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Commercial Account Subcontracting Question

Discussion in 'Commercial Snow Removal' started by BPPlowing, Nov 14, 2013.

  1. BPPlowing

    BPPlowing Junior Member
    Messages: 8

    This is a first year we are going to sub to keep all our vehicles in use for the snow season and employees. We found a local guy who has a bunch of home depot, lowes, toy r us, kohls. We are doing both per push and seasonal contracts but my concern and question is that on the season contracts, is it standard to have payments on installments with net 45 from invoice dates. I am concerned because we are responsible for all salt, fuel, payroll until then and our first payment wouldn't be until January. The pay isn't horrible (of course we are subs) but my concern is about not collecting payment or getting ripped off. We tried doing a little research on the company as well which we cannot find, unlike most local companies including ourselves. Just need to know if this is standard. And if not is there anyone in the Chicago area that wants to add a few teams to some accounts that we could sub. Like I said this is new as we normally have several large accounts but this year hasn't been to well or promising because I think a lot of these companies are bidding very low.
  2. BC Handyman

    BC Handyman PlowSite.com Addict
    Messages: 1,838

    45 days is pretty common for commercial work.
  3. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    This were a credit line comes in handy,you need to take of your people even if your not paid.But don't give this guy to long of a leash
  4. Mick76

    Mick76 2000 Club Member
    from Maine
    Messages: 2,157

    Welcome to commercial plowing! Yup you are going to wait that long to get paid (if not longer)....and FYI management companies don't like subs hiring subs....cya and make sure its ok (get it in writing) to sub on the lots you do
  5. Wilnip

    Wilnip Senior Member
    Messages: 583

    Let me go a little further with the comments that we already made. All the properties you mentioned are handled by National Maintenance Companies. They give prices to the corporate office of these major retailers for snow removal and landscaping. Then they take bids from schlubs like us to do the work. A lot of those accounts are handled thru USM. They pay 45 days after the invoice is received. After the first check is received, the contractor receives a check every 30 days, but it's still on a 45 day old invoice. The fella you are going towork for decided he's not going to pay you until he gets paid from the maintenance company. Kinda crappy for the sub, but nothing illegal about it. I didn't do that to my subs, I paid them in 15 days.

    In these contracts with maint. co it says that the contractor is not permitted to have subs work on the properties. It happens all the time, though. I think the risk is on the contractor, not you on this matter. I would discuss it with him though.

    See if he will pay you sooner. Even 50% in 15 days and remainder in 45. I would not want to put my expenses on a line of credit because that cuts into the little bit of proffit margin you have. Or talk to other contractors who have better payment policies.
    Good luck.
  6. Tiflawn

    Tiflawn Member
    Messages: 45

    It is a chance you should not have to take. If this is a sub for a management company you will have to wait till he gets paid. You do not know what agreement he has with the national that has the contract. If it is a management company you are talking about, you probably had to sign a vendor agreement. I turned down the two Lowes I have plowed for 9 years and 3 years because the new management company wanted me to sign a vendor agreement that stated 1) 2 year no compete clause. ( the nationals do not need to put this in the contract. If the big box stores are using nationals, they will not hire you outright anyway.)
    2) any slip and fall and they retain all money owed until case is settled. 3) Pay schedule of Jan 15 for first payment. 45 day net. I do not want to hear that this is industry standard. I plow Walmarts, they are 15 day net.
    I plow 9 other medium to large commercials. They are 30 net. We sign no vendor agreements, no none compete clause, no hold payments if there is a slip and fall. That's why we carry $3,000,000 coverage. Nationals are, for the most part, brokers. They take their large cut and give you the crumbs. We as contractors should stick to our standards, not theirs. The new sub that is working our old Lowes has not showed at the last 2 salting events ( 11/13 and 11/12. ) They are 1 hour and 40 min away. No one in our area would sign the nationals contract. The contractors with the equipment are the "tools" of our industry. Our industry is breaking and needs to be fixed. If you take on work that you normally wouldn't, just to keep busy, If you lower your pay scale just to keep busy, If you have to lower your standards just to keep busy, its time to rethink why you are in business in the first place. We should be the leader in our industry, not be on a lead. As far as a line of credit, they are okay as long as YOU get paid and get paid on time. I'll shut up. Just got to rant. I have earned that right.
  7. Tiflawn

    Tiflawn Member
    Messages: 45

    All good points.
  8. erkoehler

    erkoehler PlowSite Veteran
    Messages: 3,252

    What company are you working for? Maybe someone here has heard of them, or message me I'm in the same area.

    Seasonal payments for us are broken in to 4 installments November, December, January, February and all due on the 15th.

    Must be paid prior to starting service in November.
  9. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    What I should of said was, a credit line is good for a company,Doesn't mean you need to use if you have money on hand to pay your subs. Worst thing that can happen is not pay them,because the next time it snows they may not show up so any minor interest paid on your credit line will be worth it compared trying to find some one in a snow storm.
  10. leigh

    leigh PlowSite.com Addict
    from CT
    Messages: 1,968

    Wouldn't it be nice if the national got the line of credit themselves and paid there vendors 1st of every month. One can only dream!
  11. buildinon

    buildinon Senior Member
    Messages: 583

    What company are you looking at subbing through here in the Chicagoland area? I am in the Northwest Burbs as well and have been around the block a few times. I might know who it is, and be able to fill you in on them. If you don't want to throw the name out shoot me a pm.
  12. erkoehler

    erkoehler PlowSite Veteran
    Messages: 3,252

    Like he said, get the name of the company out to dome of us regulars. You don't want to roll the dice if someone already had problems in the past.
  13. BPPlowing

    BPPlowing Junior Member
    Messages: 8

    I just saw all these replies. I didn't even get an alert. How can I send a PM to send over the name of the company. I don't want to get burned but want to maximize my employees and equipment. Just I realize now my first payment on only 2 accounts would be earliest January with this 45 day after invoice. Seems like a scam to me. Just need some help in the right direction.
  14. Flawless440

    Flawless440 PlowSite.com Addict
    Messages: 1,543

    Im still owed 5k from a guy 10 years ago... Thats when i stopped being a sub.... Im still lookin for that as_hole.. I was young and dumb
  15. 90plow

    90plow Senior Member
    Messages: 734

    What kind of equipment are you running? Maybe askig around this site you might be able to find a more reputable contractor to work for. Not mentioning names but another plower i know on here was almost ready to give up on having a nice account and out of the blue a contractor from here reached out to him and he landed a nice sub job.
    Also depending on your equipment you could get into some driveways and probabaly make more money with less stress, wear and tear, and expense. If its your first year you should really consult with another plow guy in your area and go through the numbers make sure its enough money for the work thats how i learned.
    Good luck!
  16. BPPlowing

    BPPlowing Junior Member
    Messages: 8

    This is our second year, but I have subbed for years before that myself and was burnt once. We have everything from 5 yard dumps with salters and 12 ft plows, to 1 ton dumps with salters and 9ft plows, even some small bobcats we could put some buckets on, and just pick ups with blades on them. So we have the equipment and staff to do a lot of work. We have some larger contract jobs and residential but I hate having anyone sit and want full schedules when the snow or ice hits. If anyone out there is looking and is honest PM me as I would rather be comfortable in the situations I'm in.
  17. Ramairfreak98ss

    Ramairfreak98ss PlowSite.com Addict
    Messages: 1,885

    Not when its seasonal though... if you sign up PER SEASON.. you should be paid in monthly terms from December 1st through maybe April 1st, so 4-6 payments at most... YOu should NOT have to bill them, and then wait 30-45 days to be paid. Thats not a seasonal account then.