Deposits

[FarmingSawyer]

How many of you take deposits for custom orders? What percentage of the estimated total do you ask for?
I recently had 2 customers ask if I needed a deposit for their orders, but because I didn't have a quick answer said "No"....Now I'm regretting it. Not because they've backed out, but because winter is dragging on, they obviously aren't in a hurry to pick up their lumber and I'm getting tired of tripping over piles of what amount to my unpaid bills.....
So....I'm thinking of coming up with a policy. Just looking for a bit of FF guidance.....

[taw6243]

Half down

[drobertson]

Tricky topic, I have in the past, mostly due to the folks just want to pay, I'm guessing while they had the money.  So If they insist I go along.  I still have a few thousand feet stacked, not picked up, but paid for,  so  I say pay when the job is done, and if room is available store it for them, it's what I do, but not what many can do.. bird in hand is better than two in a bush.  tough call,  even if they pay half, are you still tripping over it?  so do what you need and can I suppose.

[Kcwoodbutcher]

If it's lumber I can sell to cover their bill I don't take a deposit. If it's weird stuff or low grade I take 50%.

[GAmillworker]

I never worried much about this before 2008 however now it is 50% down and 50% when order is complete (not when it is delivered or picked up).

[red oaks lumber]

50% down,  bal. before it leaves the shop . it just make a commitment from both parties. if a customer has a problem with half ,they probably have a bigger problem paying all at the end

[Chuck White]

I don't recall ever taking any money before sawing started!

I have had customers who insist on settling up at the end of each day, and that actually works out pretty well.  Sometimes a customer will be limited to a "ball-park" dollar amount and don't want to go over the top, so the day-by-day rate is a good way to go!

Most of my customers pay when the job is done, if it's a fairly large job, some will opt to settle up at the approx. half way point and again at the end.

[JB Griffin]

If its their logs, no , My logs cut into anything other than 4/4 or 5/4, 1/2 down balance due within 14 days, unless extraordinary circumstances arise. I can't afford to have lumber sitting around waiting to be picked up and paid for.

[Magicman]

I only custom saw and do not sell lumber so it is not an issue with me.  When sawing an extended job, we generally settle up at the end of each week.

I have had customers to tell me at the beginning to "not go over a certain amount".  I don't because that is how much money they have or have allotted for the job.

In over 12 years of sawing, I have never not been paid in full for any sawing job.   ;D

[FarmingSawyer]

All good to know.....

I haven't been asking for money up-front on custom orders. But...... As I am starting to get more of them than mobile milling jobs due to the weather....I am thinking I need to get some sort of up-front commitment. I hesitated on cutting an order for a sauna recently and I'm glad I did. The logs were in the pile and I could have worked the boards out of logs I was milling for another order. However, since our last exchange I haven't heard from the person about the sauna boards--probably my price..... Or the fact that the custom milled boards are GREEN......!!

So with work being thin on the ground due to weather and money being tighter than the bark on a tree in February..... I'm thinking some up-front operating capital might assuage grumbly feelings over tripping on a pile of spruce I cut a month ago and was supposed to be picked up that week because it was urgent..... On small orders I don't have a problem with a deposit. Hardly worth squeezing someone for 1/2 of a 2 board pine order. But when it runs over 2-300bf or is really special cut stuff, and I have to keep the snow off of it so it can be picked up when the customer decides to show up.....hmmm....

[schmism]

rarely has up front money via a deposit come up.  but lots of times guys talk about having piles left over that dont get picked up.  (even if it was customers logs that were sawed)

Many have indicated that instead of a deposit up front, they require pickup within 14 days of notification that the order was complete, and after that there is storage fees.   After storage fees exceed the value of the order, your free to sell the material to recoup the money.  (even with customer logs)

The storage fees being a better method to mitigate standing piles of cut lumber, because even a half down deposit doesnt mean the customer is going to be any more quick about pickup up the finished product.  and really thats what the complaint is.

[tmarch]

I never asked for a deposit until I cut some special order stuff that was to be picked up within a week, at the end of 6 months the customer showed up and thought I should stick with the original price and no storage.  Now it's half down and to be picked up within 7 days or storage will be charged and the stack will be moved outdoors so I can store other orders or my own wood under roof.

[Brucer]

I saw custom sizes to order. If the order is for less than $2500, I don't ask for a deposit, unless it requires logs that are a lot larger than the ones I normally buy.

Up to $5000, I ask for half down, balance on completion of the order.

For really large orders, I generally ask for 20% to 30% down, the balance in the form of 3 or 4 progress payments, to be made when "X" amount of sawing has been completed.

