Deposit or no deposit??

[Rickster123]

Hi guys
Im looking for abit of advice really. Do you take deposits from customers on large installs (ie in excess of £1000)?

I have been taking a deposit for some time now and not had a single query on it until today. Spoke to the customer on tuesday and he was happy to pay a deposit of 50% of job total. Now hes emailed saying this wont happen. Im only a small business and cant really afford to take the risk of a bouncy cheque. (which has happened in the past!)

So whats the norm out there?? Any replies or info would be great.

Thank u!

 

[Rickster123]

I agree. I think Dom Littlewood and Mat Allright from rogue traders should perhaps try doing a days work for a living full stop!

 

[ecowarm]

Have a look at this thread its about a deposit account that runs along side your business account, like solicitors, and clients deposit money stays in there, safe, can't be used to pay other bills on for materials for that customer.

http://www.ukplumbersforums.co.uk/renewable-energy/21084-mcs-accreditation-6.html#post184150

Its a MCS requirement but can be used for any company

 

[kirkgas]

it must be extremely difficult for both sides at the mo, the tradesman is scared to gett bumped for labour, but more worryingly after shelling out for materials, but on the other hand the customers are getting advised about all the dodgy workers who are out to bump them and wont shell out a deposit, i only work for and get work done by colleagues so it is never a problem, i put my cars into mates garage and say its making a funny noise fix it, and he does and tells me the price, i pay it without asking what was wrong as i trust him, he knows when he has to phone me before fixing etc, and if im fixing sis in laws boiler i buy the bit and she pays me for the bit end of, but im lucky thats all the type of work i do and get done, dont fancy tring to make a living self employed, only thing to do is use your instinct and as others have said you will never really know but just convince yourself that you walked away lucky!!! a decent customer should be ok paying something towards the material on delivery or day one, as a gesture of good faith

 

[Puddle]

As it has been said before ,there are many,many more cowboy customers than there are cowboy treadesmen

imho

 

[dontknowitall]

More cowboy customers than tradesmen?

Never thought about that but it does make sense.

imho ...

... naturally.

Still wondering about this deposit business. Not taking it shows your trust in a customer, the fact that they know you're not going to walk off with their money without doing the job. I do see the arguments FOR taking a deposit though and they make good sense.

 

[gmac]

Trust works both ways, thats why I work on the cash on delivery type principle for large outlay on materials, the customer trusting me to carry out my work correctly and me trusting the customer to pay me labour cost on completion, as kirkgas said, a decent customer doesn't mind

 

[Rickster123]

How can you afford not to take a deposit? Unless you have an account at the suppliers. Most suppliers no longer take cheques and if a customer pays by cheque at the end of the job it can be another week before you have cleared funds.

 

[gmac]

How can you afford not to take a deposit? Unless you have an account at the suppliers. Most suppliers no longer take cheques and if a customer pays by cheque at the end of the job it can be another week before you have cleared funds.

Thats why I make sure they know it strictly cash on first day, I use the account for materials initially, then return that afternoon of next day and pay money off the account, any mark up covers stock for van, it works for me

 

[SafeGasInstall]

had a job passed on to me from some one from here !
went round and did survey ,total cost was 6.5k out of it it was about 3.8k materials
customer try negotiating price i did not drop ,then he agrees and gives me go a head and start job next monday
it was Tuesday i thing ! Tuesday I thing I was going to go to order it all next day just to make sure is all there on time but something stopped me and I went to work and I was going to order about 4pm on wednesday ,then I get message do not come on monday as we change our plan we are going to use some one else ,and I said thank you I just ordered 4k materials ........(which I did not) any way what if I did and cylinder was going to be horizontal ,special order no cancellation , I thing I am to start collecting 1k for deposit as I did learn from that job even I did not loose any money

 

[secret squirrel]

Lets look at this from a different point:

I had an extension built, the builder wanted staged payments, large amount for the groundworks, doors to the extension were £2000k wanted payment on arrival. Build took quite a while and I held back the final payment until the building insp turned up signed it all off.
I didn't see any of this as a problem. We were both happy.

