Paying tradesman by bank transfer

diystarter7

Strombidae said:

My local Council runs a 'Good Trader Scheme' and the very best are awarded a Certificate of Excellence. Might be worth checking to see if your own Council runs something similar? Not foolproof, but might offer a little peace of mind.

No way would I pay a trader 50% upfront by bank transfer.

Hi

Yes, true but not sure if our local council does the certificate. Our council has a list of recommended builders, so worth checking

but be aware it may be at your own risk

Thnaks

DullGreyGuy

comeandgo said:

Only Ltd companies are registered at Companies House so probably sole trader.  Absolutely no way would I part with 50% before he had even started.  A good solid business has accounts with suppliers and pay them monthly after receipt of goods.

No, unlimited companies (like MSE was for a short while before Martin sold) and PLCs are also listed.

Neil49 said:

If the 50% up front is to purchase items for the gardening project, such as slabbing etc then you would be better off offering to purchase it directly from the supplier yourself. If the trader does a runner you at least have the goods. 

I suspect the reason is the same but buying yourself may be notably more expensive depending on the discount they get... depends then if you want to pay 20% more to protect yourself from a scam or take a punt and save money if they are an honest trades person.



Personally I would ask for a breakdown of labour and materials for each of the payments. I wouldnt want to be paying too much labour in advance but at the same time can understand why they wouldnt want to offer me credit terms on the materials.

You haven't said how you selected this company? Ultimately if having the ability to do a chargeback is important to you then shop around... even our street corner hot dog seller and the busker besides him take credit cards now thanks to Zettle and SumUp 

General_Grant

DullGreyGuy said:

comeandgo said:

Only Ltd companies are registered at Companies House so probably sole trader.  Absolutely no way would I part with 50% before he had even started.  A good solid business has accounts with suppliers and pay them monthly after receipt of goods.

No, unlimited companies (like MSE was for a short while before Martin sold) and PLCs are also listed.

Neil49 said:

If the 50% up front is to purchase items for the gardening project, such as slabbing etc then you would be better off offering to purchase it directly from the supplier yourself. If the trader does a runner you at least have the goods. 

I suspect the reason is the same but buying yourself may be notably more expensive depending on the discount they get... depends then if you want to pay 20% more to protect yourself from a scam or take a punt and save money if they are an honest trades person.



Personally I would ask for a breakdown of labour and materials for each of the payments. I wouldnt want to be paying too much labour in advance but at the same time can understand why they wouldnt want to offer me credit terms on the materials.

You haven't said how you selected this company? Ultimately if having the ability to do a chargeback is important to you then shop around... even our street corner hot dog seller and the busker besides him take credit cards now thanks to Zettle and SumUp 

PLCs are listed because they are limited companies - it's what the L represents in Public Limited Company.

What do you mean by an "unlimited company"?

General_Grant

CliveOfIndia said:

It's a tricky one.

As regards the bank transfer triggering account closure, it's something I've seen on this forum a few times, though I've never come across it personally - and I've done quite a few large transfers over the years, paying tradesmen exactly as you describe.

As to the tradesman himself, that's a bit more difficult to gauge.  Firstly, anyone can appear to be "nice", and anyone can get a signwriter to livery up their van.

It's not unusual for a small one-man-band to not have the facilities to accept credit cards.  Paying 50% up front is a bit of a gamble.  On the one hand, any decent tradesman will have credit facilities at his supplier, so shouldn't need you to fund the purchase of materials.  But conversely, look at it from his point of view.  What if he spends a few thousand buying materials for your job, then you cancel at the last minute?  Sure, he may be able to return the materials, but maybe not - and he may face a fee for doing so even if he can return them.

A few things you can check.  Has he done any work for anyone else in the local area?  Can you speak to anyone he's done work for?  That'll give you a better idea than some random reviews online.

Do you know his address - either his home address or a business premises?

In the absence of anything else, if you can at least find out a bit about his reputation locally, that's a start.

