Customer demanding receipts

diego_94

Customer sounds unreasonable, and also sounds like they are tight. I reckon they may have found the prices for the materials somewhere else and want to see how much your other half paid. If its mroe expect another complaint "we saw it chepaer here, why did it cost that much etc etc"

Stop work on the job and claim the remaining money from them through a money claim online. Dont go back.

People like this will never be pleased with anything as they will always penny pinch.

Jumblebumble

liberty_lily said:

Hi all,

Firstly, apologies for the length and thanks for reading!

I'm looking for some advice please for my DH who has been working as a sole trader builder for the past four years (although I should add that due to stress incurred he is about to quit and return to paid employment).

On his current job (replacement wall ties, external insulation and rendering of a detached dormer bungalow), he priced up the materials and submitted a quote for labour (with a detailed description of what that entailed) and materials (not itemised).

The customer (who had come via a recommendation) was happy, verbally agreed to the quote, arranged for DH to order the materials and gave him the money for these. They were subsequently delivered to site by the suppliers. 

A few weeks into the job and the customer asked for receipts for the materials. DH explained that it doesn't work like that - she had agreed to the price quoted and couldn't start querying it now.

Initially the customer seemed to accept this but when the cold snap happened and DH was forced to temporarily stop rendering in case the temperature caused the render to crack, they again began demanding to have sight of the receipts and accused DH of syphoning off money for himself.

She began ranting at DH and she told her B/F to **** off when he tried to intervene.

In addition the customer complained about lack of progress, despite him constantly keeping her in the loop - which is far more than any builder we have ever used has done. 

Relations have since broken down somewhat. DH is in a fragile mental state and is on the verge of seeking medical advice as some years back he attempted suicide when suffering from stress. An impasse has been reached. 

He has been paid for the work completed so far (stage payments), apart from a few hundred £££ the customer has withheld since she began voicing her concerns.

I am extremely worried about DH's state of mind - he has hinted at suicidal thoughts - and will ensure he speaks with his GP asap. He has admitted he is actually scared of this customer and what she might do as her latest communication (via email) is hinting at legal action. 

Any suggestions as to how to proceed would be most welcome please  🙂

Your hubby should laugh loudly and ask the customer if they go to Tesco and demand to see the receipts from Heinz for the baked beans that they sell.
( thats what I do when an imbecele starts on that type of nonsense)
In addition you can bet if there any problems with the materials the customer will expect your hubby to sort out with the suppliers but not to be paid to do so.

mi-key

I have been self employed for over 25 years, and the one thing you learn is every now and then you get one of 'those' customers, who no matter what you do or how nice you are, you will never please them.

Pretty much all tradesmen make a mark up on materials ( one benefit of having a trade discount at a supplier ) , but this includes them having to source the materials, time spent ordering them, time and costs spent picking them up etc.. If it takes an hour to go to the builders merchant, load up and get back to the site, then they should be paid for this at the same rate as doing building work.

Regardless of this, if a customer has agreed to a quote for a whole job, then that is what they should pay. I find it easier to only ever give one quote for everything, and don't break them down into materials / time etc... 

DullGreyGuy

Doozergirl said:

DullGreyGuy said:

Doozergirl said:
As a sole trader, you should invoice for labour and materials separately because they are treated differently for income tax. 

Is this some weird building trade thing? How are materials treated differently for income tax @doozergirl? 

Normally for any goods or services you take the price you've charged your customer and minus the costs you've incurred, there isnt a lower rate of income tax for any profit margin you've added to the materials -v- services.

Things are slightly different if you arent doing cash accounting and you're holding stock but not sure how many sole trader builders have a few pallets of board at home ready for the next potential customer. 

It is a weird building trade thing.  Construction Industry Scheme.  If you subcontract you split them out and whoever employs you holds back 20% of the labour charge for His Maj.  

If they are used to that they will split labour and materials as habit.    

But the OP is directly contracting with the end client... I thought the construction schemes were in relation to sub-contracting etc?

I understand that if you need to do things in a certain way for one type of work you may continue doing it with others (assuming no harm) out of habit or simplicity but in other circs it may be better not to.

