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As a trader, you have just twelve months in a financial year to reach your targets and optimise the time available that you can sell.
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This is a very valid point - we have learned over time to have a nose for the jobs which are just going to be too much hassle - however we still have the odd rogue customer who doesn't want to pay at the end of the job.
It takes an awful lot of jobs to make up the profit lost from that one bad payer and for small businesses can be a huge blow.
We get contracts signed with all our customers before works commence and check their satisfaction on a daily basis throughout the build. It can be a pain getting terms and conditions signed with is why we use the Echosign e-signature service. This allows a PDF version of the Estimate, Terms and Conditions and any plans to be signed off by the customer in one package with a couple of clicks of the mouse.
Most of our contracts are signed in this way within a couple of hours!
We have a current issue with a customer which is subject to litigation and I will happily let you all know the outcome when we finally get a court date.
We also have another customer who called one of our suppliers and asked them to tell her the trade price on the materials, which they duly did, she then held back an amount as we have "charged over the odds", i.e. how dare we add 15% markup on materials supplied!. This is still rumbling on however if we haven't had payment by the end of the week I will be popping another summons out.
I wonder whether anyone else has any thoughts about markup on materials? I am beginning to think we avoid it completely and increase the labour costs instead but would welcome any thoughts
I would just be honest and have this inserted in terms and conditions.
Make it clear that there is a mark-up on all materials that are supplied by you. Make it clear that you will be happy to use any material that is specified if supplied by the client but there may be penalties if work is delayed because work cannot proceed as planned.
Of course, you must also tell the client that only a guarantee can be given on the labour element only and you as the contractor, will not accept liability for any failures of the integrity of any material that you had not supplied.
Put in such cold terms the client will not want to become involved and will normally pay the mark-up. After all, there is a cost to the contractor to source materials etc. and the mark up should be viewed as a handling charge.
I charged ten percent normally but this might change if there were any special circumstances. For example, if I spent a day touring reclamation yards then there might be as much as a fifty percent mark-up depending on the quality, scarcity or weight of what was involved.
A couple of customers have said they would never part with any money until completion. I find it hard to believe that many contractors would work for 2 weeks with no payment, but these are people that have had tradespeople to carry out other work.
You are basically providing credit and I don't consider it unreasonable to ask for part payment before completion.
This website is a wealth of information, It is good to hear how other people deal with all the aspects of running a landscape business.
Me too. Programs like Rouge Traders telling viewers "that any good tradesman will buy the goods on credit and only invoice you when the job is complete". Well, i dont have any credit accounts, and have to pay for all my goods up-front.
I now send out the T&Cs as part of the booking, and if they dont want to pay, i dont do the job.
1. There's a trade price, and there's the price you actually pay - we always get a discount off the "trade" price
2. If you have a supplier who happily reveals his trade prices to non-trade customers, I would respectfully suggest you need a new supplier!
In answer to Nick's second point I wholeheartedly agree. However, the manager there has carpeted the shamefaced 18 year old new starter who was responsible and has also promised us there will be no recurrence. We have had a long relationship with them and although it is tempting to drop them good suppliers are hard to find in these parts - particularly of fencing materials.
When there was the chronic fencing shortage starting in 2006 they never let us down when other suppliers were only prepared to supply full artic loads.
The customer had pretended to be a "trade" customer and simply reeled off a list of what had been delivered to site. As it was the "trade" price quoted to her was above what we pay and this lessened the harm slightly.
When speaking with the customer I found explaining that you wouldn't ring the farmer Tesco buy their eggs from and then ask for a refund of the "markup" after you have eaten the omelette made things a little clearer. Unfortunately it would appear not clear enough for her to get her cheque book out!
I do agree Kerrie that it is a perk of the trade - and those are few and far between!. We spend a lot of time sourcing the right materials for our customers which takes up a large part of my time. We have a retail price which is all the customer would see on our estimates. If a customer wishes to order their own materials they are welcome to do so however we have turned down using some very cheap DIY materials - particularly fence panels - as they are of such poor quality its hardly worth the effort of putting the fence up!
I do take Phil's point about inserting something into the terms and conditions however we have always worked on the basis that the contract is signed after the build price is agreed and that is the price the customer has agreed to pay. Hopefully this was an isolated incident and we can put it down to experience and move on. However, still no cheque so may have to use the County Court sledgehammer again! I sometimes wonder why I left the law as I seem to be getting into more and more litigation!!!!!!
One thing that I would like to add for consideration: If a retail customer wished to spend £5,000 on plants, would that be less valuable to any business than a trade client who wished to spend the same?
I can understand not wanting a retail customer who comes in and pushes round a trolley and buys £50 worth because it might be time consuming for the business owner, however, even if sold at trade prices, the margin is still the same as if sold to a 'legitimate' trader.
My personal view is this:
* Allow inspection of the nursery by the way of a tour (allow half an hour) by appointment - insist that orders must be accepted separately.
* Issue a trade catalogue to take away
* Insist on putting the order together for collection from a designated area or delivery under your normal terms.
* Set a minimum order value
In other words, if your retail client is willing to abide by your terms then they should be no less valuable a client than a landscaper.
I would just encourage any nursery or plant grower to insist that terms are adhered to.
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