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Deposit for works

Does what it says on the tin
DrFfybes
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Deposit for works

#402463

Postby DrFfybes » April 7th, 2021, 11:18 pm

There's a local chap who specialises in wooden buildings, sheds, garages, summer houses.

We got a quote to reclad and re-roof an old garage on to the existing frame, but he is booked up until September. He is a sole trader, not a Ltd Company, although he was a Ltd company between 2016 and 2018 when he dissolved it again.

However he is asking for a 50% deposit to book us in, for September.

He's highly regarded but to me this seems like us just taking a risk, and such a high amount (over £2k) looks like he could be using deposits to ease cashflow, although it does mean he takes the risk of increases in Timber prices.

Anyone got ny thoughts on this - is he using the deposit to buy the materials in advance at today's prices, or does it sound a bit too much of a risk?

thanks

Paul

mutantpoodle
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Re: Deposit for works

#402489

Postby mutantpoodle » April 8th, 2021, 8:13 am

you say he disolved it 'AGAIN'

if you mean 'again' then its likely he will do so when it suits him and cash flow would cause that to be possible

If I were you I would either decline deposit and risk losing hi
or
sugest lodge deposit with independent solicitor/friend or someone reliable and acceptable to both of you

if he objects...it would raise my concerns

covid has caused many problems for many people, but that doesnt mean we must ALL suffer

bungeejumper
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Re: Deposit for works

#402509

Postby bungeejumper » April 8th, 2021, 9:24 am

Sometimes roofers are best suited to being one man bands, and not so well suited to running limited companies because they forget the paperwork, so they get struck off. That happened to one of our local outfits a few years ago. You may be able to find out why the company was dissolved via one of the usual company research websites.

Other times, smaller builders go off the map because they're rubbish and they need to "make a new start" every so often with a new mobile number. :roll: Do you happen to know whether this one is still using the same numbers as he was a few years ago? T'would be a hopeful sign if so.

But I think your first guess is probably correct. People are paying tradesmen late these days, and it wouldn't be surprising if their cashflow was under pressure. Innocent until proved otherwise.

BJ

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Re: Deposit for works

#402523

Postby Mike4 » April 8th, 2021, 9:43 am

I used to do this too when I fitted bathrooms. Well almost.

My typical bathroom refit was say £3k labour, £3k materials and my terms of payment were 50% of materials on placing order, the remaining 50% on delivery to site of all the materials on day 1.

Also on day 1, 50% of labour quote, and the remaining 50% on satisfactory completion.

Very occasionally someone would barf at the idea of having handed over 75% of the total bill at the point of work commencing but frankly, with a six month order book I could afford for those people to buy elsewhere. I had a good local reputation and 99% of people were fine with those terms.

Bottom line is you need to ask yourself if this bloke is good for a £2k debt, as bank reference requests used to ask back in the day. Does he live in a nice house and generally live in a decent area? Drive good quality vehicle(s)? Have you actually taken up any of his customer references? Does he have kids in the local skool? You could even splash out £3 on a LR search to see how much equity he has in his house. None of these things are definitive but together they all paint a picture.

I too would be very concerned to find out why the LtdCo was dissolved. Was it insolvent or was it done for tax purposes, being that Ltd no longer comes with an advantage? ISTR my accountant advising me to start a LtdCo as there were worthwhile tax advantages about 10 years back. I declined and then the tax advantage vanished IIRC, so pleased I elected not to. This might be all that happened, it was done for tax reasons.

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Re: Deposit for works

#402543

Postby sg31 » April 8th, 2021, 10:39 am

As a general builder I would want materials money upfront before starting but that would be a week or two before we actually turned up on site. If there was a high value specialist item needed for the job I would want the money for that before placing the order or let the customer order it themselves.

I certainly wouldn't want money 3 months up front if the materials were easily obtainable.

Different trades have different needs, It can change by area. In Brighton as a builder the problem was always getting money out of people. In this rural area it's more difficult getting the tradesmen to give you a bill at the end of the job. I had a digger driver do some work for me over the last couple of years. The work was a week or two about 4 or 5 times over that period, I gave him £1000 from time to time but I still owe him money. I keep chasing him for the final bill, and chasing and chasing. It's been 6 months since we finished the last of the work. The farmer over the road waited 2 years for a bill from the same guy. Apparently word gets around very quickly if anyone doesn't pay so tradesmen know their money is safe. It still seems an odd way of doing business to me.

