Thermal Sash windows, in Chester Springs, Pa., asks its clients for 20% down but, says owner John Herman, “if there's a special situation or they got burned before by somebody taking a big deposit, I will adjust the amount.” Quillen Brothers Windows, in Bryan, Ohio, asks for a third, according to owner Bob Quillen. Mike Majors, owner of Majors Home Improvement, in Pensacola, Fla., says that his company asks for a 50% deposit for cash, and 10% on financed jobs.
Many home improvement companies ask for a deposit, though the amount is limited by law in some states. Deposits, contractors feel, protect them from taking a loss for laying out money and time for a job that's suddenly not there.
NOT AN ISSUE Though some companies — Marshall Roofing, in Lorton, Va., is one — don't ask for a deposit, customers do generally expect to be asked for something. If a company can prove it's trustworthy, homeowners often know that it takes a check to get things rolling. “If people don't trust you up front,” Herman says, “they're not going to give you the job anyway.”
On the other hand, many times, says Marc Rapshack, general manager for A.B.E. Doors & Windows, in Allentown, Pa., homeowners who have never bought doors or windows want to know how the process works. A.B.E.'s representatives explain that the company requires a third down at the time of the order because the color, hardware, and size of the product are custom. “We ask for that third so the homeowner has a commitment,” Rapshack says.
Many company owners say that's the most important reason to require a deposit: to ensure that homeowners are serious about the project. Also, in the case of windows, because the product — often 25% or 30% of the cost of the job — can't be returned.
ASSET OR LIABILITY Herman says that it's important to remember that the deposit money is not an asset but a liability. “You haven't done anything for it yet,” he explains. At A.B.E. Doors & Windows, that deposit check is credited to the customer's account and is “considered a liability until the job is completed,” Rapshack says.
Companies that ask for a deposit endeavor to keep customers in the know regarding the status of the order. A.B.E., for instance, sends the homeowner a thank-you note saying the deposit was received and letting them know who is their contact at the company.
At Quillen Brothers, the company guarantees installation of the product within 30 days after financing is approved, and the company seeks a deposit — if only the first payment check — even on financed jobs. “I don't count it as a deal until dollars are exchanged,” Quillen says.