We've got some jobs coming up which are $200k+. The general contractors pay 30- 90 days out. My question is how much do I need for a down payment? I don't want to be their bank, either financing the project go them until it's all done nor be holding a lot of their dollars in my accounts too long.
It looks like it comes down to who you deal with and where you are located, and also what you put into your own contracts.
There would never be a chance I would start a commercial job on zero.
we only work very few commercial jobs for this reason I guess.
One job recently had stage release payments tied in with the contract.
carrying the debt load of any job at 200k is not a good thing.
If they require you to provide a cost breakdown on the AIA form, charge for shop drawings/field measure. (even if you don't normally) You can then submit a bill for that portion as soon as you get drawings done. I get some of a downpayment in this fashion. Not enough to get half thru the project, but enough that the banker isn't me....
0% down is nuts, talk about a gamble. If you don't have the resources and money to take someone to court, you are gambling quite a bit there. Even reputable clients can screw you. I wouldn't touch a job without 30% and most of our work is paid in full by delivery. There is absolutely no reason why someone should still owe you any large percentages of the job after you have delivered.
Long long ago when we did some commercial work through GC's the standard was to submit an invoice for completed work by the end of each month and get a check less 10% retainage about 30 days later (ideally but not always). The retainage (aka profit if any) would be held until the entire job was completed and the GC received their final payment. We had one job where we installed early in the construction process and waited a year to receive the retainage. That was the last commercial project we worked on. Now my few business customers pay the same 50% deposit as our residential customers.
We are a commercial only shop. Around here you will not get any up front $. You can demand it but it won't do you any good. Progress payments generally will be at least 60 days out from start of job. 30 days to first billing, then 30 days until paid, if you are lucky. If your billing falls just past their cutoff date it adds another 30 days. It won't hurt to try to negotiate a better deal. Get it in writing! You best have your finances in order if you are going into commercial work.
Send in the drawings, shop submittals and bill for them. Order materials and bill for them. You may have to add the client/project as a loss payee, but that's not too difficult or expensive on a job this size. They may also ask for pictures and bills of lading for proof. Talk to the gc, I'm sure they will help you work it out.
Commercial is not zero, if you are not getting a deposit then we must be doing something wrong, for twenty eight years. 50% in the bank before drawing and material is ordered. It has been working. the largest deposit I have seen was just a little over 200 thou.. This is not just for one up jobs but for national companies the everyone would recognize. Yeah it is probably zero down if you let it get started and don't hold your stand. On old accounts we will do 30% as they have a history, other wise it's 50% or nothing, No kidding it works and still have a 3 mil backlog. You are not a banker you can't grow if your money is tied up.
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