I'd rather pay as soon as the job is finished, I hate owing anything.

I think you do sometinmes just have to decide if you trust the person. As Mike said you need to look at the mans reputation and reliability. Good tradesmen are booked up well in advance to some extent they can dictate their terms but if you feel uncomfortable with the situation just find someone else

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Re: Deposit for works

#403362

Postby 88V8 » April 11th, 2021, 10:31 am

DrFfybes wrote: ...reclad and re-roof an old garage on to the existing frame...

A 50% deposit for a vanilla job that you could probably do yourself? Pfft.

The only time I ever paid a deposit was for a custom-car specialist who requires a few hundred up front as booking fee, to separate the serious from the dreamers.

Perhaps he thinks you're a bad risk.... :)

V8

Dod101
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Re: Deposit for works

#403397

Postby Dod101 » April 11th, 2021, 1:24 pm

Roofers are the only trade where I do not know of anyone that I can really trust. I certainly would not be paying up front for a job which is supposed to take place nearly 6 months hence. Anything could happen in that time. The tradesman could go bust or anyone of the parties could get ill or worse. What security would the OP have? £2,000 is not a lot of money in the circumstances but obviously no one wants to lose that. The roofer will presumably be using it as working capital. Have you asked him why he seeks this deposit? If he is so busy, it surely will not matter to him whether you follow up in September or change your mind by then.

Trades people in general I think have problems with outstanding accounts and if say a week or two before he was due to start, he asked you to put up the £2000 I would have some sympathy. Even then it would be unusual. I use the same plumber every year when I need things done and the office people always ask if I have used them before. They look at my record of paying and do not ask for anything up front, but they tell me that if I came off the street as a new customer they would require 50% of the estimated cost up front before they came out. As it is, when I get the bill from them, I pay on the nail via internet banking.

Dod

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Re: Deposit for works

#403405

Postby AsleepInYorkshire » April 11th, 2021, 1:47 pm

DrFfybes wrote:There's a local chap who specialises in wooden buildings, sheds, garages, summer houses.

We got a quote to reclad and re-roof an old garage on to the existing frame, but he is booked up until September. He is a sole trader, not a Ltd Company, although he was a Ltd company between 2016 and 2018 when he dissolved it again.

However he is asking for a 50% deposit to book us in, for September.

He's highly regarded but to me this seems like us just taking a risk, and such a high amount (over £2k) looks like he could be using deposits to ease cashflow, although it does mean he takes the risk of increases in Timber prices.

Anyone got any thoughts on this - is he using the deposit to buy the materials in advance at today's prices, or does it sound a bit too much of a risk?

thanks

Paul

Unless you know why he dissolved the business I'd suggest there's a risk. However, let's jump in his shoes for a moment. You order the works and pay no deposit. Then a week before the works start and he's bought materials on your behalf you cancel. He's out of pocket.

I've spent 41 years in construction dealing with this quandary.

I think you do need to reassure yourself that your deposit will be safe. Perhaps an "uncomfortable" chat with him to see where that takes you?

Perhaps you could offer to make a payment direct to his material supplier and have the materials delivered direct to you?

I don't know, I'm offering thoughts. However, I think you're right to think about the risk issue.

AiY

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Re: Deposit for works

#403446

Postby dealtn » April 11th, 2021, 5:16 pm

AsleepInYorkshire wrote: However, let's jump in his shoes for a moment. You order the works and pay no deposit. Then a week before the works start and he's bought materials on your behalf you cancel. He's out of pocket.

I've spent 41 years in construction dealing with this quandary.



Any reason, wearing his shoes, he doesn't ring you in August, a month before works are due to start to confirm you are happy to go ahead, just before he orders those materials? He won't be out of pocket.

You only pay your deposit 1 month, not 6 months, before works commence. Both parties happy?

AsleepInYorkshire
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Re: Deposit for works

#403450

Postby AsleepInYorkshire » April 11th, 2021, 5:37 pm

dealtn wrote:
AsleepInYorkshire wrote: However, let's jump in his shoes for a moment. You order the works and pay no deposit. Then a week before the works start and he's bought materials on your behalf you cancel. He's out of pocket.

I've spent 41 years in construction dealing with this quandary.



Any reason, wearing his shoes, he doesn't ring you in August, a month before works are due to start to confirm you are happy to go ahead, just before he orders those materials? He won't be out of pocket.