If you get a quote from a garage etc then often it will say £500 labour plus parts at MLP... if you are lucky it will have the manufacturers list price to give you a grand total at the bottom.  So you may pay the garage £150 for a new panel as the MLP but the garage will have bought that at wholesale price which is notably below MLP.

Certainly with direct customers companies/sole traders can add a margin to materials (shops would go out of business quickly if they didnt). No idea with the CIS if materials have to be at cost or if the trade can make a margin on them too but escape the withholding tax from that?

Fixed price/all in/ global offers can be a good way to make people think they are getting a good deal if they dont realise the level of trade discounting available. 

plumb1_2

macman said:

Maybe send an LBA for the remaining payments. Or just write it off as a bad debt if the stress of pursuing a claim is too much?

Don’t bother sending a lba, just send a invoice for money owed. Payment within 7 days.
If no payment received then pass it over to a debt collection agent, yes you will have to give up a percentage. But far less hassle-and stress let the agency do the work, sit back and wait for the cheque to arrive.
Youngplumb1 doe’s this and never failed to get paid. 

Doozergirl

DullGreyGuy said:

Doozergirl said:

DullGreyGuy said:

Doozergirl said:
As a sole trader, you should invoice for labour and materials separately because they are treated differently for income tax. 

Is this some weird building trade thing? How are materials treated differently for income tax @doozergirl? 

Normally for any goods or services you take the price you've charged your customer and minus the costs you've incurred, there isnt a lower rate of income tax for any profit margin you've added to the materials -v- services.

Things are slightly different if you arent doing cash accounting and you're holding stock but not sure how many sole trader builders have a few pallets of board at home ready for the next potential customer. 

It is a weird building trade thing.  Construction Industry Scheme.  If you subcontract you split them out and whoever employs you holds back 20% of the labour charge for His Maj.  

If they are used to that they will split labour and materials as habit.    

But the OP is directly contracting with the end client... I thought the construction schemes were in relation to sub-contracting etc?

I understand that if you need to do things in a certain way for one type of work you may continue doing it with others (assuming no harm) out of habit or simplicity but in other circs it may be better not to.

If you get a quote from a garage etc then often it will say £500 labour plus parts at MLP... if you are lucky it will have the manufacturers list price to give you a grand total at the bottom.  So you may pay the garage £150 for a new panel as the MLP but the garage will have bought that at wholesale price which is notably below MLP.

Certainly with direct customers companies/sole traders can add a margin to materials (shops would go out of business quickly if they didnt). No idea with the CIS if materials have to be at cost or if the trade can make a margin on them too but escape the withholding tax from that?

Fixed price/all in/ global offers can be a good way to make people think they are getting a good deal if they dont realise the level of trade discounting available. 

I think this is a lesson not to do it for consumers!  

I break down by far more than that, mainly by trade, but I think it helps to break up big big numbers into just big numbers 🙈

Gavin83

Doozergirl said:

DullGreyGuy said:

Doozergirl said:
As a sole trader, you should invoice for labour and materials separately because they are treated differently for income tax. 

Is this some weird building trade thing? How are materials treated differently for income tax @doozergirl? 

Normally for any goods or services you take the price you've charged your customer and minus the costs you've incurred, there isnt a lower rate of income tax for any profit margin you've added to the materials -v- services.

Things are slightly different if you arent doing cash accounting and you're holding stock but not sure how many sole trader builders have a few pallets of board at home ready for the next potential customer. 

It is a weird building trade thing.  Construction Industry Scheme.  If you subcontract you split them out and whoever employs you holds back 20% of the labour charge for His Maj.  

If they are used to that they will split labour and materials as habit.    

I too don’t get this. If you’re adding extra costs onto the materials you buy why is that not considered profit and therefore charged at the same rate at labour costs? If you can do that why charge labour at all? You might as well just charge a fee for the materials and make the labour free.

Postik said:

The customer should have purchased the materials themselves if they wanted receipts for them.  If your husband charged x4 times the amount and "syphoned" off the extra that's his business.  It's called making a profit.  It's also his perogative to earn as much as he possibly can, and the customer's perogative to do their due dilligance (before the job starts, not half way through) and get the best deal for themselves.

