Can Your Client Afford the Project? Here’s How Your Contracting Business Can Find Out

When you put in a bid for a project, you generally expect to prove that you can actually do the work. But since you have so much riding on every project you do, you should probably be doing the same thing for your clients. Every contractor has a horror story about a client that seemed legit and then bailed on the bill at the end. If you don’t want this to happen to you, there are a few things you can do to follow up on a client’s ability to pay. Here are some things to ask for, and ways to request them without alienating prospective customers.

Set a Pay Interval You Can Manage
It’s really tempting to let clients pay you whenever it suits them. If you do this long enough, you might go out of business. Companies that have a lot of overhead may teach you that it never suits them to pay you in a timely manner. Instead of catering entirely to their preferences, find out the regional billing standards for your industry. Depending on the project, you might charge the full price upon completion, or bill with 30, 60 or 90 days to pay. Don’t let this aspect of business administration slip through the cracks. You don’t want to discover that they had the money when you did the project, but spent it by the time you billed them.

Know When You Can Ask for Financial Verification
There’s basically two times that you can ask for proof that a client has funds sufficient for the project: at the beginning, and if something happens during the construction process. The latter can create a sticky situation, so it’s better to find out about this before you start ordering materials and scheduling hours. This is also a good opportunity to ask about timelines. If the property owner’s ability to pay is contingent upon them securing a grant or other public funds, make sure they got it and will have the money ready before you start.

Get Evidence From the Start
Beyond feeling comfortable that the client will be able to meet their end of the deal, the kind of evidence you collect depends how far you intend to take it if the client doesn’t. Usually, you can ask for verification of ability to pay in the form of a loan, offer of credit or a bank statement showing sufficient funds. If the client fails to do on your initial request, it’s probably best not to do any more work until they can provide evidence. If you bill for portions of the project in stages, send invoices on time and track when they are paid. In the event that you have to pursue someone to get the rest of your money, these records will be necessary.

Avoid Project Scope Creep
Of course, there are instances when everything checked out at the beginning, until the project exploded in scope. This underscores the need to give a clear estimate before signing any contracts to provide service. If the client changes their mind about something and requests a change, clarify those changes in writing and have everyone sign a new contract. This helps avoid confusion at the end, especially if the alterations mean the total is higher.

Choose a Reliable General Contractor
At times, part of your work might involve subcontracting to another general contractor. As a general rule, the general contractor for the project is the one who has both the right and the responsibility to verify a client’s ability to pay. And typically, you’re going to wait to get paid until they do. As a result, you’ll do better to work with general contractors who have experience and the savvy to know how to follow up with clients for this information. That way, you’re less likely to be left on the hook for your expenses if the project fails.

Keeping the income flowing through your contracting business is the way you succeed. That takes clients who can pay for the services they request. For more information about starting a successful business in construction, visit CSLS today!

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About CSLS

Contractors State License Service (CSLS) is the largest school in California devoted to the Construction professional. For over 23 years, CSLS has helped its students pass the exam to become licensed contractors in the State of California, licensing more students than any other school. From our main offices in Southern California, CSLS operates over 25 locations with full-service support and classrooms. We have grown to this extent by providing quality, professional services. In comparison, this provides 7 times the number of convenient locations than the second largest contractor school. Contractors State License Services is one of the only contractor schools in the state that is run by educators, not lawyers or people mostly interested in the bonding and insurance business. Contractors State License Services formerly operated under the oversight of the State of California's Bureau for Private Post Secondary and Vocational Education. As of January 1 2010, the new Bureau for Private Postsecondary Education (BPPE) came into existence replacing the BPPVE. CSLS now operates under the provisions of the California Private Postsecondary Education Act of 2009 (CPPEA), Article 4 Section 94874(f). Our Mission is simple; We can help you pass your California Contractors License Exam. Celebrating our 25th year, CSLS has helped over 120,000 students pass the California contractor licensing exam to become licensed contractors in the State of California. Additionally, we offer complete home study and online contractor’s license programs to help you pass your California contractors license exam. CSLS offers licensing classes for all types of contractor licenses, including General Engineering Contractor, General Building Contractor, Specialty Contractor, Insulation and Acoustical Contractor, Framing and Rough Carpentry Contractor, Cabinet, Millwork and Finish Carpentry Contractor, Concrete Contractor, Drywall Contractor, Electrical Contractor, Elevator Contractor, Landscaping Contractor, Warm-Air Heating, Ventilating and Air-Conditioning Contractor, and many others. For a complete list of contractor licenses, visit and tuned for more informative posts.