little in reserve for this type of deal and to make enough and get paid often enough to be able to not sweat it. DanT
Then we just address the last paragraph of your post.
Huck wrote ;
Contractor owed me about 4.4k for some finish work I did on his remodel job (3k of that was money I put out for cabinets/materials - I know, live and learn. Won't do that again!). Balked on paying. Has told me he'd pay "next week" several times. Then he took a three week vacation to work on his mansion in Mexico. Got back from vacation, but still not returning my calls. My secretary got through, and he told her "I haven't been paid on that job yet, so I can't pay you." My work there has been done for almost two months. Homeowner is very happy with my work.
How would he have had control over that ? We seem to teach here to make money off the materials so he has to buy them to do it . He also mentions from a another job running concurrently the guy actually owes him 10 grand. I know , he should have got money up front from the builder on the cabinets . Its evident the builder didnt have the money so that would not have worked anyway. What the builder had was a good repore with Huck from past history. Piffin still does work with a handshake . I can tell you with the respect I have for you that if you sent me to a job , you could get it done with a phone call . Thats a fact . I would do it on judgement of you.
To me the GC has been the one that failed the relationship. Im glad Huck got out while the getting was good enough to make it happen.
Tim
That post was supposed to be addresseed to DanT as everyone probable figgured.
Tim
"I haven't been paid on that job yet, so I can't pay you." My work there has been done for almost two months. Homeowner is very happy with my work.
"I haven't been paid on that job yet, so I can't pay you." It is ontrageous for the GC to take that kind of attitude. If he had not goten paid becasue of Huck's work it would be different, but according to Huck the HO is happy with him.
The GC, going to Mexico and then making that excuse is just not right. The GC's success is limited if he continues with that approach.
Right .
I view it strictly as the GCs fault and none of Hucks although he says he wont do it again.
When a sub cant trust their GC then he doesnt need him anymore . The two should have a relationship of trust and compliance to make it work. Somthing is missing if not.
I try to be like my mentors when I was a sub. As I mentioned earliar in the thread I responded to my GCs phone call . He night say Im gonna have one ready for you in two weeks , would you schedule it ? That was about all the dealing there was except if there was extra work . It was nice when they met me on the job with a check too before I loaded. The work is hard enough with out worring about the money. You dont mind spending extra time for somone like that .
Tim
"I haven't been paid on that job yet, so I can't pay you." It is ontrageous for the GC to take that kind of attitude.
Funny thing is, on the other job, which he owes me about 5k on, the owners have told me that he's already been paid for the work I did. But since they have contracted with me directly for further work, I'm gonna call them and say Hey look, I've been holding off, waiting for pay. But since I haven't been paid in two months, and the GC hasn't returned my calls for a month, I'm no longer interested in dealing with him. My schedule is starting to fill up, and I need to get back to work on your project now, or its going to be a problem to get to it later. If I can have your assurance that you'll pay up in full upon completion, I'll push my work through for full completion ASAP, and you can work it out with him.
I've got a call in to them, hopefully I'll get the go-ahead this weekend so I can get back at it on Monday. These guys have been good to work with, and they've already assured me that they don't want to lose me, and that they'll pay if he doesn't. "...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
There have been a couple of comments about doing business on a handshake and a smile...I do not. My paperwork is thorough..... detailing not only what my responsibilities are, but how and when I'll get paid. My reasons are related to encountering jerks like the GC example you have given. The paperwork and signature of the client is all I need to go to court, but I have never had to take that course.
>>>The paperwork and signature of the client is all I need to go to court, but I have never had to take that course.
Probably because they know that's all you need, and that you have it.
Huck
I think you took offence with TX and DanT when they were offering you some good advice.
TX was just poking a little fun with the Huck Fin reference and Dan was just simply telling you not to put yourself in that position(something he positions himself so as to avoid), that way these bumps in the road wont happen. We all have them but we all want to avoid them.
I would hate to have to go to the HO to get my money when I was contracted to the GC, it hinges on unprofessionalism, not that I wouldnt have done the same thing, sometimes we gots to do what we gots to do.
Lucky for you that the HO had not already paid the GC cause then you'd be sitting there with a loan right now and maybe a GC that had blown the money and you not having any chance of ever seeing it.
I know that if I contract with a GC he/she is the one that owes me and I shouldnt have to go to anybody else to get my money, I shouldnt even have to ask more then once to get that.
I would have a hard time ever working for someone that didnt respect my need for a timely payment. I assume that you did quality work so why should you have to go begging for your money! Its not your concern/fault if the HO hasnt paid the GC, you were working for the GC.
Dont get me wrong, I know less about this business then most! I just like the work.
Doug
I think you took offence with TX and DanT when they were offering you some good advice.
Sorry if it came across that way. I'd love to have that kind of $$ to just blow stuff like this off. I do keep a reserve, which is why I was able to pay my cab. shop, and my materials costs, and my help, up front (I always pay my people ASAP). And why I've been able to get by for two months between checks. But my pockets only run so deep. As far as not getting into those situations, yeah, I did have that much figured out. Like I said, it kinda snuck up on me. But today I'm a little wiser.
