SHOP OWNERS, how do you bill your customer?

I've been reading many posts lately about shops billing for hours worked, shop rates, etc. but what I'm wondering is on big jobs HOW do you bill your customer for the big jobs? I've got a pretty big job going right now, that I started back in November, and thankfully the guy is very understanding of my situation, and is in no hurry for his car....needs it for the second weekend in Aug. I asked for 1/2 of the ESTIMATED total up front, and asked for any parts I purchase be paid for as I buy them, and the final 1/2 of the cost paid in full when the car is finished.

Well, it is working out soo far but what I'm starting to realise is by the time I have the car finished, the money that was collected at the beginning of the job will have been spent, and until the car is finished I'm not going to be able to collect for the hours I'm working on it to finish it. I'll be able to do other jobs to keep money flowing, but what I'm wondering is how do all of you who have shops doing jobs that will be taking several months to complete bill for them?

I'm thinking the next one I get I'd like to go with 30-50% up front, and that I will bill him monthly for the hours worked during that period. Does this sound logical? Is asking for 30-50% up front wrong or unfair? What about billing either weekly, bi-weekly, or monthly for hours worked during that time period? Would that be asking too much? Is charging a certain % up front, then a certain % half way through, and the balance when completed a better way?

I know that there is a "cushion" of money in the bank to help carry over short times, but if a guy can bill on a regular basis then he would not have to always carry the job until it was finished. If this sounds like a dumb question being asked by someone who doesn't know **** about running a shop, you are right. I got laid off last year, and have decided to try and see if I can make it on my own. I have two buildings with just over 4000 sq. ft. of space. I've been doing work on the side for 20+ years and have a pretty good customer base even though I was never a "real" business until now. Yeah I know...this is why a guy should take business cl***es etc before jumping in. In my defense, I was pushed!!! just kiddin.

If any of you guys would care to share your billing schedules it would be greatly appreciated. Same goes for guys who have shops do work for you, how are you billed for the work you get done? If you do not want to share it with the world, you could PM or email me if you'd like. Sorry for the long post...

Thanks in advance, Al
a.k.a 333 Half Evil

 

For big jobs we take an upfront deposit of $2000- that will be applied toward their last invoice. Then we bill every two weeks for labor, supplies and parts. We also have working agreements signed so the customer knows our policy.

 

Welcome to the business world and the world of contracting. It doesn't matter if you're building a car or remodeling/building a house.

It sounds like you've put yourself in a position to finish the job as soon as possible to collect the rest of the money. You didn't expect to collect money while not working on the project did you?

If the parts are paid as you go and not part of the estimate the only thing left is labor. If the job takes longer than you estimated you don't make as much money as you planned on.

The best thing for you to do with future projects is use your experience from this project and adjust your periodic payment schedules to suit your needs.

I will offer this. As tempting as it is especially in troubled times, DO NOT take huge up front deposits. Because you already have your money, huge up front deposits or worse yet paid in full in advance take away a lot of incentives to do a job and do it well.

There's nothing more anti-climactic than turning over a finished project and not collect a dime from it (because you've already been paid and the money was spent long ago).

 

ive always built my cars then sell them,my stress levels would be through the roof otherwise.estimating my time to do a job would be guessing on my part ,and the pressure to rush through a job would probably make me an unhappy camper.like was said if you can take a deposit for supplys and bill monthly you are on a level playing field with your customers , you will prob enjoy the work more.

 

We were doing the whole parts paid up front and settle the labor at the end of every month. That now doesn't seem to be working. I spend to much time chasing down people to pay their bill. At this point we are going towards a bigger deposit that will apply to the last invoice. It ****s but people put this stuff as their last priority or just don't take it seriously.

 

An estimate is just that, a statement of the approximate charge for work to be done. I make sure I explain that. Now if I give someone a quote that is a different story. If I give them an estimate it can end up costing more. If I give them a quote then as long as they don't change anything the price stays the same. They are not interchangeable.

 

i do bi- weekly billing for the locals and monthly for the long distance customers.. same for parts-materials..usually don't take much of a deposit just enough to keep them serious..just stay honest with your hours. take pictures and keep in touch with your customers ..from experience stay away big deposits it makes you lazy and the job takes too long hope this helps

MIZERVILLE KUSTOMS

GREAZY HUBCAPZ CC EAST TN

 

Not too big on deposits.If I take one I put the money in a savings account and draw on it when I bill. This will keep your head straight.

I bill off of a time clock on the 1st and 16th. The invoice is due when they recieve it. If they don't pay me the most I am out is two weeks work.

 

Thanks for the input guys. I have a lot to learn, but think I can do it!! I never thought to apply the deposit to the final bill, but that does make sence. I definiatly do not want to have myself always in the position to have to hurry the work to get the final payment, as quality would begin to suffer and that to me is unacceptable. One thing I want is quality work and happy customer.

How much time to you give your customers to pay thier bill before you stop working on thier car? I have a buddy that gives 10 days to pay before he stops work, and after 30 days the car gets put into "storage" and he then starts to charge a storage fee, currently $5.00/day until payment is received. You never want to get into this situation, but I'm sure it will/does happen, so how do you deal with it in your shop?

I do want to thank you guys again, every bit of advice I can get is appreciated. Al

 

I've often thought of an escrow account that can be drawn on at each billing cycle. But the banks seem to want to make this harder than it needs to be. A buddy told me he has them open a credit card with a limit to cover the build and just charges it every billing cycle. He does nothing but high end stuff and it works for him. I don't know if some of my customers could do that.

 

My take on the subject as a customer: I deal with a shop that does detailed email billing on parts and labor twice a month. Also get progress photos. The professionalism of the business side of this shop instills a lot of confidence in the craftsmanship of the builder.

