How can a buyer protect themselves and their money??

[finga]

Gidday all,
Now, with the way of the economy and with the number of companies of all persuasions closing their doors how can a buyer of a house, boat, motor, car or virtually anything big protect their deposits and progress payments??

Thanks then
Scott :)

[lippa]

i wonder if it could be insured? ya can insure ya budgie these days so i cant see why not. costs shouldn't be to prohibitive.


in custom plate boat building, it would be difficult for the manufacturers not to take progress payments. how many builders would go to the wall, if consumers pulled out at the last minute??????? which can and would happen.

the builder would have to take the client to court, wait 22 months, and still be left with f/all.

cheers

lippa

[finga]

Yeah mate...dunno.
We're looking at some bigger purchases like another home in the very near future hopefully and it scares the crapper out of me.

[Marlin_Mike]

What about a system used in construction industry - possible for boat builing industry?

To negate the need for the principal constractor to with hold retention monies, contractors use bank guarantees. Cost them interest and charges, but is this more preferable to losing large amounts on payments, and would it work or maybe be cost prohibitive?


Mike

[TheRealAndy]

Escrow. Just like a house. Money in trust, handed over on setllement. Not sure if you can do it with boats. I know ebay offers this service, sureley their must be a mob that will do it for other things.

[DR]

Maybe we need to be able to write into the contract, making it binding, that if they default for any reason they agree that we can kill them in any painful way we like;D & their dog too:'(

[Blackened]

G'day

Here's an opportunity for Steve "Ausfish Financial Services" And Steve, I'll gracefully accept royalties for the idea.

Now lets think of a slogan

Dave

[Mindi]

Finga..agree with Andy...no problems with an existing house as your deposit is held in the agent's trust account by law and can only be accessed at settlement when the keys are handed over. Certainly the case interstate and I think that happens Aust wide. No such scheme for manufactured goods I am afraid...
The answer with a boat is to buy second hand and swap cash for keys..thats what I am doing. I would rather have a less preferred colour of motor than risk the deposit. No good dealers whingeing... its up to them to provide some protection for their customers or risk losing them.
Insurance may be the answer offered through the dealer...? would be a new product I think.

[Grumpah]

My 20 cents worth.
I have never bought a house, car or anything i couldn't put on a card or pay cash for by placing anything other than the most minimal deposit. i.e. Max $500. If that is not good enough then the company you are dealing with either doesn't want your business - or isn't strong enough to fund the manufacture (build, whatever) and you could lose your doh ray me. I have never (touch wood) lost out to date. I suspect because the risk is all with the seller. If they do not deliver - you only have a smallish amount to lose - the seller (if they've made or built it ) has more to lose. One thing though, based on recent experience, make sure everything is documented - down to the smallest detail - like even what items are made from.
That way no-one can query what was supposed to be.

Cheers.

[Tim_N]

Remember everyone, you're only talking about custom boats in this regards aren't you?
You regular run of the mill production style stock boat (glass or ally) should not be subject to progress payments etc.
With this style of purchase, you may have to fork out a deposit and pay the balance on delivery.
Don't group the whole industry as a pitfall for the sake of a few.
Tim

[DR]

i think that a small deposit is all thats required, once you sign a contract it's binding . Basically the opposite to what they want.. many years ago i purchased a $100,000 house with $100 deposit plus a signature on a contract..
If you cannot afford to buy stock you should not be in business, When i bought my boat, $16,000 at the time & had to be built & delivered for fitting out, $1,000 dep rest on delivery, the boat was purchased in Ballina & the dealer lived on the Gold Coast so he dragged it up there for me to collect to save the drive down, paid the balance & all were happy. So there are some fair dinkum dealers out there..

[finga]

Remember everyone, you're only talking about custom boats in this regards aren't you?
You regular run of the mill production style stock boat (glass or ally) should not be subject to progress payments etc.
With this style of purchase, you may have to fork out a deposit and pay the balance on delivery.
Don't group the whole industry as a pitfall for the sake of a few.
Tim
No Tim. I'm not just talking about boats and I purposely did not solely say boats.
A general question was asked where a lot of items could be included like machinery, sheds, home extensions blah, blah.
Boats also come in but in this economic climate I'd be scared poo-less wondering what will happen to my deposit on any purchase and if I'll see the end product in my procession.

A prime example is I'm looking at buying a milling machine.
They're on special. I need to pay now but delivery is in 3 weeks.
What could happen in 3 weeks??
Big companies go down just the same as small companies.

Thanks for the info on homes too fella's.
If the plans come together the cook and I will be moving and buying another farm this year.

