I did a millwork job earlier this year through a commercial GC and I'm having a hard time getting paid. All the work was installed at the end of February, and I've only received payment for my 25% deposit invoice that I issued in early January.
My question is how typical is this? Most of my work isn't with commercial GC's, so I don't deal with this often.
Like Robert said, what is in your contract? GCs like to work on your nickel! If you have to, make contact with the owner. That will not win you any GC friends! Is the job bonded? Are you still within your lien time frame?
The reason I had the job is that I know the right hand man of the owner. I got a tour of the building before the owner had even chosen the architect and GC. And yes, I've contacted the owner and the owner has contacted the GC. And still no payment. The contract is boilerplate stuff.
I guess my question is more general in nature. To me, this situation seems so unnecessary in the sense that if the GC had told me at the outset that they would likely make me float the majority of contract amount for 90 or 120 or 150 days, then I could have factored that into my pricing and cash flow plan. With extras, it turned out to be a $30k job. Medium, but not huge for me. The cost to float that money for 3-4 months is probably somewhere in the hundreds of dollars. Not a big deal, and could easily get wrapped into the overall cost.
I just don't understand what's in it for the GC to be so cagy with their subs? A few hundred bucks in interest that could have been paid by the owner? And a burned bridge? It just seems like bad business. But again, I'm not too familiar with the commercial side of the business. Am I missing something?
Is there a standard for payment in commercial? 30 days from the invoice is what has been used in the past but I don't think commercial or residential is any different ,it more has to do with the GC. A good GC that wants to keep good subs will pay on time and they don't have problems getting draws for work done. The bad ones are always behind with payments because they take their cut out first and will not give up that money. So you become the bank as long as they can and then for the next job they will just find another guy to use. What you should always do if it is a new GC check out his history or see if you can go to a job he is running and talk to the subs there and see how he is. It's sad but you would think GC would pay subs that are good to keep them or at least if there is a problem with payment be honest with you and tell you what's going on. Good luck
Typically the GC will bill the customer around the 1st of the month due the 10th of the following month. Unless you make prior arrangements they aren't going to pay a deposit. GC's don't pay if they don't have all the documents, insurance, contract, conditional releases, invoice in their format. If you don't submit an invoice in their time frame you may have missed a 30 day window there.
Question 1 to the owner is have they paid the GC and what percentage.
If they have paid the GC and the GC is not paying then its time to file a lien.
We typically submit invoices between the 15th and 25th depending on the GC cutoff date.
I would expect an invoice submitted in June to be paid around the 15th of August.
You need to find out where the problem is in getting paid, whether its incomplete documents with the GC, the GC being paid and not paying you or the GC not being paid.
Boy this is a hot button topic for me. Business is a 2 way street. You get what you negotiate. Every GC will tell you that they don't pay deposits. That is only if they are not challenged on it. BUT - you must read and negotiate the contract terms on the front end. I am currently doing 2 commercial projects of size, one a law firm, the other a hotel remodel. I made it clear that I would not do the work without deposit or "mobilization" money. In both instances they sent me a contract with their standard terms, in both I sent them back with my exceptions. And it is not just pay terms. These contracts are loaded with all types of toxic terms that no responsible business person should agree to. I note them and suggest alternate wording and in the end we reach agreement and I get the up front money. Every time. Or I walk. It helps that I am known for doing high quality work, meeting schedules and commitments. But it is a myth that G.C's won't pay deposits. And I wish more of our brethren would quit accepting this.
There shouldn't be any question on their pay schedule or terms, the contract says EXACTLY what is supposed to happen.
I am with Peter in that you need to read it carefully and modify any & all terms you are not comfortable with, and refuse the job otherwise. A 'great' project is no longer great if it breaks you.
So read your contract again.. if the way the GC is paying you now is what the contract says, then tough luck. If they are behind what they agreed to pay then it would be a good idea to talk to your inside man to get the GC to follow their commitments.
Keep in mind EVERYTHING in a contract provided by a GC is to cover their ass not yours. There are usually multiple clauses to allow them to not pay or delay paying. Hence what Peter said is spot on.
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