 

When I was running my shop I had a standard policy for long term projects. I had a small shop (4 car) so my policy was nessasary. I never took up front money except for major part purchases. They would be billed at the first of the month for labor and any minor parts/ materials. If I was not paid by the 5th, work stopped and storage fees of $25 a day would start (no outside storage). If they ever went past 10 days as soon as the bill was paid they would be told to take the vehical out of the shop, no need to fight to get paid, make room for a customer who could pay on time.
I always knew up front their budget so I wouldn't shock, kill them at the end of the month, to be a "long term" project they HAD to agree to a minimum of $1000 labor per month to earn a space in the shop. I always had a bay open for small "quicky" jobs that came and went, those cars had 2 days to be paid for and picked up or storage would start. All of my customers understood my terms, when your a small shop every foot has to be making money, couldn't afford to "store" cars while the customer tried to raise money. Only a couple times did I have to file lien charges to get paid and I got use to being paid once a month, by the time I collected monthy charges from the 3 big projects I'd have enough to take me thru the month, the quickys were just gravy money.
One last thing, I NEVER worked off of a quote unless it was a small job that I knew exactly how long it would take. I would sometimes give guesstaments for budgeting reasons but everything was billed by the actual time worked, too easy to be optimistic about how long things would take then surprises would kill you. Luckily I had a reputation of being very fair with my hours so most of my customers were good with that, if they wern't I let them go elsewhere.
In this town there seems to be a real problem with shops taking big deposits, spending the money before the work is done, can't afford to keep working on the car with no more money coming in so they take another job, do it again. Preety soon they have a shop full of cars, no money to work on so they go belly up, screwing all the car owners out of thier deposits.

 

Weekly, nothing more. You can fast outstrip the best bank accounts with two guys putting in 40 hours a week plus parts. Plus, you will NEVER get them in each week. sometimes it will stretch out giving MORE time for the bill to add up and a **** pucker moment when they see it.

Only other way is to agree on set increments, say $2000.

Always bill fairly, take copius digital picture to back up your billing. The guy won't believe you that "restored" car he brought in had CEMENT in the rear seat riser (right zman)?!

 

^^^^^^that's the way it goes around here too.

Big deposits are a business killer IMO.

breaking long term projects down into a list of smaller jobs, and billing for each FINISHED task has always worked for me. Customers seem to work better too, with a bunch of small bills instead of a few large ones.

 

i never take money up front thats what killed my first shop lesson learned. it took me over a year to pay back the debt after i shut down the shop but i paid back every dollar. now i bill my customers weekly parts and labor. if you don't have the money to pay for the customers parts up front you may want to consider doing something else because it will be a matter of time before the doors are closed for good.

just a life lesson from me.

 

LOL, there is always something that will surprise you on a car.

I take tons of pics. I tell the guys to take pics. I show them to the customer. They still don't get it sometimes.

I'm presently dealing with a "it's ready for paint" car. It wasn't. I told him what the paint would cost. We then had to strip it bare metal, rebuild the door hinges, align the doors to the body, then the front end to the doors. Patch a ton of rust that was mudded over. New quarters and the rot underneath. He's moaning about it and the price I gave him. I told him that was for the paint portion but all this is beyond that. I also gave him the option of we either do it right or it can go elsewhere. After we finish what we promised so far he is fired. It's not worth the headache.

 

In my biz- there are laws pertaining to deposits. (I own a Plumbing & HVAC shop)
Max is 10% or $1000.00, whichever is less. This is before any work starts. After that- it's progress payments until completed. At no time do we bill for more than the work that's been done. Maybe it's different in the auto shop world.
As a customer, a 50% or more deposit would be a red flag for me. Are these guys working on a shoestring here? Need my money to pay for another job? Nope. No upfront money from me. Do they have open accounts or are running on COD? If they have open accounts, then they don't need the money upfront for materials. IMO- you need to be solivent enough to cover your costs upfront.

I've taken my car to several big hot rod shops over the years. No deposits, billing every 2 weeks is how it was done.

 

These are always good threads.Everybody and their situations and cir***stances are different but in a lot of ways the same.When this many people give their side of the story,we all learn something.

 

With this particular job, my customer was going on vacation from nov. thru march. He was going to be traveling and it would be difficult for me to bill him regularly. He suggested paying for it all up front, and that kinda scared me for the simple fact if something came up(suprise) then maybe I would be stuck and not able to collect? So I decided on the 1/2 down, and 1/2 when project is finished. I did email him pics of progress and he has since decided to have me do even more than originally agreed upon, and he called me to tell me we can go over that when he gets back and at that time discuss costs. Like I said earlier, he is a very understanding guy, and knows I'm starting out after being in a very tight financial spot after some bad health last year and being laid off.
I've decided I'd want to try going on my own and do my best to make it. That is why as I'm going through this I thought I'd ask these questions and hopefully get an idea of what would be a better way to structure my billing to not only benefit my customers, but help keep an average cash flow through the shop. I like the idea of billing hours as they are worked, makes sence on both my end and the customer as the bill be it every week or two weeks is not a shocking as a big bill all at once. Just from what I'm reading and thinking, I'm leaning towards a two week billing schedule, and a deposit will be required more for security than anything else. If a guy commits to a deposit, it will proove they are commited to finishing thier project. If a guy doesn't want to put down a deposit, what will keep him from backing out? I'm not saying the deposit would be huge, not half, but say 20%. The deposit to be applied to the final billing. If they decide to stop or back out, the deposit will at least help cover the time from the last bill that was paid to the time they decide to stop.

This is great guys, keep it coming. I'm glad that there are guys willing to give advice based on thier own experiences, and give information on how they are running thier bussiness, be it in success or in failure. Thanks again guys.