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Old 12-16-2017, 04:46 PM   #1
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Default Financing large jobs

I have opportunity to bid on a job that is quite a bit larger then I would normally do. I won't have any problems doing the work but wondering how other companies go about funding for the material?

There is around 150k in material which is a lot for a 2 man shop. It's a government job and there is no chance of getting paid until job completion.

Looking forward to hearings some replies.
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Old 12-16-2017, 05:14 PM   #2
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Quote:
Originally Posted by Ty the electric guy View Post
I have opportunity to bid on a job that is quite a bit larger then I would normally do. I won't have any problems doing the work but wondering how other companies go about funding for the material?

There is around 150k in material which is a lot for a 2 man shop. It's a government job and there is no chance of getting paid until job completion.

Looking forward to hearings some replies.
First thing to do is talk to your suppliers and see if they will work with you.
I know Graybar will carry jobs like that for terms.

Otherwise you need to have a relationship with your banker and see if they want to make some money too.

Good thing is government jobs are not that risky
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Old 12-16-2017, 08:54 PM   #3
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At the wholesale house you set up a "job account". Then materials are pretty well estimated by you before they open the account. All materials are supposed to be taken to that specific job and not used on other projects. The payments from the contracting authority are usually split up between the wholesaler and you , and they get their cut before you do. It's been successful for me a couple of times. Watch out for overcharges on materials cost though, sometimes they try to charge above the normal price you get on goods, and then charge you interest to boot. You sort of belong to them once the ink dries.
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Old 12-16-2017, 09:37 PM   #4
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You could consider a bond.
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Old 12-16-2017, 10:22 PM   #5
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Why do a job that large and give the customer an interest free loan until the very end of the project? Will this large job cause you to lose other jobs?
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Old 12-16-2017, 10:27 PM   #6
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Why do a job that large and give the customer an interest free loan until the very end of the project? Will this large job cause you to lose other jobs?
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Old 12-16-2017, 10:51 PM   #7
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A Big Job without progress payments is a non-starter.

1) You are not the Primary Contractor -- or are you ?

2) Your bid// contract must stipulate that you need progress payments.

3) You must be able to pass through reasonable interest charges incurred because of the government's slow payout.

And, so forth.

BTW, it's as common as dust for such contracts to break smaller contractors.

Under NO CIRCUMSTANCES can you 'afford' to purchase a completion // performance bond.

Trust me, you'll NEVER complete or perform per the terms of said bond.

The Authority will make sure this is so. Then they cash in the bond and gift it to their buddies.

I've seen it happen -- more than once.

For you're intruding into their field of play.

Your rivals have been kicking back to the critical players within the Authority -- for Y E A R S.

That's reality. It's as illegal as all Hell. But... it's how it's played.

&&&

Just look at the incest within the DoJ and FBI.

ALL of the top players are scratching each other's backs.

They are ALL criminals. And so, they've got dirt on each other that will take every last one down.

And, obviously, the Deep State has dirt on AG Sessions. There is no other explanation for why he's chasing cannabis -- and letting the Clinton crew at the FBI get a free pass -- while it, the crew, chases his own boss, President Trump, out of office.

She can do no wrong.

He can do no right.

It's the worst scandal in American political history.

It makes Watergate look like a joke.

Since the foundational reason for the FBI was to investigate political corruption -- this scandal is all the more astounding.

( Yes, the original, original, original ambit of the BI was to investigate crooked members of Congress and the Judiciary. They had, otherwise, no police force to look over their shoulders. Hoover transmuted the BI into the FBI -- the name change occurred under FDR -- and massively expanded its powers to go after bank robbers (yeggs) like Dillinger.)
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Old 12-16-2017, 11:21 PM   #8
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[QUOTE=telsa;4619834]A Big Job without progress payments is a non-starter.

1) You are not the Primary Contractor -- or are you ?

/QUOTE]



I am bidding to a local construction company. They will be the general. I'll talk to them yet but they generally don't pay until they get paid for the job.
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Old 12-16-2017, 11:24 PM   #9
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Why do a job that large and give the customer an interest free loan until the very end of the project? Will this large job cause you to lose other jobs?


I'm not sure I'm going to lose much other work. It's during February-March which is the slowest time of the year for me.
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Old 12-17-2017, 01:25 AM   #10
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Is Canada any better than the US for government work and payout?
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Old 12-17-2017, 02:28 AM   #11
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[quote=Ty the electric guy;4619890]
Quote:
Originally Posted by telsa View Post
A Big Job without progress payments is a non-starter.

1) You are not the Primary Contractor -- or are you ?

/QUOTE]



I am bidding to a local construction company. They will be the general. I'll talk to them yet but they generally don't pay until they get paid for the job.
In California such an 'arrangement' is illegal as all get out.

This is true in many other jurisdictions.

