Mike Draper
Why are so many homeowners holding up that last cheque?
Canadian Contractor BusinessWhat is it about February that makes some renovation customers so difficult to deal with - and get cheques from on a timely basis?
Lately, many contractors have been telling me about homeowners driving them crazy by delaying their final payment. I’m hearing, far too many times, how homeowners are making it tough to complete a project, or they won’t let the contractor come on site except during very specific times. I’m hearing that these homeowners are being overly critical about the quality of the work being done. From the contractor’s viewpoint, what was once a reasonable client has changed into a very difficult client.
I am not a psychologist but I have started to think about why this always seem to happen at this time of the year. A couple of ideas come to mind. Winter is a tough time for everyone. Working conditions are harder due to the cold and the snow. There is far less light available and that can affect people’s mood (“Seasonal Affective Disorder”). During the winter months, people obviously spend more time in their homes than they do during the summer – and so they are around the construction all the time. For the contractor, it is also a time when work volume is slower and cash flow is tighter but overhead expenses keep coming in. All of this adds to the pressure of running a business.
Thinking about all of these factors, it seems clear that, as business owners, contractors have to be prepared for this every year. Knowing that every February is going to be similar means that it can be anticipated and planned for. Setting the expectations with the homeowner that the project will take longer in the winter and giving yourself more time to complete the project will help keep the project on schedule. Being on schedule is less stressful for the homeowner, thereby keeping them happier. If they can’t wait that long for the project to be completed then suggest they wait until spring, when you are able to work faster due to better weather conditions. Slowing down the schedule may seem counter-intuitive but it is all about meeting your client’s expectation.
Cashflow is a whole other story of which we will cover next week…….
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Payment terms that indicate substantial completion as the second last scheduled payment , and defining the day, 45 days from which the last payment is due ( expiry of construction lien period) make clear language for both the contractor and the client to live by . Seasonal deficiencies beyond the 45 days can be given a dollar value and be held back until complete. Weve practised this for years and have very little trouble getting paid. Tieing the job progress /benchmarks to the payment schedule and publishing the schedule to client so they know when to expect to pay also eliminates a lot of hesitence on the clients side and gives clear language for the contractor to request payment when due.
Well said. I haven’t heard anyone talk about the cold and weather affecting timeline and schedule but it is so true. So the lesson for us is to always under promise and over deliver. Manage your client’s expectations according to real circumstances. We as contractors want to please the client by being time optimists.
Rob
This year wasn’t as warm as last year in the north and I’ve definitely seen some projects on hold. Everything Scott mentions above is the most savvy approach to contractor/client relations…
Good read
-J