How do you ask your customer to pay you?

My dad is old school. I can remember going along with him on sales calls and after the customer said he was ready to use us for his new roof, my dad would tell him "We don't ask for money up front like most roofers do, but we're roofers not bankers, and when we are finished I will walk in with a guaranty and an invoice and I expect to walk out with your check. If you need other arrangements, tell me about them now before we start your job".

Our customers are really slow pay right now. Our contracts usually say: Terms: 100% due on completion. One customer hasn't paid in 60 days and just keeps offering more promises. A customer on a large job is 2 weeks late paying and I just learned that he's on vacation, with my bill due before he left. Another customer tells me yesterday "I'll pay as much as I can soon." Huh? As much as you can? How about paying all of it like we agreed.

I alway resist the temptation to tell a customer who is reluctant to pay "Look, there are 4 dozen gray areas in our guaranty, and there is nothing in it tat says I can't put my slow paying customers at the end of the list of you have roof problems, and I can tell you that if you make me jump thru hoops to get paid, I'll do just that.

What do you guys do to assure prompt payment?

Most of the work I sell is with a handshake unless the customer requests a contract. Drives my son nuts. There is a contract for everything anyone else sells.

It states $100 down. 50% at the start of the job. Balance upon completion. Your contract will serve as your invoice.

Some people really believe that they do not owe you anything without an invoice.

The 50% is not for materials, we just ask for 50%.

Commercial - 20% down, 40% when materials are onsite, balance upon completion. We do not do a lot of commercial work. The commercial work we do is usually 50 square or less.

I rarely work with contracts, if you get to a point of needing the contract as evidence, you have already lost. I use a simple proposal or estimate form. In the past 20 years, I have been burned once by a customer that refused to pay for about $500 worth of extras I did for her.

I have never understood the 50% upfront "for materials" argument. It seems like an admission that you don't have good credit with your suppliers.

Things keep changing but last time I checked closely it was ten percent or $1000, whichever was less. That means a hundred bucks on a thousand dollar contract or one thousand on a hundred thousand dollar contract. That's for home improvement contracts. You can submit a bill for specific items already done (pulling permits, etc.) or for special order non-returnable items you are/have provided. Business to business prime contracts allow you to structure the deal pretty much any way you want.

My understanding is that the state is essentially trying to shield the "unsuspecting, trusting, ignorant, and defenseless" homeowner from contractors who would grab the fat down payment and disappear, something that seems to happen from time to time, usually with unlicensed scammers. I don't usually take anything down. But then, again, I don't usually work for people I know absolutely nothing about. When I do work for completely unknown people, especially those who offer up any hint of wierdness, I consider myself to be an unsuspecting trusting ignorant and defenseless contractor and take the ten percent down, sometimes even with scheduled payments, but on single family dwellings we move so fast that scheduled payments are usually absurd. I'd be standing there with my hand out the whole time.

If I were doing mostly commercial work, as Tim is, I would not be as blithe as I am with homeowners in forgoing the down payment. The amounts at stake are too high. I know Mike Hicks has developed quality relationships with his clients over the years, the kind that have a personal connection locking in an extra measure of confidence and honor, but my experience with property managers, owners in absentia, developers, real estate people in general, does not contain a lot of loving kindness in its history. These folks, while often smiley, notwithstanding some remarkable exceptions, have generally been pretty hard-nosed and unsympathetic clients. If you structure a soft deal with them, they usually think they should have driven an even harder bargain on the price and terms.

Seen-it, good point. I just changed my contracts to state:

Terms: 100% payable on day of completion, warranty issued upon payment.

For years I have handed them the warranty with the invoice, thinking that "warranty is effective after payment in full" covered me, but lately it hasn't been enough. It's s delicate dance not to make people nervous when competing for the job.

My terms of payment is 10% down on signing and balance in full payable on day of completion.

Make sure your contract says payable instead of due and also state day of completion instead of just completion.

It also helps to have your invoice in hand as you ring the doorbell and when they open the door, don't make eye contact and step right in. I say "All done, will that be cash, cheque, or bank draft", and look them straight in the eye.

It also helps to smell sweaty, look dirty and keep your boots on. Only one bad account in 28 years of around $1800.00.

In Texas we cannot charge more than 1-1/2% interest per month late fee. I never put that in a contract for a fear our customer will see that as an invitation to pay late.

We get 50% at the start of the job. The customer is usually bugging us before we get done for a final number so they can have a check ready. Can't remember the last time a customer needed encouragement to pay.

But then, payment terms are spelled out in the contract, and we walk through those terms at contract signing.

Depends where we're working; In Colorado we have owner pre-pay us or material supplier the lion's share of materials to be used; Balance upon completion/net 30 days. I California; Never asked for anything up front - Net due 30 days - Most homeowners pay within a couple of days. I don't think you can ask for more than 10% in CA. EGG?

Well, when I ran a larger business focused on full roofs with repairs a side gig, we provided everything up front and then just billed them. And yes, many of them took a month of Sundays to finally pay. We put a note on the bill that said payment is due within 10 days and a 3% late fee will be added if payment is not received in our office within 10 days. Most paid within that time but some didn't. We never actually charged anyone the late fee. It was just there to speed things up. lol

However, these days doing 99% repairs, I usually collect 1/3 up front, schedule an appointment with them to do the work myself, ( with them present just like when I did the estimate ) and just bluntly tell them I like to be paid " IN FULL UPON COMPLETION" before leaving the property and that's exactly what happens. ;)

Man, I wish we could get 50% up front, sure would make cash-flow easier. But we are smack in the middle of the hail belt and people are really leery/savvy about storm troopers. In other parts of the country most people buy a commercial roof once or twice in their career. /in our part of the world they buy one every 7-9 years.

Most on completion, some are 50/50, but I have carried payments 2 years on some projects.

I'm a 50/50 guy. Only exception would be really small projects. Been doing it this way for years. Have yet to have anyone complain about it. Most actually expect it. At least, that has been my experience...