Calling All Plumbing Sub-Contractors ? When are We Going to Get Paid?

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On Time Pay is a Privilege?

This is a subject I?ve struggled with for my entire time in the sub-contracting business. When are we as sub-contractors going to demand we get paid in a timely manner? I remember the day fondly when we hung our shingle, when we thought we are going to be better and faster than our competition. Our customers helped us out, they paid us when they received the invoice. (look at what I?m doing in the sentence above, I?m so programmed to appreciate pay when the work is complete that I thank people for it. That should be the norm not the exception).

Then something happened around our 5th year in business. Customers stopped paying within terms, stopped paying in 60 days. I know I?ve heard this said before ?fire your customers? well that?s easier said than done and it went deeper than just firing our customers. It felt, it feels like a systematic attempt to strangle, to use every single sub-contractor for financing until they can?t finance the projects anymore. I?ll get to a more concrete reason why I think that a little later.

Over the last 13 years it happens more often than not that when dealing with $100K jobs and less we are done with the project before we ever see a penny. So the owner gets their entire construction project financed by the sub contractors. The general contractors feel some of the pinch but because they all have ?paid when paid? clauses in their contracts to the subs, they never have to pay their bills until they get paid by the owner, regardless of your terms to them. You can make some alterations to GC or Owner contracts but you will never have them strike the ?paid when paid? clause. Remember this doesn?t even address a general contractor that feels like sitting on the draw for 30 days, which happens quite often. Remember to watch your lien rights it differs from state to state. We find the only way to get an owner off dead center is to threaten to lien the building. When dealing with tenant build-outs it is a very powerful tool because most tenants can?t have a lien encumbering an owners building, it is part of their lease agreement so the tenant runs the risk of getting booted from a property if they don?t pay their bills.

By far the most sobering event that happened in the last two years was when we received a package from a fairly good customer. The package came with a letter basically saying ?During these tough economic times we want to check the financial strength of our preferred sub contractors. We would like to see a set of your most recent financials along with a letter from your bank telling us what your line of credit is and how much is left of the line.? Along with this letter (you can insert a drum roll here) there was a letter from their bank saying ? blah, blah, blah Construction Company has been a valued customer of the blah,blah bank for over two decades. They have a high seven figure line of credit that they have never tapped into.? I read it over and over again as my blood pressure went through the roof. For the last 13 years that we had done work for them they had never paid us in less than 75 days, we borrowed money for every project and they never went into their own line to pay us on time. This wasn?t a letter to check the financial strength of their subcontractors, it was to check which subcontractors could still finance their projects. Use them up and move on to the next batch.

The Federal government or individual State governments need to pass legislation for prompt pay with teeth. We have to pay our bills faster than ever, the banks won?t loan money for operating expenses and the owners just flat out refuse to pay in a timely manner. An old and wise friend once told me ?never be embarrassed to ask for the money you?ve earned? unfortunately sub contractors are forced to beg these days for the money they?ve earned and it has to stop. So contact you?re local politicians and stomp loudly that you want to be paid on time, maybe if enough of us stomp loud enough someone will listen.

theplumbinginfo.com

Jobs almost always start too late in the month to get in a draw to pay for material and labor for the first month. So you almost always get kicked into the following month for your first pay request. I?m sorry I wish I could give some witty bit of advice but there is very little you can do in this situation. Especially with projects below 100K. Very few architects or owners reps will let you bill for mobilization so you end up out of pocket for most of the job.

Jobs almost always start too late in the month to get in a draw to pay for material and labor for the first month. So you almost always get kicked into the following month for your first pay request. I?m sorry I wish I could give some witty bit of advice but there is very little you can do in this situation. Especially with projects below 100K. Very few architects or owners reps will let you bill for mobilization so you end up out of pocket for most of the job.

The deadline for getting in invoices in to the owner is the 10th of the month (pick a date they are different for every job) and yours came in on the 20th so we couldn?t get the invoice processed this month. The most obvious thing to do in this situation is make sure you have the invoice date correct so you can invoice right away. By the way if your trade is one of the prime subcontractors on the job they all know you?ve done work. A good GC can put you in the draw for something or will call and ask you for an invoice so they can put it in the pay request.

The deadline for getting in invoices in to the owner is the 10th of the month (pick a date they are different for every job) and yours came in on the 20th so we couldn?t get the invoice processed this month. The most obvious thing to do in this situation is make sure you have the invoice date correct so you can invoice right away. By the way if your trade is one of the prime subcontractors on the job they all know you?ve done work. A good GC can put you in the draw for something or will call and ask you for an invoice so they can put it in the pay request.

Some Reasons Real or Not for Slow Pay

The Projects are Built Complete with No Funding

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