Hey guys got some pretty big commercial jobs which is amazing… Just about hand off the final estimate so they can sign off on it and I have no idea about how long they have until payment is due. With residential they always have the money ready, was thinking of saying cheque is due within two weeks of completion of job?
Does anyone have any experience on how payment works for commercial work? Maybe let me know what your policy is in regards to payment due by? Thanks
Here’s a good, recent thread on the topic:
The consensus seems to be that you’re at the mercy of their AP department. Although some have had success with setting firm guidelines, and are willing to walk away from contracts that don’t mesh with their business plan.
IMO, a good way to gauge their reasonableness/flexibility is to require a security deposit. 15-25% is within the norm.
30 - 45 days in my experience. You can ask for a deposit, but likely not to get it.
Remember, if this is the first time, they are not sure if they can trust you to complete the job any more than you can trust them to pay in timely fashion.
Just the way the game is played at that level sometimes.
Solid advice from @TexasRich .
I’ll add, you want to ASK other contractors who have worked with them to see what kind of a company they are. You’ll want to know if they are good to work with, if they pay timely, and treat contractors right.
I will try to bill net 15, some times customer asks for net 30 because check is mailed from corporate office in another state. When going over the estimate I always say we usually get a check upon completion if you need to we can bill you met 15. Then I see were the conversation goes.
Yeah I see where you are coming from but putting in the time to find who else works for them (how do you even find that out) calling them or meeting them and asking about how credible the company is (which may get back to them and upset them) is time consuming and just won’t happen however I do like the idea of a net30 and see. Growing pains here, part of the ride.
Use google - you would be surprised what would show up with regards to contractor satisfaction.
Secondly, factor the wait unto the bid.
30 days? Extra 15%.
45 - 60? Extra 25%.
Don’t tell them that, but make it worth your wait.
Whether they realize it or not, they are paying for their terms.
Out of $140,000 billed out we have $55,000 1-30 days past due and $30,000 30-60 days.
When serving larger accounts this happens but normally not to this extent.
Yes there are late fees but it’s really not much and prompt payment is much more desirable.
When customers have outstanding invoices we wont service more locations until it is paid. This helps get payment, otherwise your at the corporates timeline.
Always ask what there net is. Them it’s up to you if you want to wait.
Whatever it is if you don’t receive check by that time Put a call into the AR department . Just a friendly call. Asking if payment was sent , an if not will it be sent soon. That’s all.
Most pay it’s just a matter of if it’s in time or not, an are you willing to wait. If not don’t do commercial.
