welding business advice

[cbrundage88]

So ive started my own company. Ive jumped through all the hoops and I still have a few questions I need answered before this thing really takes off. My main questions pertain to billing. I plan on doing most of my work on T&M. In my particular industry that's pretty standard unless its new construction. What all should my T&M contracts contain? What should they entail? Also, how does everyone accept payment. Cash is cool but I don't believe I can stick to that forever especially when I go dealing with other businesses. Are standard live checks ok still or are there other methods of payment you guys are doing that I should be hip to? Also, frequency of invoices. Should I do them weekly? Ive also been collecting deposits for material costs up front. Not trying to finance everyones BBQ's. Is that something I should continue doing as I work my way into the bigger fish pond? This whole "getting paid" is really the only part of the business im kinda lost on. I don't want to seem like a complete moron when im walking in and trying to land the bigger deals. Any help and advice would be awesome. I appreciate it guys!

[MMW]

In my opinion. It really all depends on the client of each job. I do work for individuals, small businesses and townships. I am lucky enough that I don't run my business on a shoe string so I can wait to get paid. You should have a pool of money or line of credit to pull from while waiting for payments. Individuals I usually try to get paid when done but sometimes you end up waiting for various reasons like you do the job when they are not there, etc. I have only been stuck twice in many years, I just figure it is the cost of being in business. If you don't know the person at all I would probably get a deposit. Businesses will most likely have a set policy of how they pay so be prepared to wait for your money, 30, 60, 90 days. Just like when you have an account at your steel supplier and local welding supply they don't get paid until you pay them so again it is part of business. Townships and local government have there own policies set also and are less likely to bend any rules so plan to wait. Once you have steady work then the payments become steady also so it doesn't really matter at that point.

I guess I am saying you can have your own policy to use as a guideline but your customer mostly decides when you get paid. You can always take a hardline on how you want to get paid but then prepare to walk away from work because you do not wish to wait for your money. I usually make invoices at my convenience. Sometimes I do them right away and sometimes it is down the road. I have a good customer base so I know I will get paid though. A new business probably does not have this option.

[MMW]

As far as payments I take cash or checks. I do have one customer who does direct deposits into my account but that is rare.

No contracts just verbal. I do have some customers who send purchase orders that I have to acknowledge and abide by their terms.

Deposits, if you do not know them then take a deposit. This usually applies to individuals and small businesses only. My thought is just make it as easy as you can for your customer so I do not ask for deposits but I can afford to cover the expense up front.

[Ltbadd]

I do welding for machine shops and manufacturers, when I deliver parts I have them sign a packing slip, then when I get home I email the invoice. Most of the small shops pay in 30 days, I have one larger company that is at 60 days. So the sooner they get the invoice....

If you get a off the street customer, ask for a deposit, if they balk at that then you're probably better off not doing the job.

[Electric4Life]

I dont have an answer for specifics like cash or checks but I can say that if you aren't able to "eat" the cost for material, take a deposit. It also depends on the type of work you do. "Bigger fish" tend to lean towards contracts and draws depending on the scale.
Maybe you could share a little about the type of work you plan on doing, of course a business plan is great but if its anything to do with fabrication you could be at the mercy of whatever walks thru that door and that makes it impossible to base a budget on. Production manufacturing or contract based work would be the most sound from an accounting stand point.

[tarry99]

So ive started my own company. Ive jumped through all the hoops and I still have a few questions I need answered before this thing really takes off. My main questions pertain to billing. Billing and getting paid for what you do is by far the most important function of why you started your own business and that is to make money and if there is a failure in most new business it's from not having a Professional plan to follow or guide you through all the BS.... I plan on doing most of my work on T&M. Good luck charging T&M ? I have yet to find anyone willing to pay a new company or someone new to a trade T&M.......as this would be akin to on the job training!! most folks want an estimate of costs , meaning in your new trade you also have to become an estimator. In my particular industry that's pretty standard unless its new construction. It might be for the well seasoned knowledgeable individuals......but not everyone can get there in an industry where your unknown.. What all should my T&M contracts contain? What should they entail? All Agreements / Contracts should spell out exactly what job you are performing along with a list of materials and specs if required.....also payment terms , and all the other dirty little Boiler plate nomenclature that protects you and your client in the event of failure or non-payment...Also, how does everyone accept payment. Cash is cool but I don't believe I can stick to that forever especially when I go dealing with other businesses. Business's will normally not deal in cash as they want a receipt for your services. Cash can also get you in trouble if your not recording it or claiming it on your taxes. That's a question for your bookkeeper , accountant or tax professional Cash is nice Are standard live checks ok still or are there other methods of payment you guys are doing that I should be hip to? You'll need a bank account and a DBA Business name filing so that you can deposit checks from a business into your own account..and a Business License and Insurance. Also, frequency of invoices. Should I do them weekly? YES and be prepared to have a printed form that again clearly spells out the work performed and the terms of payment and non payment...Ive also been collecting deposits for material costs up front. All of that activity has to be logged in a Ledger of sorts to keep track of what you have bought in on behalf of others......Not trying to finance everyones BBQ's. Is that something I should continue doing as I work my way into the bigger fish pond? This whole "getting paid" is really the only part of the business im kinda lost on. I don't want to seem like a complete moron when im walking in and trying to land the bigger deals. Any help and advice would be awesome. I appreciate it guys!

As I mentioned before Getting Paid is the most important part of your job..........setting that up in a Professional Manner now will pay dividends later.............I know there are many that have gotten along over many years with many accounts on the old "hand shake" method and so have I but that type of policy has its own risks and rewards and takes decades to obtain & manage.....

See my answers in RED above


Good Luck on your new venture..

[ryanjones2150]

A couple of big companies I have done some small work for have some funny rules. Like you have to become a “preferred vendor” if the cost of the work exceeds a certain amount because they can’t use their petty cash, they have to use a credit card to pay you or you can wait for corporate to cut you a check in 30, 60 or 90 days, whatever system they have.

And I agree with Tarry’s T&M statement above. I stay away from it because sometimes the T&M isn’t worth dragging your gear to wherever their dump truck is broken down at, or whatever it is you’re planning to weld on. Plus, sometimes I’m working on two or three jobs at the same time. That gets tough to capture a true T&M for. So id I feel like dragging my feet on something then I can. I also can’t expect my customer to pay more because I’m a slow poke. Time is money, unless it’s T&M.