My friend, Abe WalkingBear Sanchez, tells it like it is and in a discussion we had recently, he said, ?Any contractor that would build a job out of his or her own pocket is crazy.? I could not agree more.
If your payment schedule is 1/3, 1/3 and 1/3, you are working out of your own pocket for much of the job.
If you are building government jobs, either for a city, county, state or federal government, in most cases you are working out of your own pocket.
If you are doing commercial work, and you sign a contract that says you get no down payment and that you will get paid in 30 days, 60 days or whenever, you are working out of your own pocket.
If you are a specialty contractor, and you sign on with a general contractor and he tells you that you will be paid when he gets paid, you are working out of your own pocket.
Gang, you don?t have to do that. You should not be doing any job where you have to take money out of your pocket to pay any portion of the job upfront, regardless of who you are working for. Why do some clients believe that a contractor must lend them the money to get the job built? That?s what you are doing when you pay for a job out of your pocket.
This is one of the major reasons for cash flow problems in a construction related business. Think it through before you write contracts with a 1/3, 1/3 and 1/3 payment schedule, or sign for a job that requires you to front the money. It hurts your business, and too often, that means it hurts your family.
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