And the Huck / Tom reference, I just played along with it. I love that story. Tom was actually the scoundrel ('contractor') who hoodwinked his buddy Ben into providing the labor on his project. I guess at any rate the shoe did fit, so, no harm no foul. "...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
Well, since the whole concept of a lien is to have a way to ensure that the subs get paid, I think you did the right thing. You tried to get the GC to pay you, he didn't seem interested for some reason...and if you wait too long, it's too late to file a lien.
As a HO, I'd be pretty angry at my GC if I was faced with this, maybe a bit annoyed at you, but in retrospect I'd understand. I'd probably not pay you, but instead have my lawyer send the GC a letter demanding IMMEDIATE resolution to the problem. And I would mean IMMEDIATE. And I'd consider firing the GC for being incompetent and unethical.
However, since I had a GC go bankrupt 3/4 through a house, and had 12 liens filed against the property, maybe I have a better grasp of these issues. It was fun.
As a HO, I'd be pretty angry at my GC if I was faced with this, maybe a bit annoyed at you, but in retrospect I'd understand. He was angry at the GC. Fortunately not annoyed with me so much as annoyed at the situation. He owns a lot of rental property, and told me that he is not embarrassed to knock on doors and demand his rent when its due. And if they don't answer, he says he calls them from his cell phone and tells them to answer their door!
I'd probably not pay you, but instead have my lawyer send the GC a letter demanding IMMEDIATE resolution to the problem. And I would mean IMMEDIATE. And I'd consider firing the GC for being incompetent and unethical. He did call the GC and ask if all the subs had been paid. He said the GC wouldn't give him a direct answer, but skirted the issue by changing the subject."...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
Huck,
Some of my bigger subs bill monthly, and have a late payemnt clause in the original contract. All due invoices that are not paid by the 10th of the following month are subject to a colllectionss bookkeeping charge of $150.00 and APR interest at 18% on the unpaid balance. This is stated and agreed to at initial signing. It is stated, understood and agreed to, avaliable for delays in payment and any consequent mediation, arbritration or court case.
As the one hiring, I understand and agree when signing off on their proposal.
Next time you do that, be good to the HO and advise her to pay you by joint check. She can get screwed otherwise.
explain?"...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
Most commonly used in commercial contracting, a joint check's issuance is preceded by a joint check agreement between the three parties involved, usually the GC as the one who writes the check, and a subcontractor and his material supplier, who will receive the check jointly, and split proceeds in accordance with the agreement.
It ensures the GC that the sub is using the necessary proceeds to pay his bill to the material supplier for the stuff furnished to the job. It also keeps the material supplier from liening the job, and furthermore provides assurance to the GC that the material supplier won't lien in future for that unpaid bill.
Google for joint check and you'll find all kinds of law firm sites explaining the mechanism.
In your case the agreement was between your GC customer and you. The owner had no agreement with you.
If the GC was owed, say, $25K by the owner, and owed you $5K, and the owner paid you your 5 directly, the owner is still liable to the GC for the 25, regardless of the direct payment made to you.
Thats what I thought. Kinda hard to write a joint check without a joint account. I understand the concept, but I think you're mistaken in thinking that it applies to this situation.
At any rate, I'm not worried about the H.O. paying for my work twice. Here's why: he's not going to write the final check until he knows all the subs have been paid. So if the GC wants his contract amount, he has to pay me (which is highly unlikely once he finds out I've already been paid) - but if he did, I'd gladly refund the H.O. his money, so he can write the final check for the contract amount, and all is well in suburbia.
I'm not gonna hang the guy out to dry, in the highly unlikely case that it ever came to that. I have a relationship with the H.O., who has asked me to bid some other work to him, unrelated to this project. And another thing - the GC wants to get his final check - I doubt he's going to risk that by demanding to be paid for work that he never paid for, and which he knows the H.O. did pay for."...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
"Thats what I thought. Kinda hard to write a joint check without a joint account."No, too different things.He is talking about a joint payees. You and go that with any account.IE Pay to the Order of -- Joe Smith (contractor) and City Wide Lumber Co.Both have to endorse it.A joint account is on that requires two different persons to write the check. And that might be done in some construction cases, but not cases like this.
OK, thanks for correcting me. Yes, I could see the value of a situation like that. And it could work in a situation like this, i.e., the H.O. writes a check for the final payment to the G.C., with my name on it also. The G.C. can't cash the check until I endorse it - which of course I won't do until I'm paid. But it wouldn't have worked here, since the H.O. is not paying the G.C. his final payment at this point (since the work is not yet complete).
But - thinking aloud here - he could have made a partial payemnt to the G.C., for somewhat more than I'm owed, but less than the full amount of the balance. The G.C. still wants to cash the check to get his partial payment, and hence, has to pay me, in order to do so. And there is still an unpaid balance significant enough to (hopefully) motivate the builder to finish his work.
Had Gene explainded it that way, I could agree, as I think that could have worked in this situation.
"...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
Edited 8/20/2006 10:24 am by Huck
I think that the dual payee checks are more appropriate in simplier situations.For example some one getting a new roof. So they make the check out to the roofer and the shingle supplier.In a large job that is not practical. You might have several subs and many suppliers.Another place that dual payee checks are used is for insurance claims. They will make them out the HO and the contractor.
What I don't understand is how can a GC order cabinets without paying for them at the time they were ordered, that boat won't fly down here.
busta :0)