You only pay your deposit 1 month, not 6 months, before works commence. Both parties happy?

Many small traders, well large ones too, prefer to have a secure pipeline of work. So a deposit does really mean the other party is committed. And many traders in construction do need to secure business as far ahead as they can. A month before you are due to go there you ring and Mr Ffybes says he changed his mind. You've then got to find work to fill in that "gap". And that can mean having to work for less than you're worth just to get some income through the door. And then on the other hand if the Ffybes pay a month ahead of work starting the risk still passes to them.

There's a possibility of using an escrow payment. But both parties need to be bought in to that option.

Most of the work I am involved in is for significant amounts of money so there are contracts and deeds in place with remedy clauses and of course statutory protections too. But ultimately if you've paid someone and they run off then you need to know they have assets before you drag them through any legal system.

If the materials are paid for directly and delivered to Ffybes mansions then they belong to them.

The doubt and suspicion is why was a previous company dissolved. And without that knowledge I'd be wary of moving forward with payment unless I had a more secure form of protection.

AiY

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Re: Deposit for works

#403453

Postby AsleepInYorkshire » April 11th, 2021, 5:50 pm

Before you get building work done

There maybe useful nuggets in this article?

But just a side note ... most builders do have credit from their suppliers. So if they don't this may be a poor sign.

I think it boils down to an uncomfortable chat to establish why a 50% deposit and why now and decide after that what to do. Given that 70% of communication is not the spoken word it would be best to have such a chat in person and not over the phone.

AiY

DrFfybes
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Re: Deposit for works

#403524

Postby DrFfybes » April 12th, 2021, 8:51 am

Thanks for all the replies, and suggestions.

FWIW he set up the company and dissolved it after just under 3 years, nothing irregular.

MrsF has used her finely honed family history skills and worked out he's been in the village for at well over a decade, in houses around the 500k mark which is towards the top end around here (oddly always in a 450 - 500k house, even 10 years ago, but now a smaller one but that could easily be family circumstances). Google reviews seem plausible and well spread out. He meakes wooden buildings for a living, that is all he does, so it is possible this is a standard thing he had when he had shorter lead times and was buying a lot of materials up front.

We're replied as follows, if he accepts it then fine, otherwise back to the cheaper and more available local chippie.

We see that the deposit is 50% non refundable with a start a date 5 months away. Normally we would expect a nominal deposit to reserve a slot and further payment when work starts.

Can you confirm if this is acceptable as we understood little pre-construction was required.?


Cheers.

Paul

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Re: Deposit for works

#403545

Postby Dod101 » April 12th, 2021, 10:14 am

DrFfybes wrote:Thanks for all the replies, and suggestions.

FWIW he set up the company and dissolved it after just under 3 years, nothing irregular.

MrsF has used her finely honed family history skills and worked out he's been in the village for at well over a decade, in houses around the 500k mark which is towards the top end around here (oddly always in a 450 - 500k house, even 10 years ago, but now a smaller one but that could easily be family circumstances). Google reviews seem plausible and well spread out. He meakes wooden buildings for a living, that is all he does, so it is possible this is a standard thing he had when he had shorter lead times and was buying a lot of materials up front.

We're replied as follows, if he accepts it then fine, otherwise back to the cheaper and more available local chippie.

We see that the deposit is 50% non refundable with a start a date 5 months away. Normally we would expect a nominal deposit to reserve a slot and further payment when work starts.

Can you confirm if this is acceptable as we understood little pre-construction was required.?


Cheers.

Paul


I hope you can let us know how he replies. Would be very interesting to know.

As a complete aside and commenting on AiY's remarks, I always admire my supplier of tyres for my car. He always has to order them in. They arrive usually the next day. I get them fitted and pay him there and then of course, I expect he will be on a monthly account with his supplier and I always think it must do wonders for his cash flow. His prices are competitive though so it works both ways. I was the same when I ran a business. The debtors' ledger was always the thing to keep tabs on.

Dod

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Re: Deposit for works

#403554

Postby Mike4 » April 12th, 2021, 10:24 am

DrFfybes wrote:Thanks for all the replies, and suggestions.

FWIW he set up the company and dissolved it after just under 3 years, nothing irregular.

