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% of progress payment schedule

12/14/17       
chipbored

I have had a payment program in my head for years and am thinking about implementing it. Wondering if anyone has done something similar.

Here it goes
- A job is broken into a set amount of key stages (10 for simplicity sake) Each stage contributes to 10% of the jobs completion.
- From the date the customer signs the contract the job is active. An invoice is issues at a set period until that job is completed (fortnighly for example)
- The Invoice is based on the status of the job. Here is an example

A job is started that includes a kitchen, a bathrooms and a wardrobe
The kitchen cost $10000
The bathrooms $3000
The Wardrobes $5000
After 2 weeks the kitchen is 3 stages in. The bathrooms 5 stages in and the wardrobes 2 stages in.
Kitchen (3 stages)30% = 3000
bathrooms (5 stages)50% = 1500
wardrobe (s stages)20% = $1000
Total invoice for that fortnight $5500

- Stages can be defined by such things as. Listing, Machining, Assembly, painting ect. ect

The benefits I see:
Your cash position is a true reflection of the effort you have made on a job so far-
- It is clear for customers to see where the job is at and what they are paying for
- A rule can be set in place so that if a payment isn't made production is halted
and needs to be rescheduled. Therefore your efforts are going towards work that is being paid for.

Cons
- No upfront deposit. Perhaps a set deposit could be defined i.e 30% or 50% and then the payment program can be activated once that percentage amount is hit.

Anyone doing something similar to this?

12/14/17       #2: % of progress payment schedule ...
Derrek Holland

"10 stages for simplicity" ?
Sorry, thats to complicated for $18000 dollar project. Keep it simple and be clear in your communication with customer on what is expected and when. As acustomer, if someone wanted 10 seperate payments to complete a job, I would tell you to pound sand. I dont have time for that much work. First if your a legitamite business you can reasonably carry the cost of doing that job. Im going to give you money and sign a contract as good faith in you to complete it, and i dont want to be bothered with the details of how you do it. I want it done in a reasonable time frame and want solid dates of when it will be completed. I will pay you when its completed and not before.
In your above scenario, I would write 3 seperate contracts or work orders, as they maybe completed at different times and probably have different specs for each.
My contracts are written and have paymenrs spelled out
Down no more than 10% of project (California law)
Custom work, approximately 20% of project
Balance due on completion.
I normally get the first 2 when they sign. Installers collect at walk through whether cash, check or cc. If its a builder and we are waiing on draw we discuss when before we install. We will work with them on their terms once, if they pay like they said they would we will work on their terms for future jobs if they don't, they pay on our termsnor we don't do work.
We don't start or schedule install without signed contract and down and custom work. No exceptions. We will complete 650 projects this year and have only had issues collecting on about 20 and we always get paid and rarely have any of those gone past 30 days.

12/14/17       #3: % of progress payment schedule ...
Pat Gilbert

Sean Benetin

Had a good idea, 10% down, if all the information for the kitchen was not provided within x days, he would refund the deposit. This was a way to keep homeowners punctual.

12/14/17       #4: % of progress payment schedule ...
Matt Calnen

I take full material deposit, plus the full finishers charge if I sub that out, I then write that I will bill at the months end for the percentage of labor complete as judged by me. I tell people I’m not a bank, and if you don’t trust me we shouldn’t work together.

12/14/17       #5: % of progress payment schedule ...
chipbored

Thanks for responses

Just to clarify. I'm not sending someone 10 seperate invoices because there are ten stages in a job. It's simply a benchmark to set a percentage of job completion. A round number is good because the percentages are simple numbers. 5 I feel may be a bit too broad. I feel there are more stages to a job than that.

The invoice is based on how many stages are completed after that 2 week period. It could be set up in a spreadsheet with a column for each stage. When that stage is complete the cell is ticked off.

That 10% down seems a bit rough. That doesn't even pay for materials if the customer decides they don't want the cabinets after all.

Matt, your system sounds quite similar to what I'm proposing above. Do you find that the month is a long time between payments? How long are the terms on that invoice? i.e is the invoice issued at the end of the month with 7 days to pay?

12/15/17       #6: % of progress payment schedule ...
Matt Calnen

I take full material deposit, plus the full finishers charge if I sub that out, I then write that I will bill at the months end for the percentage of labor complete as judged by me. I tell people I’m not a bank, and if you don’t trust me we shouldn’t work together.

12/15/17       #7: % of progress payment schedule ...
Leland Thomasset  Member

Website: http://www.cnc-cabinetparts.com

Here is what we have used for the past 14 years.
50% deposit
10% Once shop drawings are done
20% On partial completion which means the cabinets are built and staged in shop. Photos or a shop visit with arch or owner.
10% Delivery
10% Final when cabinets are installed
New for 2017 Jobs under 6K are as follows.
60% deposit
20% Partial
20% Delivery

http://taghkanicww.com


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