Paying upfront - what is reasonable?

[skyflyer]

Last year we ordered £3000 worth of kit at the Raymarine stand at the LBS, and paid in full there and then. As we subsequently found out, we weren't actually buying direct from RM but from a dealer that helped them staff the stand.

3 weeks later that dealer went bust and we received nothing. Fortunately as some (not all) of the purchases had been paid for by credit card and as RM took an 'enlightened view' we were able to minimise the loss.

However after that experience I said never again would I pay up front for later delivery/manufacture unless by credit card.

I have now fallen foul of that promise to myself with an order for some custom made items from a small company (with an excellent reputation, but it is small - not even VAT registered) that wants 50% deposit with order but does not offer credit card facilities.

I have made the point that if Comet can go bust anyone can go bust; indeed RM would not have chosen anyone they thought as being in financial trouble to help staff their stand. Once bitten twice shy and all that.

The business owner is basically saying in that case he doesn't want the work. Fine - you say - go elsewhere then. However most other businesses providing the same service are also small and would require 50% deposits and wouldnt have credit card facilities

I dont think the actual cost of materials is more than maybe 25% of the total cost so what is to be done?

I have found an escrow service https://www.trustedfriend.com that charges a flat £3 fee (which i would be happy to bear). Is it unreasonable to expect the tradesman to agree to use this service.

I feel that he has taken umbrage that I am effectively calling his financial health into question, but I see that as no different than his asking for a 50% deposit - I take no offence at that, I just want my cash protected!

I'd be interested in others views. I have deliberately not said whatthe item of equipment in question is as I dont wish anyone to speculate on which company it is. Until we hit this impasse I was highly impressed by their level of service and if I can resolve this problem I very much wish to use them so i dont want to bad-mouth anyone here!

Thanks for any advice.

 

[sailor211]

You could ask for
1. Note stating you own material and work done.
2 personal guarantee.

 

[claudio]

If its custom work 50% down payment is justified. He is investing in materials and time to produce the goods. If he didn't take a down payment, the risk is all his. He may have had a similar experience to you, and not been paid. He won't find it easy to resell the custom parts.

I would rather do business with small companies, they survive by their reputation and generally provide very good workmanship.

If I were you, I would ask him to agree a delivery date, if he fails to deliver then the small claims court service is very cheap and very quick.

He certainly would not a county court judgement against his business.

 

[skyflyer]

Claudio

You miss the point; I am happy to pay not just 50% but 100% up front. I am sure he will do a good job and deliver on time - if he stays in business!

The point is that if he goes bust then I lose what i have paid and have no come-back. Of course he says he is not about to go bust - so did the MD of Comet a week ago!

He says he wont go bust - I say I won't go bust (ie I will pay him).
This 'mexican stand-off' could be solved if he took credit cards - he doesn't!


If he goes bust the Small Claims Court will get me nothing - you cannot get blood from a stone.

So the problem is not the principle of paying a deposit, its the matter or protecting my deposit.

No established business worth it's salt runs on such a shoestring that it NEEDS to be financed to the tune of a few hundred pounds for materials. If it does, then I have good reason to be worried.

If it does not, then his concerns are not about having the funds for materials but whether I am going to 'stiff him' for the balance.

 

[Pete7]

What about using one of those cheques the credit cards send you every so often. He cashes it and you have the debt on a credit card so are covered.

Pete

 

[David2452]

What about using one of those cheques the credit cards send you every so often. He cashes it and you have the debt on a credit card so are covered.

Pete

Those cheques do not carry the same protection as a card payment from the same account. I am in a similar position in not taking cards but have found a way around it that protects everybody but does cost a little. I use my paypal business account to send a paypal invoice where customers can, or will, only pay by card, the customer can then pay the invoice with a card without even having a paypal account, if the OPs man opened such an account it may help him get business which he might otherwise not get in the future too.

 

[Richard10002]

How much are we talking about? Why not tell us what it is you're buying - maybe somebody will know a supplier who takes credit cards.

Sometimes, you just have to take a chance, or not buy what you want

 

[claudio]

Claudio

No established business worth it's salt runs on such a shoestring that it NEEDS to be financed to the tune of a few hundred pounds for materials. If it does, then I have good reason to be worried.

If it does not, then his concerns are not about having the funds for materials but whether I am going to 'stiff him' for the balance.

The point is that you are asking for a custom part that is only of any use to you. I don't suppose that he has checked your credit history, most small businesses wouldn't, but he doesn't know anything about you. He has to judge whether or not you will pay. The only way he can do this is to use his experience. The other businesses would ask for 50% advance so it seems that this is standard procedure.

I have no idea of the value of the order, most large custom orders are charged on a time and materials basis, i.e. stage payments.

If it is a small order and you believe the material costs would be around 25%, can't you offer to 'deposit' the 25% against material costs, then get a receipt stating that the materials have been paid for and belong to you?

If it is getting to that stage where you don't trust each other I would walk away.

 

[emnick]

Payments

What about PayPal ? There is ome protection there, you might have to pay a little (lot) for their service though.

 

[Rigger Mortice]

The danger is that you are going to foul up any relationship with your supplier before you have even started.