Not sure if this is actually of any help to you (!), but just my thoughts.

Self-employed people (even those who are Big Issue sellers) and those with small companies use card readers to take Credit and Debit card payments, paying very little upfront and probably less than 2% as commission.  So probably becoming increasingly unusual not to accept credit cards.

DullGreyGuy

General_Grant said:

DullGreyGuy said:

comeandgo said:

Only Ltd companies are registered at Companies House so probably sole trader.  Absolutely no way would I part with 50% before he had even started.  A good solid business has accounts with suppliers and pay them monthly after receipt of goods.

No, unlimited companies (like MSE was for a short while before Martin sold) and PLCs are also listed.

Neil49 said:

If the 50% up front is to purchase items for the gardening project, such as slabbing etc then you would be better off offering to purchase it directly from the supplier yourself. If the trader does a runner you at least have the goods. 

I suspect the reason is the same but buying yourself may be notably more expensive depending on the discount they get... depends then if you want to pay 20% more to protect yourself from a scam or take a punt and save money if they are an honest trades person.



Personally I would ask for a breakdown of labour and materials for each of the payments. I wouldnt want to be paying too much labour in advance but at the same time can understand why they wouldnt want to offer me credit terms on the materials.

You haven't said how you selected this company? Ultimately if having the ability to do a chargeback is important to you then shop around... even our street corner hot dog seller and the busker besides him take credit cards now thanks to Zettle and SumUp 

PLCs are listed because they are limited companies - it's what the L represents in Public Limited Company.

What do you mean by an "unlimited company"?

Ltd is explicitly private limited companies not PLC which is Public Limited Company hence the different capitalisation.

Unlimited companies are exactly what they say on the tin (https://en.wikipedia.org/wiki/Unlimited_company)... where the shareholders take on unlimited liability. The one benefit is you dont have to publish your financial results which is why Martin took MSE from a Ltd to a Unlimited company when it got a bit embarrassing how much money he was making from being a consumer champion. 

Pre 1856 all companies were unlimited and you had to get comfortable with an organisations state of being by the names of the people financially back it. Post that limited companies were created where the company could stand alone from the shareholders. This encouraged investment because your liability was capped but the tradeoff was the company's performance became public record. With many pre 1856 companies you'll find their name is X & Y, like Fortnum & Mason where one was the businessman with an idea (William Fortnum) and the money man (Hugh Mason) 

eskbanker

General_Grant said:

Self-employed people (even those who are Big Issue sellers) and those with small companies use card readers to take Credit and Debit card payments, paying very little upfront and probably less than 2% as commission.  So probably becoming increasingly unusual not to accept credit cards.

Personally I think there's a distinction between a Big Issue seller (who knows that they'll process far more of their high-volume low-value transactions if they can accommodate those who carry little or no cash) and a tradesman who has plenty of work coming in and prefers the flexibility of whether or not to declare it!

grumbler

eskbanker said:

The only posts I've seen about bank transfers and account closures relate to inward transfers, i.e. those where a another party has paid into your account and then claims that there was some fraud involved, thereby triggering checks by the recipient's bank.  Has anyone claimed account closure after making payments by bank transfer?

It was freezing, not closure recently. Barclays - and a payment for some kittens was one of possible reasons.

Zanderman

General_Grant said:

CliveOfIndia said:

It's a tricky one.

As regards the bank transfer triggering account closure, it's something I've seen on this forum a few times, though I've never come across it personally - and I've done quite a few large transfers over the years, paying tradesmen exactly as you describe.

As to the tradesman himself, that's a bit more difficult to gauge.  Firstly, anyone can appear to be "nice", and anyone can get a signwriter to livery up their van.

It's not unusual for a small one-man-band to not have the facilities to accept credit cards.  Paying 50% up front is a bit of a gamble.  On the one hand, any decent tradesman will have credit facilities at his supplier, so shouldn't need you to fund the purchase of materials.  But conversely, look at it from his point of view.  What if he spends a few thousand buying materials for your job, then you cancel at the last minute?  Sure, he may be able to return the materials, but maybe not - and he may face a fee for doing so even if he can return them.

