How to Collect Money From a Customer

money makes people funny that's a fact jack today what we're going to talk about is how you can safely run your landscaping excavating your construction crew without worrying about how to collect from people I'm going to tell you a few stories I tell you some horror stories and then you are going to never have to live or walk in those shoes again so let's talk about how money makes people funny if you go back into my files I have a video called the drain tile job from hell I did this project for my neighbor and friend and I did not follow my own protocols because it was a neighbor and a friend I got burnt because I didn't do what I'm going to tell you that you should do it came back to bite me in the ass and I'm still in the collection process on that how do you save yourself the same headaches the same hassles naughty it's not tough there's really no mystery let's walk through this real quick how do you do this well grab my permit it's blowing away simple when you go out to sign a job you let your customer know it's $100 to schedule the job that is non-refundable what does that mean that means when they make that decision to hire you as a contractor they have to give you $100 if they back out you keep that hundred dollars that is your nuisance fee now as long as they proceed with the project their hundred dollars comes out of their contract total the second protocol is the moment you show up on a job site the moment you arrive you get half down that's right you get half they see the equipment work in there they say you they see you starting to work now I don't care if this is a one day or a two-week job doesn't matter if you're gonna be in and out in one day that morning you collect half now you may get this feedback wow I can't be there that day oh that's a great excuse and the answer to that is then they can tape a check to the door if they can't be there that they can have an authorized representative one of their kids or family members there to hand you a check for half down either way you don't start that project the reason is is that is your assurance that at least you'll get half okay there is no right or wrong in between there is no absolute positive way that you'll always be able to collect a hundred percent but this assures that you're going to get half and the last element to this is you collect the balance due that will be the other half plus the minus the hundred dollars the other half before you leave now the way I put it is I want half when I start as soon as you see me show up you see the equipment getting off the trailer I want half and then I want the balance due before my equipment leaves your site that means when I am anticipating leaving that job you have to be there you have to be able to walk you have to make yourself available to go over the project and you have to have the funds ready to pay me then and there that's not the point is while you're still on that jobsite you have a certain level of control from the customers mind because you're still present because you're still working you're more you're more influence more impact and more ability to actually collect a check and once you're gone there's an old saying out of sight out of mind as soon as you leave that job site you're out of sight and they're trying to put you out of their mind but when you're there your equipments there your guys are there you're in their face they can't help but feel more responsible and it's harder to say no to someone and look them in the eyes it's easy through an email to go oh but you didn't do the ADI yatta or via text message or a phone call but when you got to live someone face to face you have a greater chance as the contractor to be able to collect on the debt that is rightly owed to you time and material sometimes you guys are going to get in what we call time and material job sites where you don't give them a lump sum bid you don't give them a two or three thousand dollar bid what you give them is hourly wages you can hear some of the traffic in the background sorry about that you give them hourly rates what happens is is it protects you from the overall job cost but to try to collect half down it's a little tough in this case what you'll have to do is you'll have to do what you anticipate now I'm air quoting what you'll anticipate to be the total job cost but being very careful because as soon as you throw that number out there do you know what happens you become alive they're flipping nutjobs you become locked in to that number even though you're on time and material rates because you've given them a lump sum now you have an anticipated goal so you have to be very careful how you word that but you still want to collect something down on a time and material jobsite it doesn't matter if it's if you have a lot of materials make the customer pay for them don't you pay for those materials make them pay for them that way all you're collecting on is the time that's one less hiccup one less hurdle that you have to overcome all right I want to hear your stories I'm gonna share one of my horror stories true life story that's coming up but I want to hear yours who hasn't collected how did you what issues did you have I have a video out there called don't get bit in the ass have a lean plan in place I want you to go back and review that after you're done watching this video to make sure that you do have a lean plan in place I want you to share your story because your story will help the rest of us so lay it on us and in the meantime here's mine hey by the way if you get a bad vibe from somebody when you're initially negotiating the contract and the terms don't be afraid to up that down posit that initial payment up to 70% 75% pick a number that you feel comfortable if you think somebody's going to screw you there's a reason why you think that your gut is telling you something that you're pelagic a brain can't relate to let's go back to that horror story now okay I actually just told this earlier today in Minnesota whenever a residential customer pays you I tell my customers to write paid and fall on the bottom of the check now when you deposit that check that is the same around my parts of the woods as executing a contract okay doesn't mean for sure that the homeowner is safe but it is another layer of security against fraudulent contractors now you're not a fraudulent contractor and of course I'm not a fraudulent contractor so when you tell homeowners that it just gives them an extra level of comfort a good story of how they can be a homeowner can get screwed over is something that a real life event that happened about ten years ago I had dug this monster's basement is this was literally 20 feet deep and I think my invoice was about $16,000 from the day the cement guy came in toward a new basement and I think he had about 25 30 thousand dollars worth of work the lumberyard supplied all the framing materials for the new house and that was another 20-some thousand dollars the contractor came to me and said hey here's my check I'm gonna pay you right now and I need a lien waiver from you now being a green contractor I've signed the lien waiver knowing that I had his check in my hand he went to the consent contractor and the lumberyard and did the exact same thing he brought these sign lien waivers to the bank let the bank knew that he paid all the contractors off and he needed to cover the checks that he had written the bank gave him it was approximately sixty thousand dollars the bank gave him the sixty thousand dollars to cover his payments to me to the concrete guide to the lumberyard and then he skipped town his checks to me to the concrete company and the lumberyard all bounced now who do you think was held responsible for that it would be the homeowner the unfortunate truth is the homeowner at that point is still on the line this is a true story it happened now the three of us work together with the homeowner gave him time to make payments and make adjustments accordingly but the contractor left town was $60,000 in his pocket that's my story what's yours I am sure you have a story put it in the comments below we need to hear this we need to spread the stories we need to be able to relate how contractors can get screwed and how homeowners can get screwed and then we can all just stop getting screwed so that's it I love you guys I hope this has helped you out put your stories in the comments below want to hear from you please subscribe please share these videos that's it go get them have a great one