payment schedules

[ITE]

how do you typically structure your payment schedules from a client? Do you find that the lendig institution determines this in most cases?

What about with your subs? How do you typically sturcture a payment schedule to them?


thanks,

Jason

[Rich]

If a mortgage company or bank is lending the money - they will typically have something. I tell them to stick it in their ear. They're the bank - not me.
If it's a small project I will typically ask for 50% to start and 50% upon completion. With larger projects I will ask for 10-15% to start and either periodic monthly payments or a portion after framing, etc..

[ITE]

thanks for the reply Rich.

If the lending company has a specific schedule, do you find that they are generally flexable with this or is it their way or no way?

[Mike Finley]

I've never been on a project big enough for a bank to be involved, but I do break up the payments usually 10% up front, 10% at the end and a couple of payments in between. Subs doing work for me are usually a 1-2 day job, they get paid upon the work passing inspection.

[Rich]

Smaller local banks are more willing to work with you. Larger (US Bank, Wells Fargo, etc) can be more difficult.. I don't think it's the people.. I think it's all the red tape they have to wade through.

[grumpy]

I do mostly service work, in and out in a day or 3. However from time to time we get a nice exterior remodel and be on a site for weeks.

If it is an in and out job we require 1/3 down and final upon completion. If it is a long drawn out job we price by phases. When phase scheduling the payments we accept 1/3 down for the price of the total project and usually apply that to the final invoice.

Phase pricing works like this... Let's say we are doing roofing siding gutters and windows. Just for ease let's say each phase is $3k each. That's a total cost of $12k. We would require 1/3 so we would need $4k. When we finished the roof we would bill 3k, when we finished the windows another $3k. When the siding and gutters are complete we would bill the remaining balance which would now be only $2k. In these cases we will not start the next phase until paid on the last phase.

Alternatively we have sometimes accepted downpayments and finals upon completion of each phase. So the roof they'd pay us $1k down then $2k when done plus another $1k to start the next phase and so on and so forth.

If we are purchasing anything special order we MUST have the cost of that purchase. Therefore that 1/3 may be adjusted upwards to cover our expenses.

[grumpy]

I should also mention when a builder tries to stick me with his scheduled draw system I refuse to work UNLESS I also have a clause in our contract which states payments not to exceed 30 days from invoice date.

Too often with roofing, I will be lumped in with the rough ins which might not be done for weeks after my roof is complete. Then with siding I will be lump0ed into substantial completion. NO FRICKIN WAY. I expect payment upon completion, max 30 days. After 30 days the lien process begins.