He is probably asking for 50% up front not because he needs the cash to keep going, but because he has been messed about by slow/non payers in the passed. 50% is fair for both sides.

You need to decide either to just go ahead or to pull out.

 

[BarryH]

" if he stays in business!"........do you expect the company to go out of business.
Put the boot on the other foot. Maybe he's thinking "can this guy really afford it, maybe I should cover myself"

 

[skyflyer]

About £800 altogether.

To be honest I am inclined to walk away - having nearly seen £3000 paid to a "cast-iron" supplier go up in smoke last year - and for several weeks I thought it had been lost - I am in no mood to repeat the experience.

The 'next best' supplier (actually slightly less expensive) also asks for a 50% deposit but does take cards.

The irony is that my preferred supplier was the only one to come and spend quite some time with me on the boat (from which it should be obvious, by the way, that we keep it in good condition and are not averse to paying out money to keep it that way). He made several good suggestions about how to do the job which I can of course pass on to any other supplier but I thought the fair and decent thing to do was to offer him the job as he had come up with the ideas and spent the time with me looking at numerous options!

Times are hard (he even mentioned he had not had the normal rush of orders he expects at this time of year) and of course if I pay 50% and there was a hitch, who realistically am i going to get to finish off a job that he hasn't finished or may not even have started - no my 50% will be history!

The company seem sound, they have been around for a while, he assures me there will be no problem and I'm 95% certain there wont be - but would you be prepared to bet £400 at those odds.

I have now suggested the escrow service, which I will pay for - if he doesn't want to take that offer then I reckon he has me pinned down as "difficult" and probably we are better not doing business.

What irritates me is that (suppliers in general) seem happy to doubt the customer's integrity or ability to pay whilst expecting them to accept their own assurances of financial probity. Why should one be more reliable than the other?

the trouble is that a suppliers reputation is based on his ability to do a good job, on time and within budget. No account is taken of whether they are or will remain profitable!

Past performance is no guarantee of future performance either!

Thanks for the thoughts and input, anyway.

 

[sailorman]

About £800 altogether.

To be honest I am inclined to walk away - having nearly seen £3000 paid to a "cast-iron" supplier go up in smoke last year - and for several weeks I thought it had been lost - I am in no mood to repeat the experience.

The 'next best' supplier (actually slightly less expensive) also asks for a 50% deposit but does take cards.

The irony is that my preferred supplier was the only one to come and spend quite some time with me on the boat (from which it should be obvious, by the way, that we keep it in good condition and are not averse to paying out money to keep it that way). He made several good suggestions about how to do the job which I can of course pass on to any other supplier but I thought the fair and decent thing to do was to offer him the job as he had come up with the ideas and spent the time with me looking at numerous options!

Times are hard (he even mentioned he had not had the normal rush of orders he expects at this time of year) and of course if I pay 50% and there was a hitch, who realistically am i going to get to finish off a job that he hasn't finished or may not even have started - no my 50% will be history!

The company seem sound, they have been around for a while, he assures me there will be no problem and I'm 95% certain there wont be - but would you be prepared to bet £400 at those odds.

I have now suggested the escrow service, which I will pay for - if he doesn't want to take that offer then I reckon he has me pinned down as "difficult" and probably we are better not doing business.

What irritates me is that (suppliers in general) seem happy to doubt the customer's integrity or ability to pay whilst expecting them to accept their own assurances of financial probity. Why should one be more reliable than the other?

the trouble is that a suppliers reputation is based on his ability to do a good job, on time and within budget. No account is taken of whether they are or will remain profitable!

Past performance is no guarantee of future performance either!

Thanks for the thoughts and input, anyway.

This chap has spent time with you in good faith,offered you constructive suggestions & you still don't trust him & are prepared to steal his ideas.
you Sir have a strange way of working.
i have taken delivery of expensive items from forumites prior to payment, i have also done the same to others, its all down to trust.

 

[skyflyer]

do you expect the company to go out of business.

Not specifically, but it is a small company and nobody expected Marine Electronics Ltd, Comet, Plastimo, JJB Sports, Habitat, Oddbins, ...... need I go on?

He is probably asking for 50% up front not because he needs the cash to keep going, but because he has been messed about by slow/non payers in the passed. 50% is fair for both sides.

I have offered to pay 100% up front if a way can be found to protect my deposit. 50% up front wont guarantee the last 50% if I am that type of person.

The more i think about it the more I am inclined to walk - unless you have had that sinking feeling of having just lost £3K you probably wont understand my nervousness

 

[dt4134]

About £800 altogether.

To be honest I am inclined to walk away - having nearly seen £3000 paid to a "cast-iron" supplier go up in smoke last year - and for several weeks I thought it had been lost - I am in no mood to repeat the experience.

The 'next best' supplier (actually slightly less expensive) also asks for a 50% deposit but does take cards.

The irony is that my preferred supplier was the only one to come and spend quite some time with me on the boat (from which it should be obvious, by the way, that we keep it in good condition and are not averse to paying out money to keep it that way). He made several good suggestions about how to do the job which I can of course pass on to any other supplier but I thought the fair and decent thing to do was to offer him the job as he had come up with the ideas and spent the time with me looking at numerous options!

