Canadian Contractor

Post-dated cheques as security?

June 3, 2020
By Patrick Flannery

Jen Dyck chimes in on the deposit question discussed in “Why does a contractor even need a deposit?”

Could post-dated cheques act like an informal reverse version of a commercial surety bond? Seems to me they bounce just as hard as ones dated today. Still, it could be some disincentive for the client to back out.

This is an interesting topic to me, as I’m debating on how much to set the deposit. The biggest issue are the customers who refuse to pay ANY money after the job is completed as per discussed in a quote. ie: My son will pick up the materials – but THAT never happened, but the job was expected to go ahead as planned AT THE SAME PRICE. Some companies will hire a contractor and “forget” to pay for months, despite repeated reminders. This doesn’t sound like a bad thing, but when you have payroll to run, materials to pay for, and over $200,000 owing to you from outstanding jobs, and not knowing if and when payment will be forthcoming, that would be bad for any business. I run a music teaching business, at a very young age, (I was in high school) I had a family of 3 kids whose mom “forgot” for 3 months in a row to pay me. Then they quit and flat out refused to pay me. It was a lot of money for me, and I had no signed contract because… well, it’s piano lessons. It taught me a lot about business. Get everything in writing, and prepay. I have a cancellation policy, and the “prepay” is just post dated cheques that I can return if they quit, without any problems. My rates go up 20% if people choose to not use post-dated cheques, which would be a pretty good incentive that doesn’t really cost more money for anyone if there is an intent to pay. Perhaps for those who are uncomfortable with the idea of having a larger deposit, is to ask for a post-dated cheque so the intent to pay is there without necessarily causing the customer to be out of pocket for the fly-by-nights. Just a thought.