In all honesty I think it’s a disgusting tactic. 

Firstly I’ve no issue with people being paid for their time. If they’re spending X hours sourcing/picking up products then they should of course be financially rewarded for this. However the customer isn’t the expert, hence the reason they’re hiring the tradesperson in the first place. Charging them way over the odds for products they know full well the customer knows nothing about is merely taking advantage.

It’s the lack of transparency that’s the main issue though. If they said “I charge a 75% fee on all materials I buy” and the customer accepted that then they’ve really no complaint. If they listed the items they were buying and the customer could do their research that would be better too. However the vast majority keep it as difficult as possible so customers won’t find out.

If a builder said to me “You’ve got 10 square meters of wall to tile, I’ll grab you some nice tiles for that, it’ll be £1000” then I’d expect to have tiles approaching that value. If they then turned up with £10sqm tiles from B&Q and then tried to tell me the rest was their profit I’d be fuming and rightly so. If you’re buying materials for a customer it’s definitely implied the materials will roughly match the price you’re paying. People on here say you should question it first but I can guarantee you if you presented your builder with pages of questions and a request to list every item they’re buying and the price they’d tell you to do one, precisely because they can’t then rip you off.

I’ve no problem with paying a fair price for work but similarly I don’t like to feel ripped off. I’d feel massively ripped off in this scenario. I’d much prefer it if they bumped up their labour charge and kept the material prices as is. At least that’s more transparent. Or just list one price for everything. Even that’s less sneaky.

Threads like this make me glad I don’t hire tradespeople unless I absolutely have to.

DullGreyGuy

Doozergirl said:

DullGreyGuy said:

Doozergirl said:

DullGreyGuy said:

Doozergirl said:
As a sole trader, you should invoice for labour and materials separately because they are treated differently for income tax. 

Is this some weird building trade thing? How are materials treated differently for income tax @doozergirl? 

Normally for any goods or services you take the price you've charged your customer and minus the costs you've incurred, there isnt a lower rate of income tax for any profit margin you've added to the materials -v- services.

Things are slightly different if you arent doing cash accounting and you're holding stock but not sure how many sole trader builders have a few pallets of board at home ready for the next potential customer. 

It is a weird building trade thing.  Construction Industry Scheme.  If you subcontract you split them out and whoever employs you holds back 20% of the labour charge for His Maj.  

If they are used to that they will split labour and materials as habit.    

But the OP is directly contracting with the end client... I thought the construction schemes were in relation to sub-contracting etc?

I understand that if you need to do things in a certain way for one type of work you may continue doing it with others (assuming no harm) out of habit or simplicity but in other circs it may be better not to.

If you get a quote from a garage etc then often it will say £500 labour plus parts at MLP... if you are lucky it will have the manufacturers list price to give you a grand total at the bottom.  So you may pay the garage £150 for a new panel as the MLP but the garage will have bought that at wholesale price which is notably below MLP.

Certainly with direct customers companies/sole traders can add a margin to materials (shops would go out of business quickly if they didnt). No idea with the CIS if materials have to be at cost or if the trade can make a margin on them too but escape the withholding tax from that?

Fixed price/all in/ global offers can be a good way to make people think they are getting a good deal if they dont realise the level of trade discounting available. 

I think this is a lesson not to do it for consumers!  

I break down by far more than that, mainly by trade, but I think it helps to break up big big numbers into just big numbers 🙈

Its a debate... consumer price is £500 for a widget, trade price is £350.

You could quote £500 parts + £200 labour = £700

Or £450 parts + £250 labour = £700

Or £350 parts + £350 labour = £700
 
Or £700 parts & labour


Plenty of business books will speculate which will result in more sales even though the bottom line in all cases is £700. If the consumer knows the retail price I would suggest that the last one would get the least sales. 

Doozergirl

Gavin83 said:

Doozergirl said:

DullGreyGuy said:

Doozergirl said:
As a sole trader, you should invoice for labour and materials separately because they are treated differently for income tax. 