MrsF has used her finely honed family history skills and worked out he's been in the village for at well over a decade, in houses around the 500k mark which is towards the top end around here (oddly always in a 450 - 500k house, even 10 years ago, but now a smaller one but that could easily be family circumstances). Google reviews seem plausible and well spread out. He meakes wooden buildings for a living, that is all he does, so it is possible this is a standard thing he had when he had shorter lead times and was buying a lot of materials up front.

We're replied as follows, if he accepts it then fine, otherwise back to the cheaper and more available local chippie.

We see that the deposit is 50% non refundable with a start a date 5 months away. Normally we would expect a nominal deposit to reserve a slot and further payment when work starts.

Can you confirm if this is acceptable as we understood little pre-construction was required.?


Cheers.

Paul


I predict he will tell you to shove it, in the nicest possible way :)))

I certainly would have. You have offered him no reason for him to want to change his terms of payment given his order book is rammed full and he doesn't need your work.

Receiving such a request I would read between the lines that you still have some doubts. If any of my old order book ever cancelled at the last moment, it was always the one that wanted the special terms. Maybe you are wandering about moving house. The last thing I'd want as the start date approaches is the customer announcing he doesn't have a agreed deposit and needs to cancel at little cost to themselves. The whole point of a deposit to me was to lock the customer in and secure my work flow. At least if a cancellation happed the deposit helped fund my three weeks of scratching about for something to do and/or the considerable time involved in bringing forward future work already settled. This happened once to me when a customer died shortly before their bathroom installation was due to commence.

You might get run over by the apocryphal bus; where would that leave the tradesperson?

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Re: Deposit for works

#403564

Postby dealtn » April 12th, 2021, 10:45 am

Mike4 wrote:
You might get run over by the apocryphal bus; where would that leave the tradesperson?


The tradesperson might get run over by the apocryphal bus; where would that leave you?

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Re: Deposit for works

#403566

Postby richlist » April 12th, 2021, 10:49 am

Being told to shove it seems preferable to having the builder not turn up in 5 months time or to have the work cancelled completely or to find the firm has been folded and you don't get your 50% back.

I've never had a problem in paying a deposit up front for work but then I've never been asked to pay 5 months in advance.

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Re: Deposit for works

#403573

Postby Mike4 » April 12th, 2021, 11:02 am

dealtn wrote:
Mike4 wrote:
You might get run over by the apocryphal bus; where would that leave the tradesperson?


The tradesperson might get run over by the apocryphal bus; where would that leave you?


Well its asymmetrical isn't it?

My executors would refund the deposit were I to be squashed by one of them damned apocryphal buses. I doubt a squashed customer's executors would proceed with the bathroom installation though, should they have tangled with said bus.

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Re: Deposit for works

#403579

Postby Adamski » April 12th, 2021, 11:11 am

I've had my fingers burnt with a roofing job. Its a trade that is notorious for dodgy sole traders. I found definately worth looking for best company in the area, and paying extra.

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Re: Deposit for works

#403581

Postby dealtn » April 12th, 2021, 11:12 am

Mike4 wrote:
dealtn wrote:
Mike4 wrote:
You might get run over by the apocryphal bus; where would that leave the tradesperson?


The tradesperson might get run over by the apocryphal bus; where would that leave you?


Well its asymmetrical isn't it?

My executors would refund the deposit were I to be squashed by one of them damned apocryphal buses. I doubt a squashed customer's executors would proceed with the bathroom installation though, should they have tangled with said bus.


Agreed its asymmetrical.

Going with an alternative supplier, and not having a 5/6 month wait reduces the risk of such a bus turning up. That might be acceptable if the workmanship, and wait, and lack of access to funds placed on deposit are deemed worth it. Does that cost get matched by the benefit of doing so? Only the OP will know the answer I suppose. A number of said they wouldn't expect that to be the case were it them.

Both parties are aware of the possibilities and the risks concerned, and will proceed if both are happy. If one party isn't happy with the offer from the other they won't proceed. That part is symmetrical at least.

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Re: Deposit for works

#403628

Postby DrFfybes » April 12th, 2021, 1:44 pm

dealtn wrote:
Mike4 wrote:
You might get run over by the apocryphal bus; where would that leave the tradesperson?


The tradesperson might get run over by the apocryphal bus; where would that leave you?


Exactly - asking for over £2k "non refundable deposit" 5 months before starting work with no guarantee the work won't slip is too much of a risk for us. Makes me wonder how much he has tucked away in deposits - I suspect £15-20k.

But as Mike says, wouldn't be surprised if we don't hear back.

Paul


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