Had the driveway and patio done in block paving, small company (2 young lads) just starting out. They were recommended but wanted money up front for the blocks. Not happy with this, I called the supplier and paid for the blocks up front myself.

I then paid them as they asked for money, eg. rubbish removal, sand etc.

The long and short of it is, I don't think paying for the materials up front or on the day they arrive is a big issue. I don't think it is unprofessional to ask money for the materials. Its not just plumbers that do it.

 

[Puddle]

How can you afford not to take a deposit? Unless you have an account at the suppliers. Most suppliers no longer take cheques and if a customer pays by cheque at the end of the job it can be another week before you have cleared funds.

Always try to build up a bit of capital for your business, I know it is hard ,especially when are a one man band, work not to clever and younger with young family ect but it will increase your profits, you should not be relaying on earnings from the job you are on to pay the immediate bills, I am not knocking it, I have had to do this in the past but it only has a negative effect on your income, you miss out on extras because you want to get the job done and get that final payment or you can not afford the materials, you repair things instead of replacing as it is a lower out lay but also less profitable
Customers can somehow sense it and request extra things done before you will get the payment, you can not be firm with them as you fear it will hold the payment up, it goes on
As said ,it is easier said than done but if you can build up that little cushion, you will see profits increase...it is your cushion though not the customers mind, do not use it to their advantage..as said take deposits and stage payments as if you had nowt

imho

ps

I know of notone Plumber who has not been taken for a large amount, if it has not happened to you yet it will, fact of life ,no matter how careful you are, not matter what checks you do, at the end of the day the customer may want to pay you but can not to many unforeseen reasons

Your job is to minimise that damage when it happens and one of the ways is to take stage payments

 

[royston]

I always have and always will ask for a payment to cover materials on larger jobs. Never had a problem with customers paying for materials up front then rest on completion of job. their still is a 2 way trust as your hoping to get the rest of payment when you have done. Even that way you could still end up working for nothing if customer doesn't want to pay, but at least your not out of pocket for materials. It would still be the same for close friends or family, it works for me.
To be honest if they don't want to pay a deposit, they don't trust you or they wasn't going to pay at all.

 

[SimonG]

Don't take deposits, although for the first time I will be on an upcoming job, done work a couple of months back for same people and were slow paying, so intend to get materials money on day 1.
I do ensure stage payments on bigger or longer jobs. Its all about keeping the cashflow moving.


I think I will move more towards taking deposits to cover materials. Safety first and all that. Been touched three times over last 6 years, luckily not large sums, but have taken some form of payment in kind, if you know what I mean. Postcrete was a wonderful invention.

 

[cobra]

dont know how the big boys like dolphin bathrooms and british gas able to get full payment from custards before an installation job and then have them wait weeks for an installation date? I would always take for materials and my labourers wages before taking on central heating installation work, at least worst came to worst i would only lose out on my labour

 

[Mrs Tara Plumbi]

We routinely take deposits - more for bathrooms which are costing in excess of £5k AND involve booking in other trades - so it is not just to cover materials - we need to know the customer is not going to cancel at the last minute and mess up the diaries of a whole load of busy tradesmen.

We have often NOT taken deposits for smaller jobs and heating installations but we are increasingly taking deposits for all jobs over about £1,000.
The reason is because sometimes we have to wait an unreasonabe amount of time to be paid and have to chase it up several times.

When we take on a job we make it clear - in writing - that we expect payment on the DAY of completion - but surprising how many people think this means they can send a cheque weeeks later.

I can understand a customer worrying about giving a deposit - I see a couple of ways around this:
1. Get them to order and pay for the materials with your supplier - then you are not so out of packet and you know they are serious.
OR
2. Set up credit card facilities - so customer knows if they pay by credit card they have that protection. BUT this does have costs to you.