Is this some weird building trade thing? How are materials treated differently for income tax @doozergirl? 

Normally for any goods or services you take the price you've charged your customer and minus the costs you've incurred, there isnt a lower rate of income tax for any profit margin you've added to the materials -v- services.

Things are slightly different if you arent doing cash accounting and you're holding stock but not sure how many sole trader builders have a few pallets of board at home ready for the next potential customer. 

It is a weird building trade thing.  Construction Industry Scheme.  If you subcontract you split them out and whoever employs you holds back 20% of the labour charge for His Maj.  

If they are used to that they will split labour and materials as habit.    

I too don’t get this. If you’re adding extra costs onto the materials you buy why is that not considered profit and therefore charged at the same rate at labour costs? If you can do that why charge labour at all? You might as well just charge a fee for the materials and make the labour free.

Postik said:

The customer should have purchased the materials themselves if they wanted receipts for them.  If your husband charged x4 times the amount and "syphoned" off the extra that's his business.  It's called making a profit.  It's also his perogative to earn as much as he possibly can, and the customer's perogative to do their due dilligance (before the job starts, not half way through) and get the best deal for themselves.

In all honesty I think it’s a disgusting tactic. 

Firstly I’ve no issue with people being paid for their time. If they’re spending X hours sourcing/picking up products then they should of course be financially rewarded for this. However the customer isn’t the expert, hence the reason they’re hiring the tradesperson in the first place. Charging them way over the odds for products they know full well the customer knows nothing about is merely taking advantage.

It’s the lack of transparency that’s the main issue though. If they said “I charge a 75% fee on all materials I buy” and the customer accepted that then they’ve really no complaint. If they listed the items they were buying and the customer could do their research that would be better too. However the vast majority keep it as difficult as possible so customers won’t find out.

If a builder said to me “You’ve got 10 square meters of wall to tile, I’ll grab you some nice tiles for that, it’ll be £1000” then I’d expect to have tiles approaching that value. If they then turned up with £10sqm tiles from B&Q and then tried to tell me the rest was their profit I’d be fuming and rightly so. If you’re buying materials for a customer it’s definitely implied the materials will roughly match the price you’re paying. People on here say you should question it first but I can guarantee you if you presented your builder with pages of questions and a request to list every item they’re buying and the price they’d tell you to do one, precisely because they can’t then rip you off.

I’ve no problem with paying a fair price for work but similarly I don’t like to feel ripped off. I’d feel massively ripped off in this scenario. I’d much prefer it if they bumped up their labour charge and kept the material prices as is. At least that’s more transparent. Or just list one price for everything. Even that’s less sneaky.

Threads like this make me glad I don’t hire tradespeople unless I absolutely have to.

I think @Postik's point was that a person's business model is a person's own business model, not that it's a thing to overcharge on materials.  

Just like mine is saying that if you have to do something for one person, you may well do it out of habit for everyone.  

Nobody is transparent about what they pay when they resell. No one advertises their margins.  

You're not supposed to add profit onto invoices for contractors because the materials bill will be compared to the receipts you put through your books.    It doesn't matter so much for consumers.  We're going way off topic here!  

twopenny

There are some people who think if you ask a trade to buy the materials and get them transported to the site that they should just pay the initial price. If they've not been in business they don't understand the time taken sourcing, ordering and transporting in time paid for.

I wonder why she is asking about this? She obviously thinks she is being diddled in some way. Is she over anxious, is someone suggesting without knowing the facts that she should query this?

It happens seldom and I had the same in my small business (quite different work) and even domestically with a neighbour re fence. Still haven't forgiven her for this.

If your husband wants work and a holiday in the West Country I can happily offer enough to pay some of the costs. I have work needs doing and a lot of nit picker prima donna workmen. I'd love to find someone reliable as your husband

Just trying to lighten the load - but it's also true......

I;ve also been in a situation like this where it reduced me to a gibbering wreck because I wouldn't let go - twice. And a builder friend in Oz put the business in jeopardy because of determinedly persuing a bad debt.

I promised I'd never do it again. Just not worth it. He's looking after orangutangs in Borneo now