I'm currently wrapping up a large kitchen I built. The total kitchen was about $35,000. I received half down and second payment when cabinets arrived. The problem is, there was about $10,000 in add-ons and I have a few punchlist items remaining, but the customer is tapped out. This is a 2 million dollar home. They (each) bring in over six figures a year. I have done work for them for about 6 years and they are very easy to deal with. He wants to pay here and there as I wrap up, but I am hurting financially and need the money for my rent and bills. He would like to add on crown around the room and shoe moulding, but he still hasn't paid what he owes. What would you do? Do I get angry and lose the customer for future work and referrals, or do I just sit and grind my teeth as I complete the job with very little enthusiasm? This seems to happen to me often at the end of the job.
(Business and Management Forum)
From contributor M:
You have to tell them it has nothing to do with being angry or spiteful, but a business decision that you won't do any more work for them until their bill is paid off. I'll bet you that the bills they can't put off, such as mortgage, cars, utilities, etc. have been paid on time. They are choosing to put you last - don't let them have that choice.
However, the sooner you take control of it with this client, the better off you will be. Won't necessarily get you out of the immediate bind, but you do not want to get in deeper. You need to recognize the new add-ons as a carrot ploy to keep you on board, and unpaid. Do not let your anger show, but require a sit down with the client and have your documentation to go over all that has taken place to date. Let them know you have to move on to another project unless the arrears or a substantial good faith payment is made immediately. You will come back and do the punch work ASAP. As for the new work they would like done, you will be happy to begin that once there has been a completion of pending work and payments.
If you really are desperate, you could consider offering a discount if they will pay you in full immediately. You may not have another project to go to, but spend your days finding another project rather than continuing. They have you confused with their bank. It is just business. Be very pleasant, finish your punch work, pick up your tools, and final invoice them to date. Then most important, do not let your lien rights expire.
Funny thing with two million dollar homeowners is that many of them are one paycheck away from homelessness. They may pull out the checkbook before you get everything into your truck. If they don't, you are doing the right thing to put it in drive and head for the beach or bar or wherever you can lick your wound for a couple hours. Then get back on your horse.
Getting upset and making demands won't help much, as you can't force them to pay and may only make matters worse, as many previous posts have addressed. For the short term I would have a sit down to explain your situation. Oftentimes open communication can help you come to a solution. Save the lawyers and liens for if/when things get ugly.
In the future you may want to restructure your payment schedule, though. I do three payments with my clients, and so far it has worked very well for me. 40% down to start kitchen, additional 30% once kitchen is built but before finishing starts, and final 30% at completion. This way I have 70% before a cabinet ever enters their house. From past posts I know others do it differently and will require kitchen paid in full upon delivery and leave only installation costs open. Whatever you choose to do in the future, I think it's too risky to leave a full 50% until the end. But this is just my opinion and you have to decide what's right for you.
Get them to make weekly payments to you while you continue to work there. Explain to them that if they do not keep up with the payments, you have no choice but to work elsewhere to pay your bills. Leave no material on site that is not paid for. Leave key pieces undone if you are forced to leave the site for a while. Don't come off with an attitude. Keep it as pleasant as you can and I suspect they will too.
One last thing. 10k worth of add-ons in a 35k kitchen? How did you let this happen? Some of the onus for your situation lies with you.
Am I missing something here? Most complaints about slow pay start off with some reference to the value of the home and the income of the clients. These inferences have nothing to do with the situation, but usually show a bit of jealousy on part of the supplier (us). I have been on both sides of the custom home building game, client and supplier, and I can tell you it doesn't matter what the cost of the home or the annual salary of the owner, everyone is broke by completion. The smart supplier figures a way to get to the head of the line. Maybe if you didn't still have punch list items lagging, you would have gotten paid faster than you have. The floors and countertops are large ticket items that come after the cabinets. Finish up the installs efficiently and completely before the other subs get there and you will help your cash flow.