Why You Should Get Deposits

For many years I didn’t get any money from customers until the completion of the job. I viewed this as a sign of honesty and a way to develop trust. It may have worked that way some of the time, but it also left me vulnerable to the whims of my customers.

For example, we would get to the end of the job and have a door to paint. The customer couldn’t make time to be home for us to paint the door, so the job was not completed. He would then refuse to pay us anything until the door was painted, yet he wouldn’t provide us access. He basically had us over the barrel.

We also had lots of situations where we scheduled the job, ordered materials, etc. only to have the customer back out at the last minute. We were stuck with materials that we might not use, as well as a hole in our schedule.

We now get deposits. If a customer wants us to make a commitment to their project, he should be willing to make a commitment to us. A deposit shows that he is serious.

Deposits (and progress payments) do more than show that the customer is serious. They also provide us with steady cash flow. If I have 3 $10,000 jobs going on, those progress payments make it much easier to pay my expenses.

I have a deal with my banker. He won’t paint houses and I won’t finance painting projects.

© BEP Enterprises Incorporated 2008