Quote:
Originally Posted by ccracin
Tim,
I understand what you are saying for sure. I think one of the issues is you may not have a clear understanding of the PO process. It is a two way street. The terms on the PO including Payment terms more importantly for you are there to protect both parties. The contract requires the customer to pay for goods and services rendered. Court is not always the only course. You can also turn claims over to collections. you get money and they get the job of chasing the customer. Quite a few people move when credit rating is threatened. That being said, you are correct, if taking this route or court is not something you are willing to do, then the contracts mean nothing for either side. If you look at Marty's post, that is how most of the business world works. It seems this car industry has it's own set of rules. With the examples you gave above, why are you still in this business doing things the same way. It's always been said that people that continue to do things the same way and expect change are in for a huge disappointment. Rather than than abruptly saying I don't want your business if you show up with a PO or contract, a simple negotiation could really pay off. When you are talking these highly specialized, expensive engines it would not be out of place for you to ask for an escrow account be setup at a bank that can be drawn on when milestones are hit. Also, when the customer changes his mind, you send out revised quotes and receive revised PO's or whatever you have in writing. Verbal deals are the dangerous ones. Communication, documentation and general good business practices will go further than anything.
All that being said, I hope you don't take my comments in a negative way. I am simply trying to add perspective from outside the car world because it truly runs on its own set of rules it seems. I love this industry and hobby and do not want to see it crash from bad deals and people loosing tons of money on these bad deals. Customers or vendors. I am by no means an expert and am only providing my opinions. You guys are one of the most respected shops in the industry and I respect what you have to say on the subject. Hopefully just these exchanges will help educate some people allowing them to have better experiences in this community.  |
I have quite a bit of business experience and get what you are saying and don't take offense to it but we are a small 2-3 man shop and the administrative time involved in what you are talking about wouldn't be cost effective to keep altering po's every time someone wants to change something. We purposely keep our crew small to reduce overhead. Imo the escrow means nothing unless we had access to the funds which would make it pointless to have it then. We won't work ahead the money because I'm not getting stuck with someones half built engine or parts anymore, if you don't pay that week then the engine is going to sit until you do. I have no idea of your knowledge level of an engine of this caliber but the piece price can get pretty insane on this stuff, 1 example I can give is the pushrods we use on a high boost engine are $1000 a set. You can see why I won't finance peoples parts any more, the cost adds up fast in a week alone depending on where the build is.