Times are hard (he even mentioned he had not had the normal rush of orders he expects at this time of year) and of course if I pay 50% and there was a hitch, who realistically am i going to get to finish off a job that he hasn't finished or may not even have started - no my 50% will be history!

The company seem sound, they have been around for a while, he assures me there will be no problem and I'm 95% certain there wont be - but would you be prepared to bet £400 at those odds.

I have now suggested the escrow service, which I will pay for - if he doesn't want to take that offer then I reckon he has me pinned down as "difficult" and probably we are better not doing business.

What irritates me is that (suppliers in general) seem happy to doubt the customer's integrity or ability to pay whilst expecting them to accept their own assurances of financial probity. Why should one be more reliable than the other?

the trouble is that a suppliers reputation is based on his ability to do a good job, on time and within budget. No account is taken of whether they are or will remain profitable!

Past performance is no guarantee of future performance either!

Thanks for the thoughts and input, anyway.

Look at it from his point of view. He may well have been bitten in the past too. If he splashes out on materials and time and receives no payment it'll take him the profits from a few more jobs to recover that.

Perhaps consider how much you are prepared to risk on him, given that he seems to have demonstrated expertise in a satisfactory way, and discuss a mutually acceptable deposit.

I don't think you're going to get the job done without you and your chosen supplier trusting each other to some extent. Protection from using a credit card is one thing, but what reduction in the professionalism of the supplier are you willing to accept to get that?

 

[claudio]

Not specifically, but it is a small company and nobody expected Marine Electronics Ltd, Comet, Plastimo, JJB Sports, Habitat, Oddbins, ...... need I go on?

You have quoted large companies, it will have been no surprise to the 'management ' , they will have known for months.

There are no real guarantees, the escrow company that you mentioned in an earlier post can take you money and go bust too!

If you don't think the company is honest, why are you hanging on ? just walk away and find somebody that you can trust.

 

[skyflyer]

This chap has spent time with you in good faith,offered you constructive suggestions & you still don't trust him & are prepared to steal his ideas.
you Sir have a strange way of working.
i have taken delivery of expensive items from forumites prior to payment, i have also done the same to others, its all down to trust.

And you sir have an extraordinarily one sided view of things!

I dont think - and have never alleged - he is going to run off with my money!

Many businesses - especially small businesses - aren't that clued up about their financial health. An unexpected bill, tax demand or someone else failing to pay their bill can rapidly run a business into crisis. (I believe that being 'stiffed' on a job they did, meant that Marine Electronics - from whom we bought the nav kit - was suddenly unable to pay the last quarter's VAT bill and suddenly - bingo - he's insolvent and legally required to call in the administrator who stopped them trading)

Frankly you have a bloody nerve going on about good faith - I am happy to pay the entire bill, 100% up front - if we can protect the deposit - how much good faith do you want?

I could have "stolen his ideas' as you put it and gone for the cheaper supplier but IN GOOD FAITH I didn't, I wanted to give the work to this guy, even at greater cost.

IN GOOD FAITH I have offered to pay for an escrow service.

I have - like you - trusted people in the past. but I spent a lot of time with Martin from Marine electronics last year and IN GOOD FAITH - because he was a nice guy, he spent time with us, we ordered not just RM kit but some other electronics from different manufacturers through him, IN GOOD FAITH even though we could have bought a bit cheaper if we had picked them up from other exhibitors.

This potential supplier has visited my boat - which has been at the same marina for ten or more years. Clearly we pay our bills. Clearly we maintain the boat and if not - well there's a bloody boat to sell!

so where "sir" exactly is his show of good faith?

 

[Resolution]

Trust

An awful lot of business transactions necessarily involve some risk to the participants. If no one trusted their counterparts then not much would be done.
In your case you have had one bad experience which is a pity. If you let this colour all your future transactions then you are either going to wind up a nervous wreck, or commercially paralysed.

From the point of view of the maker of this bit of kit you want to commission, it seems you are wanting him to make something special which he probably would find hard to sell quickly if you back out after he has started. He is being perfectly normal and businesslike to ask for a deposit. If the kit is special and being made to your order, then you can I believe have a lien on it, in the event of his business going bust before you receive the goods.

 

[skyflyer]

You have quoted large companies, it will have been no surprise to the 'management ' , they will have known for months.

There are no real guarantees, the escrow company that you mentioned in an earlier post can take you money and go bust too!

If you don't think the company is honest, why are you hanging on ? just walk away and find somebody that you can trust.

I really despair - its not about his honesty. He can be the nicest, most honest, most competent person in the world and go under.

Whereas it IS about my honesty from his point of view - I cant be trusted to pay the bill, despite obvious signs that I dont welch on my bills - as we seem to be agreed that he doesn't really need the money for materials.

Even though I am prepared to pay 100% - so long as it is protected.

Anyway _ i get the flavour of the posts here, thanks. Most people seem to think i should just pay the 50% in cash and take a chance and if I won't, to walk away.

I'll walk - thanks.

 

[Lakesailor]

Sell your 1/3rd share and take up bowls.

Less risk