What is the best billing method to use with a contractor?

13 Replies

Last night I had a meeting with a potential contractor for two simultaneous rehabs. We talked about the different ways that we can work and how he gets paid: cost plus, fixed price, etc

I would like to know how other pros are structuring their payments and what is the preferred method of billing. I am interested in finding out what method produces the best results for the least money.

billing? my contractors give me a piece of paper and i pay them on the spot. one guy uses an app from his android phone.

i like to buy my materials and the contractor just does the work. hope this helps.

Hey Bill is there a particular reason you are considering using the same contractor on both projects?

I`m assuming from your question that you have not used him before.

I wouldn`t give any contractor I`ve never worked with two projects without seeing his work first. Heck, I don`t give any contractor a dime until he gives me a few days of work on one. My experience tells me the way the work the first few days is a pretty good indicator of how they will be throughout the project.

I always get a "labor only" quote for the whole job. At the end of the week I assess the work completed and give him a draw accordingly. This gives him an incentive to get a lot done.

@Deano Vulcano  That's an interesting way to deal with contractors. From your experience do they easily agree in working a few days with no pay or are they reluctant?

Plus, have you ever had a situation where at the end of the week the work wasn't good and you had to dismiss them?

Hi Bruno (great name). It has never been an issue. When is the last time you started a new job and they paid you up front. No workie-no payie

Since I am only paying them for labor, they have to work first. It`s different if they are providing materials.

Yes I have dismissed contractors on the second day. My truck broke down...buh bye.

deano, are you supplying the materials?  U deliver or have the store deliver? 

Second question. . How do u find and how do u replace contractors?  Every time I call they are 2 months out. 

Yes I supply all the materials. I have preset all of my materials on the Home Depot Pro website. I use the same stuff over and over. So when I`m getting ready to start a project, I go online and place my order. If it is over $2,500 they send it to a special department and within minutes tell me how much they can discount the order. Then they deliver it to the jobsite that day or the next. I pay for it with my Home Depot card so I can track my different projects. Then I pay it off with my credit card and collect the points.

To find contractors I keep in touch with the realtors who are dealing with foreclosures. Some banks are having these realtors fix up the properties, they tend to know the guys who are good but not expensive (but not always).

The other way is to go to Home Depot or Lowes first thing in the morning and get business cards from the contractors walking in the store. This way you can see what type of truck they have and get a feel for character. Just make a note on their card if it`s someone you may want to call. Plus if they are there early it`s a pretty good bet that they have it somewhat together. Unless they just never went to sleep from the night before.

my problem is that I buy the big stuff and then make 400 trips back to the store of the following 2 weeks

Originally posted by @Deano Vulcano :

Yes I supply all the materials. I have preset all of my materials on the Home Depot Pro website. I use the same stuff over and over. So when I`m getting ready to start a project, I go online and place my order. If it is over $2,500 they send it to a special department and within minutes tell me how much they can discount the order. Then they deliver it to the jobsite that day or the next. I pay for it with my Home Depot card so I can track my different projects. Then I pay it off with my credit card and collect the points.

To find contractors I keep in touch with the realtors who are dealing with foreclosures. Some banks are having these realtors fix up the properties, they tend to know the guys who are good but not expensive (but not always).

The other way is to go to Home Depot or Lowes first thing in the morning and get business cards from the contractors walking in the store. This way you can see what type of truck they have and get a feel for character. Just make a note on their card if it`s someone you may want to call. Plus if they are there early it`s a pretty good bet that they have it somewhat together. Unless they just never went to sleep from the night before.

 Deano,

i just went to HD and asked them if I can "preset" my items on their site so when a project starts, i just "move them to my cart and hit buy". 

they said no, i can't. do you have to manually enter all items you are about to buy each time or you just copy an old order?

question 2. they said i can't pay the HD card with another card. you mention you do..how do you do that?

@George P.
only 400 trips after the big first one huh? I forget way more than that. Ha. Easily 3 times a day for the first week or so.

Originally posted by @Josh C. :

George P.
only 400 trips after the big first one huh? I forget way more than that. Ha. Easily 3 times a day for the first week or so.

 omg, good thing i dont bet "over/under" or else i'd lose every time. during remodels, i have around 65 charges on the CC per month (AMEX), which shows i go to HD more than 2 times a day. $95% of the charges are at HD.

:)

Best advice is to feed them like dogs. When they complete each task you give them a little treat and when they finish the whole job, they get a meal.

Sorry if this sounds condescending but after being screwed over by contractors that many times you have to learn to smarten up.

Also never turn your back on a dog. You may think you have earned their loyalty and friendship but YOU CAN NEVER TRUST THEM.

I usually break it up into thirds. If the contractor (who I know/trust) is getting everything and I am hands off, then I will give them enough money to cover materials. They get the second part after they are done and I inspect the work. I always hold 10% for 30 day after incase there is an issue later or during the inspection something comes up on work they performed they will come back and fix any issues quickly. If I don't know them and using for the first time I try to pay after they finish the job and hold the 10% for 30 days.

Most small contractors need to get paid after completing a certain task, this being said.

I usually set a Schedule of Values and line itemize everything ahead of time. So that I can bill every two weeks. On bigger projects its common to for us to bill once a month, that way it give our accounting department ample time to bill for multiple projects.

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