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Project down payment?
Posted by chenoa007 on June 21, 2022 at 2:25 pmI??m wondering if you business owners in your policy, require clients to put 25% down before you begin a project?
How do you go about collecting that and scheduling?
Thanks!
WA-IDSurveyor replied 1 year, 7 months ago 17 Members · 23 Replies- 23 Replies
If I estimate a 10k to 20k range, I require a 10k retainer. We usually obtain a retainer that is at the lowest part of the estimated range, if the estimate is 10k or below. The estimated delivery schedule is tied to receiving the retainer, although we may start on research and calculations after obtaining a signed agreement.
No, I don’t
I’ve asked for retainers and never had anybody balk. If they did it would be a huge red flag. We recently did work on the house and all the subs required up front deposits and weekly payments.
It depends on the size of the project and the reputation of the prospective client. We’ve required as high as a 60% retainer for a large project where the client was unknown to anyone in the company to no retainer on large projects where the clients are known to pay promptly upon receipt of the invoice. You have to do a little background check on the potential client(s) so you don’t get the shaft and wind up in court.
@norman-oklahoma what was your process? did you require it upon signature? or was there a time period to pay? did you schedule the project after the retainer was paid? Thanks!
Depends,
1. New client and over a couple of thousand, 50% down, remainder due upon personal delivery/pickup of the map.
2. Previous client and over $10,000, 50% down, remainder due upon receipt of map, i.e 30 days.
You dont leave the grocery store owing do you?
10k or under 100% up front. Larger projects 50 to 100% depending on relationships. Government is the sole exception.
- Posted by: @chenoa007
require clients to put 50% down before you begin a project?
There, I fixed it for you.
I hope everyone has a great day; I know I will! Have only demanded a retainer one time. For the full amount of the estimate. The client was a past client who I had to take to court to get the bill paid. He understood precisely why I insisted on the retainer. I believe I returned something like $20 to $30 to him as we came in under my estimate. He needed a third job and gave me a retainer without so much as my asking for one.
I have missed out on very little money over the decades without demanding a retainer. It is simpler to tell the potential client you don’t have time to do what he needs done in the first place. Sorting the wheat from the chaff is a skill learned best through bad experience.
Avoid people who make their money by not spending their own money. Oil people, horse traders, etc.
- Posted by: @chenoa007
what was your process?
Nothing real complicated
1. Prepare proposal letter and contract. Submit to potential client for approval.
2. If satisfactory, client returns signed contract with check for retainer amount.
3. Bill monthly, or upon completion if job takes less than a month. Cash on the barrelhead, as the saying goes, for non-businesses. Outfits with Accounts Payable departments will have a schedule. Know it and plan your month accordingly. Suspend work if bill not paid within reasonable time.
NOTE: If you are working for the government you will not get a retainer. They can’t do it. But they will pay reasonable costs of preparing the bill, and there is no chance of them welching on you.
Certain business clients love to play little games to postpone when you will get your money. You find out who they are the hard way. Future work requires a nice “cushion” to make up for the delay that will happen. They will eventually pay it all, just not as soon as you would prefer.
- Posted by: @norman-oklahoma
there is no chance of them welching on you
It can take some time though. I was once a third tier sub on a city DOT project. The invoice flow was: me > small engineering firm > huge engineering firm > DOT > huge engineering firm > small engineering firm > me. Basically six months for the invoice to flow uphill and the money to flow downhill.
On day the CFO passed me in the hall and said “do you know you have $600,000 in aged accounts receivable? I just looked at him and responded “do you now what kind of stud you have to land a contract that wasn’t put on the street for open bid that allows you to rack up that kind of aged AR.”
- Posted by: @james-fleming
The invoice flow was: me > small engineering firm > huge engineering firm > DOT > huge engineering firm > small engineering firm > me.
I’ve been there. Not with quite so much money, but with 6 figures. Small Engineering firm is most flexible, schedule-wise. 90-120 days is routine. Set your rates accordingly.
I only ask for a retainer when the client is a non-local entity that’s unknown to me. It doesn’t happen often. Everyone else is net 30 days unless otherwise specified in the client’s boilerplate contract. Most commercial entities ignore the net 30 and pay on their own schedule. I have a couple of repeat commercial clients that run around 6 months; I adjust my fee accordingly in advance.
I had an unusual situation come up recently: a local engineering firm I’ve worked with for years needed about $50k worth of new bench marks installed and positioned as part of a groundwater sustainability plan (subsidence monitoring). We began discussing the project last November, but my client’s clients — two groundwater agencies — didn’t get their desired bench mark locations identified until May 26, and I couldn’t do any planning or budgeting until I got those locations. The funding was a grant coming from the state, and it had a June 30 expiration date (which was actually an extension on the original end date). I realized that if I was going to meet that date I needed to start work right away, but I didn’t have a contract yet — I had to submit a budget to get a contract, and I had to plan the technical approach in order to develop a budget. So I did a Hail Mary and just started working. I was $30k into it before I was actually under contract. I was very relieved the day that came in.
It depends on the client. Regular customers no retainer. New and likely non-repeat customer, 50% retainer. The schedule is tied to the payment of my retainer. My clients pay using a Quickbooks payment link sent by me. The balance is due upon delivery for individual land owners, Net 30 for businesses. I have only had a few balk at my retainer??..and that??s what why I have a retainer.
The time or two I asked for 50% down they never signed the contract and we were better off for it !
@james-fleming Hmmmmm an aging AR stud!!!!!!!!!!!!!
- Posted by: @gary_g
Hmmmmm an aging AR stud!!!!!!!!!!!!!
Maybe you meant “AR ageing stud”? Or perhaps “ageing AR ageing stud”?
As I do both town planning work and surveying (where the town planning horizon is about 12 months to get an approval to a minor subdivision, if you’re lucky, particularly in small municipalities), I always require 45% on appointment, 45% on submission to the local authority, and the remainder once the local authority approval comes through.
When it’s solely survey work, and unless its a really bad client, no deposit/retainer.
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