Construction Costs: What You Need To Know About Extending Credit To Your Clients
Posted on: 11 December 2017
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When you are a contractor for a client, one of the most important things you need to consider is whether or not the client will be able to pay you for the job. The following are some things to consider before extending credit to your client:
Obtain All Information
Before you begin doing any work or purchasing supplies, you need to get all of the information from your client. You will need his or her contact information, including a phone number and address. Along with a billing address, you also need to obtain the address of the project location. If you are a second-tier contractor, you will also need the name and address of the general contractor for the project. This information will be vital if you need to pursue the client for payment later on.
Provide a Credit Application
You also should require a credit application for your client. This will include all contact information, the banking information the client intends to use for a loan, and credit references. The signer of the credit application needs to be someone who is authorized to be responsible for the company should the project fold.
Require a Joint Check Agreement
A joint check agreement is a very standard document in this field. These agreements are designed for the customer of your client and states that he or she will provide payment by check in both your and your client's names. A joint check agreement is common when you are dealing with a general contractor or an additional party to the project. This agreement will make sure that the money is used to pay you and your client instead of other expenses related to the project.
Include Terms and Conditions
When you invoice a client, it will need to include very succinct terms and conditions. This is ideal for all transactions. If you are serving as a supplier, for instance, you will not have a standard contract with a contractor. This way, you are protected should the owner of the project not pay the contractor as the project moves forward.
When to Call an Attorney
If you begin to notice a trend in late or non-payment from your client, you will need to be prepared to call your construction attorney. You need to get your attorney involved as soon as possible. Time is money, especially in the construction industry. Your attorney will help you place a lien on your client so that you will get paid.