The developer I work for seems to never pay bills on time to GCs and/or subcontractors. Sometimes this is a negotiation tactic to make sure everything is done right before payment is released. Other times the guy in charge of signing the checks just goes into hiding and becomes unreachable when it comes time to sign something, with no explanation. I'm 99% sure we don't have any liquidity/financial issues and this is a genuine negotiation tactic but it still seems kind of odd to me.
Do any other developers do this and does this strategy actually work? I can see this costing us more than saving in the long run.
When doing my own construction projects I have always withheld a portion of the balance as a final payment which is done after a full walk through and all items cleared from the punch list. I realize I am talking form a homeowner side and not commercial development here.
It seems there should be a draw schedule here that would resolve this, no?
There is... but we still figure out ways to delay the payment process pretty frequently.
Any idea if the invoices the developer is sending out are being paid back slowly also?
The guy is probably just stingy.
That's what I'm thinking too. We usually shoot for throw ins too. Like "We thought you said you we're going to throw in XYZ for free. We'll release payment after that's done." And the throw in is like a $5k item on a $6 million job.
If it's over and above retainage and the bank/title is paying you on time then your boss must like using a new GC on every project.
Yeah, seconding this. When I worked for a subcontractor, paying late was a good way to move your jobs down the pecking order of our bidding pile for the next project unless it was slow enough that we needed it to keep our guys working.
Alternatively, there was always the asshole tax.
You've been working with the President?
It's common
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