THIS IS THE BUSINESS PLAN!!! We worked out exactly this after several people treated us shabbily.

And PLAN AHEAD how much money will be on the table at the end. It should be enough that they will feel confident that you'll come back until every detail is attended to, and small enough that if they turn out to be dicks you won't suffer much.


Believe me, nobody responds favorably to a lien (but I know what you mean). They explode, get pissed, hate you, rant to their friends (who recognize which party is the problem), and eventually get in contact with you to resolve the problem. Be nice to such people; after all, their balls are in your court and if you're nice to them they just might be friendly afterward. You know, the old "be nice to your enemies because it'll confuse the crap out of 'em" kind of thing.

Anything over 5k is all non labor up front and labor on completion. Labor on completion shows the client we are dedicated to completion on terms. We present payment terms in the contract after the sale closes. Have never lost a deal. People expect to pay for equipment to be ordered.

Regarding the op, I think you're crazy for doing it and insane for bragging about it. In fact, the general feel of this thread is everything wrong with the ci community. We' Everyone is so jaded, dishonest, and shady. I'm personally sick of overcoming objections from clients Amor past shady contractors. I have to wonder what if anything predicated the clients unwillingness to pay.

You are not construction workers. You are a retailer and a custom installer. Retail goods are paid for up front...in any retail establishment in any store in any city in any country on any planet. Bill for labor after completion and expect payment upon completion.

1. Wiring plan/System design.

Do it, bill for it, get paid for it, then move on to the next phase.

2. Rough in.

Do it, bill for it, get paid for it, then move on to the next phase.

Note: You must submit an invoice for wire & rough in parts & accessories before you begin. Receive payment and order parts and then begin rough in.

3. Trim out.

Do it, bill for it, get paid for it, then move on to the next phase.

Note: You must put together an invoice for trim out products like wall plates and banana plugs. Submit it, get paid, order parts before beginning trim out.

4. Hardware Installation.

Do it, bill for it, get paid for it, then move on to the next phase.

Note: At some point before hardware installation you need to make the hardware sale, get paid for it, order it all so that it arrives in time for installation.

5. Programming & Configuration.

Do it, bill for it, get paid for it, then move on to the next phase.

6. System Commissioning. Test everything. Tweak programming. Provide client with documentation & program files etc. Whatever you agreed to.

Do it, bill for it, get paid for it. Done.

This way your client is only ever paying for what you have done...and you are being paid for everything you have done. This is mutually beneficial because no one gets too far under water. Any company and client can end up in a situation where they run out of money. Better to discover this when you are a few grand upside down then at the end when its more than a few.


 

The problem I have with all labor at completion is when the client insists the job is not complete to avoid paying.

If a guy comes out and replaces you A/C compressor, you don't pay for the part and pay him latter on the labor because he wants to use it for 30 days to see if the job is complete.

Agreeing on the term "complete" has many different connotations, especially to those cutting the checks.

I take a 70% deposit on whatever the project total is. Balance is due at time of my completion.
Occaisionally I will drop to 65% depending on circumstances, but absolutely no lower.
I have walked away from profitable jobs when the clients did not agree to terms. The red flags are there, just need to see them instead of $$.......

UPDATE 6/19/14: Client sent a text and said their re-fi had come through. They even sent a picture of the cashiers check with $200 added. Client stated that the control system wasn't working so he just unplugged it. They resorted to using the directv app for channel changing at least. New business model - break system, get more $

Hahah!

Dam shame he just didn't tell you what was going on earlier

That's a bad analogy...


So, TODAY my AC at the beach house went down. Company sends a guy out around 10:00 am, spends about an hour, replaces some parts, and leaves.

Later tonight, the system goes down again.

Another guy from the company comes over at 8:00 pm, spends an hour tracking down a intermittent problem, finds the thermostat is messed up.

Replaces the thermostat, says it'll be added to the ticket in the morning, and leaves.


So, labor AND materials were not paid in advance, or at the time of install, and this has been my experience on multiple occasions where I needed service on the HVAC.


Just Sayin'..... :-)

Kelly and his First World problems....... ;)

Full payment for materials before they reach the threshold of clients door / pre-pay 50% of labor / 40% close to completion with a 10% hold - out due at completion.

A contractor friend does this, and (cough-cough) he finds ways to slightly "pad" the job about 10%, so if he doesnt get the final 10% he's already covered.If he gets the final 10% - the drinks are on the house! 8>)

The only problem with Mr. Stanley's figures is that some states do not allow such a large percentage of labor to be charged in advance. California is, I believe, at 10%. But you can structure payments after the start to keep the labor and the payments roughly in line.

Full payment for materials is smart because there's no argument then about paying for things.

One contractor we work with gets a sizable deposit up front (I don't remember how much). Then still gets the regular draws at each stage so that he is always holding more money than he is owed. At the end of the job, he usually writes the customer a check refunding most or all of the initial deposit.

It does vary by state. In mass the max you can get up front is 33% for labor services.

We communicate the steps with the client throughout the process. "We'll be sending an invoice for the product by the end of the week. We'll order all the needed parts once we receive the check." Seems to work for us. We also hold approx 10% for the end.

Once the project is complete, we set an appointment to go thru each system with the client. I usually joke that I want to teach the least tech inclined person in the home; If THEY get it, they can teach everyone else. At this time, we generate a form for each system (security, WHA, use of remote, network, etc). This form has a check list that we go over. From "Show client the location of the security panel", to "Explain where to install the batteries in the remote". They see us go thru the list, checking off as we go. If we run into something that needs to be corrected, or maybe a future upgrade is mentioned, we'll note that in a comment field on the form. When all the boxes are checked, we sign, they sign, and we retain the form - as proof that everything worked and they understood. If EVERYTHING is working at 100%, we say "Great! I'll run out to the truck and write up an invoice. Will you be paying with check or credit card?" It's been a long time since we've had a custy give an excuse for non-pay.

If the system wasn't at 100%, we set a time to come back; the sooner the better (sometimes even the same day). We fix the issue(s), and with that completion form in hand, we say "Looks like we corrected X, and was able to adjust Y. Great! I'll run out...."

We also set up a date 45-60 days out to return and go thru ANOTHER checklist. This time going deeper in each system. At the beginning of the project, we explain that once the systems are up and running, we will teach them how to use them. We do this in steps; basic commands (power on/off, play/pause...) at the first meeting, expanded (switching from 5/7 channel stereo to "surround mode") at the 45-60 day meeting, and advanced instructions (advanced to them; Adding a laptop to the AV system to view the kid's pictures of his trip to Europe). These steps are aligned to the level of the user. Some guys wanna know it all right up front. We show them at THEIR pace. Regardless of their knowledge level, we still meet 2 more times after that initial check list. The money has already been collected, but in their mind it's the "service after the sale". Sure, they paid for these meetings in advance, but they feel they are getting extra treatment. Besides, now, we're in the house 2 more times to suggest other upgrades or maybe even new disciplines!!

I think what I am trying to say is, if you communicate to the client (at the very beginning) how the work is going to flow, and how payments will flow, you'll SELDOM run into issues.

its depending on the state.

You can collect 100% up front of the equipment as long as labor isnt tied to the same invoice. I just give two separate invoices, one for the equipment and another for labor. keeps me legal and im always ahead incase things go sour.