How to save 5% on your build (or at least parts of it)...

So I got the final bid from my concrete guy, and it was more than I was hoping. Called up my contractor and talked to him about it for a few minutes - basically, since December we added some add'l decking and the price of concrete had gone up. Then my PB said those magic words - "can you pay cash"? We talked to the concrete guy and he knocked off 5% for cash. Since it makes no difference to me if I write a check for each stage, or if I have the cash in an envelope, and 5% works out to over $400, I was happy to pay cash.

Next cash discount - the mason. He was contracted to set 3 boulder clusters in the waterline, but the pool looked better with 7 clusters. Offered to pay cash for the original bid amount if they'd do them all, and he went for it. That was more than a 5% discount, as the calistoga boulders alone were worth quite a bit.

WAHOO!

Gonna try to do the same thing on the equipment pad and pebble surfacing next week!

I'm all for saving some bucks, but, for $400 is it worth the hassles that could come if you have problems? Most cash deals I have gotten have had no warranty of any type attached to the job. Just me personally but I would be leary of any cash deal tied to a major construction project.

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Originally Posted by caustik

I'm all for saving some bucks, but, for $400 is it worth the hassles that could come if you have problems? Most cash deals I have gotten have had no warranty of any type attached to the job. Just me personally but I would be leary of any cash deal tied to a major construction project.

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I've got a contract, and invoice, and a receipt. none of that changes if it's paid via a check or a greenback... It's not like you're putting this on Amex where you can reverse the charges, it's a check. A check is as good as cash, and once the money is out of your account a check doesn't give you any more legal recourse than cash to get it back.

You've found out something that many people don't know about - the " - X%" for a cash transaction. Many businesses do this, or a similar deal - ie. ' pay this bill in full within 10 days and reduce the amt. due by 2%' (2% net 10). It's not hard to imagine a slightly larger % for cash (cash doesn't have to clear the bank and can't bounce). This helps keep the company in question 'liquid', they have suppliers and payroll to meet and being sure that they have enough money to do so is key.

To save someone the need to respond: I'm sure some (many, most) that do this do it to avoid a portion of thier taxes (ie don't declair the income). This isn't such a bad thing (even to the Feds), the underground economy helps keep us prosperous - the Feds don't mind a small % of anyones' income not being reported (as when it's a cash transaction) as it keeps the economy chugging along (goods bought for taxable $s) - it's only when the cash folks hide a substantial amt of their income that they sick the auditors on them. (Note the change 10 - 15 yrs ago requiring waitrons to declair 10% of their table checks as tips, if the contractors, et al, are discovered 'as a group' to be consistantly and substantially under reporting their income - you can bet the IRS will find a way to eliminate cash transactions)

Hope I explained/ described this correctly - it's been a LONG time since I took Econ 101 -102 and accounting 101 - 102 --- :)

Lets be honest, the real reason for asking for a cash payment is because the contractor is not going to declare that income. Therefore, the savings to him is more substantial than 5%. I try to shoot for 10%, if he objects, pay him by check and be sure to use the business name, Inc or LLC, to ensure that he just doesn't convert the check to cash.

Because I got a little 'testy', I replied here - Welcome adesalvo!