Payment schedule

pledgeX

We're going to have some building work done which will cost ~15k and take ~2 months.

Today our builder sent through a schedule of work and included a payment schedule. The payment schedule broke the work down so payment was made after each stage of work e.g. groundwork complete, brickwork complete etc.

This is all fine, with the exception of the first payment which is due on the first day of work which equates to 20%. I've read plenty of comments where people say never to pay until the work has been completed, so this makes me a little uneasy.

However, I can see this from the other side too:
1) He's only a small business so may not have the accounts and/or overhead to cover the cost of the materials.
2) He has no idea whether I can afford the payments or not, so this covers him if I were to be an awkward customer

He's done nothing to suggest he's dodgy in any way. We've had plenty of good references from other people and have everything in writing from him, but we don't want to put ourselves at risk.

I've not spoken to him about the initial payment yet, so am not sure whether it's to cover the materials, or for risk reasons. I'm quite happy to send him proof that we have the money in the bank to pay, but I guess this doesn't prove much, or that we'll actually hand over the money.

What are you thoughts?

Dan-Dan

What is the building work?

If its an extension i wouldnt be happy paying 20% up front, because initial work is going to be labour digging trenches

Keep_pedalling

Does not sound unreasonable. I would not be happy paying in advance of anyone actually starting work, but initial payment on day work is to start seems fine especially as you are happy with his references.

brightontraveller

Dan-Dan wrote: »

What is the building work?

If its an extension i wouldnt be happy paying 20% up front, because initial work is going to be labour digging trenches

What and labour doesn’t cost? Neither do skips/ diggers etc what are they filling it with air ? Time is money your way of thinking its ok if I’ve bought something you should pay (hey most of the time you wouldn’t know if its for your job, if Ive even paid for it even if I have I could return it very naive? If OP is worried talk in out with builder ( You can even go down escrow agreement route )

Maybe agree to pay first/ day two labour/ material cost up front compromise and communication is key if they or you can’t or wont come to an agreement then the jobs a non starter,,,,

System

Just ask him why that payment is so high - if it's an extension it may be that he needs to place an order for windows or something a the outset and requires payment for those?
Explain that you have heard horror stories about paying that much upfront and you would prefer to pay for completed work, see what he says.

Dan-Dan

brightontraveller wrote: »

What and labour doesn’t cost? Neither do skips/ diggers etc what are they filling it with air ? Time is money your way of thinking its ok if I’ve bought something you should pay (hey most of the time you wouldn’t know if its for your job, if Ive even paid for it even if I have I could return it very naive? If OP is worried talk in out with builder ( You can even go down escrow agreement route )

Maybe agree to pay first/ day two labour/ material cost up front compromise and communication is key if they or you can’t or wont come to an agreement then the jobs a non starter,,,,

I would want a builder who could afford to pay his labourers a weeks wages without needing my money to do it

Cisco001

If they need to pay upfront for the materials, you can ask them to bring them all on the first few days.
You pay it as "materials on site". Once you pay it, it is your properties, and they are not allow to remove it from you place. (you will be liable to buy it again if someone steal it from you)

Keep_pedalling

Dan-Dan wrote: »

I would want a builder who could afford to pay his labourers a weeks wages without needing my money to do it

I think it more of a case of insuring against late paying clients, of there are probably many.

I seem to remember paying a similar amount when we had an extension built around 15 years ago. Like the OP we had carried out due diligence by checking out his previous work, so we had a good level of trust in him.

Kiran

Ask him if his payment schedule is up for discussion, agree payment for materials on site and if possible, weight the payment toward completion as this helps ensure the builder remains on site as the job draws to a close.

mishkanorman

Ask to split that payment into 2 maybe ? How much time is allowed between first and second payment ?

phil24_7

Agree with Kiran. When I had my extension done (£33000 but ended up being nearly £40000 with add-ons) I did not pay anything for 2 weeks. I was then paying the wages 2 weeks in arrears and materials after they were ordered/delivered to site. A large chunk was left to the end for snagging etc.

It was always weighted in my favour.