A few things you can check.  Has he done any work for anyone else in the local area?  Can you speak to anyone he's done work for?  That'll give you a better idea than some random reviews online.

Do you know his address - either his home address or a business premises?

In the absence of anything else, if you can at least find out a bit about his reputation locally, that's a start.

Not sure if this is actually of any help to you (!), but just my thoughts.

Self-employed people (even those who are Big Issue sellers) and those with small companies use card readers to take Credit and Debit card payments, paying very little upfront and probably less than 2% as commission.  So probably becoming increasingly unusual not to accept credit cards.

But still very normal, in my experience with electricians, builders and similar over the last 18 months, to default to bank transfer.  They finish the work, and then they send you the invoice. A card reader would require them to be present - but the invoice is sent by email days after the work is finished.  So bank transfer is suggested and works fine, as long as you're careful with the details!

The small trader using a card reader - which is more and more frequent - is going to be using them for face to face payments, whilst still on site.  Some readers (like SumUp, which we use) do have an option of a virtual terminal, so you can take card payments from a client over the phone. 

Actually garden contractors we've used (within the last 2 years) seem to prefer cash.

trient

Zanderman said:

But still very normal, in my experience with electricians, builders and similar over the last 18 months, to default to bank transfer.  They finish the work, and then they send you the invoice. A card reader would require them to be present - but the invoice is sent by email days after the work is finished.  So bank transfer is suggested and works fine, as long as you're careful with the details!

The small trader using a card reader - which is more and more frequent - is going to be using them for face to face payments, whilst still on site.  Some readers (like SumUp, which we use) do have an option of a virtual terminal, so you can take card payments from a client over the phone. 

Actually garden contractors we've used (within the last 2 years) seem to prefer cash.

I have no qualms with bank transfer upon completion - plumber and sparky were fine - just that the jobs were lower value (£ hundreds rather than thousands) and most of the work was labour so I guess harder for them to justify asking for a deposit.  I just don't have prior experience with garden works and was not sure if 50% deposit was the norm, it sounds like it isn't.  Yes, I would have rather expected cash on completion (with maybe a payment mid-way), but charging so much up front triggered alarms.

trient

DullGreyGuy said:

Neil49 said:

If the 50% up front is to purchase items for the gardening project, such as slabbing etc then you would be better off offering to purchase it directly from the supplier yourself. If the trader does a runner you at least have the goods. 

I suspect the reason is the same but buying yourself may be notably more expensive depending on the discount they get... depends then if you want to pay 20% more to protect yourself from a scam or take a punt and save money if they are an honest trades person.

Personally I would ask for a breakdown of labour and materials for each of the payments. I wouldnt want to be paying too much labour in advance but at the same time can understand why they wouldnt want to offer me credit terms on the materials.

You haven't said how you selected this company? Ultimately if having the ability to do a chargeback is important to you then shop around... even our street corner hot dog seller and the busker besides him take credit cards now thanks to Zettle and SumUp 

Works consist in removing some plants with an excavator, laying new lawn and some top soil and building some raised garden beds. He wasn't keen to do a breakdown so no idea how much he needs to pay up front himself (for renting the skip and digger, buying sleepers and soil etc) and I imagine it won't be cheap but as others said I'd expect him to have credit terms and not have to charge me thousands well in advance before the works start.

We found the company (well, "company") on Yell. They're not from the local area, maybe that was a mistake to start with.

The ability to chargeback was just one way of doing risk management I thought.  Trust needs to be mutual but risk management has to be sensible on both sides.  For me 10% deposit sounded right - after all he knows where I live.  Or I could pay more if I would get some level of protection, so credit card for chargeback, or MCOL? though not sure whether/how well it works for sole traders.

Again hoping for the best but having to plan for the worst as well.