In 10 years, I've only had two customers fail to show up to get their order. In one case my customers separated about the time the order was done. It wasn't a big order and I decided I'd rather let it slide than get in the middle of a nasty separation. In the other case, my customer hadn't been able to sell his house and the real estate agent told him he should add on a covered entry. I called to tell him his wood was ready -- about an hour after he closed a sale. He told me he'd pay for the wood but it was a size I could sell easily so I let it go.

The only reason I charge a deposit at all is because I may have to buy in extra logs to fill a large order. When I explain that to the customers, they never gripe.

[scsmith42]

If I mill at my farm I will usually charge a deposit. On mobile milling I usually do not.

The only time that I was stiffed was when I made 12k worth of custom flooring for a logger that planned to sell it back to the landowner. I'm still trying to sell it to recover my losses.  Lesson learned!

[dgdrls]

I have not done enough work to even worry about that,
Local stationary mill does at least 50%  and I paid 100% up front for some
16' materials 

I think its good business, it helps protect your log inventory
from being sawn into material that is not easily marketed if the buyer bails.

DGDrls

[Brian C.]

We normally take a deposit due to the fact of storage. We do not have covered storage and at the moment we don't have a lot of extra space for even exposed storage. We have had a few customers that we didn't take a deposit and ended up stuck with a stack of boards that we kept tripping over. So, if we don't know them a deposit, typically 50%.

[taylorsmissbeehaven]

I have never asked for a deposit on any saw job. I have taken money up front if the customer offers it. I am small enough that tripping over lumber has only been a problem when I was too lazy to clean up, until now. I have an order that was paid for three months ago. It is sitting on one of my equipment trailers. No problem now, but as the weather gets better it will be an issue. I may have to add storage fees to my contract. Thanks for another bit of advice FF! Brian

[Cedarman]

When we ship, all new customers pay in full plus shipping up front.  Regular customers are billed.   Some pay with in 10 days some take 30.  But those are commercial people.  All local sales pay a deposit unless it is something that will go toward standing orders such as 1x6x8'.  Regular customers pay on pickup.
Wood doesn't leave without being paid unless prior arrangements are made.
I think getting a deposit is good business practice.  Otherwise take a chance on making lumber for free.
And if you have been doing orders for regular customers without a deposit, it would be very bad form to begin asking for a deposit.  Trust is something that develops over time.  This is why there can be no true trust with first time customers because there is no basis for trust.  Takes time.

[thecfarm]

I would ask for deposits. Some mean well,but to keep them all honest,have them pay something. As one of my friends found out with selling turkeys. They had them all sold. I asked about a deposit and thay said no need. It was too bad,a few days before Thanksgiving about 10 did not bother to pick up turkeys. They learned the hardway.

[WV Sawmiller]

Farming,

    I am new to sawing and plan to ask for a deposit on most orders however if it is a small order cut at my home (I'd prefer to do mobile sawing) and they leave a trailer, which I ask to prevent double handling, I will not be requiring another deposit - just hold the trailer till the load is paid for. I am short on equipment to handle logs and lumber and need to minimize the handling issues.

    I had not thought about requiring a storage fee. I do include in my contract that lumber sawed on my site requires prompt pick up or will be sold for sawing costs.

[okmulch]

I require a deposit on every order because every order I do is custom cut to my customers specifications. Everyone seems to want something just a little bit different. Plus I do not have the room to store any items. Customers always seem to be fine with a deposit of half down and remaining balance of payment on pickup.

[AdirondackMill]

Deposits deposits deposits. We ask for 50% on all custom orders & retail orders, I require it from new wholesale customers now as well. Once bit twice shy. Or bit a ton of times and just got sick of getting burned after having completed an order a bunch of times. It didn't used to be like it is now, but man you just can't trust anybody these days.

[FarmingSawyer]

I would ask for deposits. Some mean well,but to keep them all honest,have them pay something. As one of my friends found out with selling turkeys. They had them all sold. I asked about a deposit and thay said no need. It was too bad,a few days before Thanksgiving about 10 did not bother to pick up turkeys. They learned the hardway.

Ray, now that you mention it, I got bit once selling pigs. After that I began taking deposits and things skyrocketed and I had great luck. If you ordered a whole or 1/2 hog you paid 1/2 the basic price up front.....

Something just take time to translate......

[Chuck White]

Welcome to the Forestry Forum, AdirondackMill.

Where abouts are you located in the Adirondacks?

[AdirondackMill]

Welcome to the Forestry Forum, AdirondackMill.

Where abouts are you located in the Adirondacks?

Technically I'm just over a mile on the other side of the line. But don't tell. :D We're in the Lake George area. About an Hour North of Albany and 2 or so hours south of the Canadian border.