I would never sign a "pay if paid" contract.

BTW, I think you're being lied to... BIG TIME.
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Old 12-17-2017, 02:32 AM   #12
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If this is a government contract... no I REALLY don't believe it's a "pay if paid" contract.
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Old 12-17-2017, 06:04 AM   #13
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Quote:
Originally Posted by Ty the electric guy View Post
I have opportunity to bid on a job that is quite a bit larger then I would normally do. I won't have any problems doing the work but wondering how other companies go about funding for the material?

There is around 150k in material which is a lot for a 2 man shop. It's a government job and there is no chance of getting paid until job completion.

Looking forward to hearings some replies.
I forbid you to do this job.

Kidding aside, ask yourself this. Do I really want to go outside my comfort zone at this time to do a "quite a bit larger" job? Am I financially prepared to risk 150K to do this job?

Think about it.
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Old 12-17-2017, 06:17 AM   #14
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All of my company credit is still backed by me personally. How about you, Ty? I would definitely look into that before risking everything that you own while you take out loans/credit and hope to get paid at the end.

That alone should be enough to turn away from this. But the fact that they won't pay you until they get paid (which will end up being months after you are 100% complete) is absolutely crazy.

I am with flyboy, I simply won't allow you to do this job. If I have to send one of my Canadian friends to go speak harshly to you, I will.
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Old 12-17-2017, 06:43 AM   #15
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We have been involved in government entity work like this.
The supplier straight up knows that he is going to carry that gear or generator until we get paid.
Find a supplier that will work with you, give them all of the job info, let them file notice.
More than once I have used the leverage of a supply house to get me paid. They do this kind of thing every single day and they know how to get paid.

Just find out your pay dates.
If you have to put in your numbers on the 10th and get paid in 30 days, don't receive 100k in gear on the 12th unless you know it's coming and can forcast into your pay app.

Some of these places get money in October and it's half spent before it arrives. Government jobs are real sketchy around August and September, expect to get dragged out that time of year unless you know 100% sure they kept money for you.
Careful about the paperwork, we have pay in 10 days in some municipalities and I can tell you for a fact that your invoice will sit in a basket or get lost or suddenly require some odd document that keeps it from being entered into the system.
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Old 12-17-2017, 06:46 AM   #16
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All of my company credit is still backed by me personally. How about you, Ty? .
One comment about that.
I always refuse to sign that form and they always say something like, OK.
You don't have to personally sign with every supplier, open credit with a new place that you don't really need and give it a try.
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Old 12-17-2017, 06:54 AM   #17
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One comment about that.
I always refuse to sign that form and they always say something like, OK.
You don't have to personally sign with every supplier, open credit with a new place that you don't really need and give it a try.
Maybe things are different now that I have been in business for 5 years and have bank records and stuff. But when I started out there was no way that anyone was going to give me a credit card or credit account for the company, or else everyone would pay the $150 to start a company and get credit that they aren't liable for.
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Old 12-17-2017, 07:13 AM   #18
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[quote=telsa;4620082]
Quote:
Originally Posted by Ty the electric guy View Post

In California such an 'arrangement' is illegal as all get out.

This is true in many other jurisdictions.

I would never sign a "pay if paid" contract.

BTW, I think you're being lied to... BIG TIME.
I do lots of work for the Feds and seldom see partial payments under 150,000.

Pay if paid is the game GC's try to play here.
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Old 12-17-2017, 07:19 AM   #19
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Maybe things are different now that I have been in business for 5 years and have bank records and stuff. But when I started out there was no way that anyone was going to give me a credit card or credit account for the company, or else everyone would pay the $150 to start a company and get credit that they aren't liable for.
I understand.
I just like to scratch through a few things and initial them and write NA in the personally guarantee line.
Here in Florida, the qualifier is personally responsible no matter what so maybe it's not that big of a deal here. Jersey might be different.
Our electrical contractors board meets every other month.
You have to go before the board to get "sworn in" to be a contractor. The first item on the agenda is the discipline hearings. People working out of scope, people trying to pull the 1099 scam, not pulling permits, and my favorite one.

City Electric Supply. They are always good for at least a case or two. The board suspends your license until they get paid or make some kind of deal in front of them. Nothing like being paraded in front of your peers as a dead beat.

One poor bastard had a crackhead employee buy $2,500 worth of tools and a bunch of materials for a side job and quit.
He tried to get out of it but, the guy was authorized by the company to sign for it. Too bad for the contractor.
Another one was a business partner running up a tab and leaving the electrical qualifier a $10,000 bill with the supply house. He electrical contractor had to pay it.
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Old 12-17-2017, 07:29 AM   #20
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Here in Florida, the qualifier is personally responsible no matter what so maybe it's not that big of a deal here. Jersey might be different.
That seems odd. What's the point of corporate protection if someone is personally responsible?
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