[Trent Butler]

Having worked for a custom plate boat builder for a couple of years I can tell you that if you want to go down the path of having a custom plate boat built, the transaction will involve progress payments..end of story. All the talk of setting up trusts etc is not going to happen as the builder requires your money to finance the construction of your boat. There are simply too many overheads such as labour (sometimes up to 500 hours @ $40 an hour for a topshelf builder), materials, electronics, trailers and outboards that can't be covered with a small deposit and one final payment.

Here is my suggestions to try to protect yourself as much as you can.

1. Research or try to get some advice from a liquidation company on what proof of ownership for an asset is required to allow you to remove the asset (prove you own it) during a liquidation / receivership type scenario. I suggest you request from the boat builder a bill of sale type receipt after each payment, i.e 1 x 6.4 plate alloy boat with all welding and fabrication completed etc. Do not accept a simple deposited monies type receipt.


2. Get a detailed description of what your next payment covers, ie, some major items such as electronics (sounder / gps) might be purchased well before they are required and left in storage on the premises (taking advantage of specials etc) - if this is the case for your particular build I would try to convince the builder to allow you to store the items and you will deliver them just prior to installation. If not collect all serial numbers of said items and insure them who knows they might be covered if it all goes to shit.

3. When paying for the larger items such as trailer and outboard, get the builder to add as much details to Bill of Sale as possible, full description, serial numbers, VIN etc. stating PAID IN FULL.

4. As soon as you pay for the trailer get it registered in your name immediately.

5. Get to know a couple of the guys building your boat. Drop off a carton of beer (maybe two, one for the owner/boss as well) for the boys and try to establish a good relationship with them. Give them your contact phone number, who knows they may just give you a little heads up if things start to go pair shaped.

Other then the above there is not a lot more a prospective buyer can do to insulate themselves, the rest is trust and LUCK.

Cheers

Trent

[Mindi]

Remember everyone, you're only talking about custom boats in this regards aren't you?
You regular run of the mill production style stock boat (glass or ally) should not be subject to progress payments etc.
With this style of purchase, you may have to fork out a deposit and pay the balance on delivery.
Don't group the whole industry as a pitfall for the sake of a few.
Tim

No we are talking $3000 - $4000 (10%) on a dealer ordered boat motor trailer package where the delivery time is 5-6 weeks and the dealer or the builder or both can be history by then. It is not a plate boat/progress payment problem as much because the buyer may have a partially completed boat with his name on it..not with a dealer deal....you are now an unsecured creditor likely to get 10 cents in the dollar.

[PADDLES]

ultimately if you want the best protection, always seek legal advice from a solicitor (this will cost you) before signing any purchase contracts and accepting the conditions of sale, maybe use their trust accounts for the storage of any deposits. obviously amendments to any "standard" purchase contract and conditions of sale that a seller may use can only be done with the agreement of both the buyer and the seller. i personally reckon that the people who winge when they get dudded have generally done nothing to protect themselves and it simply makes no financial sense. ie. solicitor's fees of $500 or so in a $100k purchase are nothing in the big scheme of things if you are suss on the builder/seller.

[Steeler]

Hi All

Trent, i respectfully disagree with progress payments.If such payments are required that to me suggests the company is operating in a financial sense "hand to mouth" manner.

This could be because they are over committed or underfunded and i don't believe customers should be used as a substitute for operational capital.

Just my thoughts.

Have a good weekend

Steve.

[PADDLES]

progress payments are ok if the customer retains legal title over what has been paid for. again it needs to be captured in the conditions of sale/contract.

[upstart]

Interesting thread. I got burnt a year and a half ago on a shed. I paid a $4000 deposit and not long after the owner of the business shot through with my money and a lot of other people's money. I had to just kiss it goodbye. This bloke is still out there somewhere. Wish I knew where.

[Trent Butler]

Steeler,

I don't know of any custom plate builder in Australia that doesn't operate without progress payments. Plain and simple, no progress payments no boat built to your needs and wants.

Cheers

Trent

[the gecko]

I think trents right. they all need progress payments to survive, and that doesnt mean that they run hand to mouth. They just dont wanna outlay money on your boat, when you might do a runner.

Escrow or trust accounts wont work. The only solution is an industry based insurance scheme, like the builders gold card system. The manufacturer pays an annual sum to insure that if he goes broke, then the boat will be finished by someone else, and paid for by insurance. Then we will only deal with boat builders who are members of the voluntary scheme.

[Tim_N]

The only time I have had to make progress payments is on a custom plate boat. I have never had to pay progess payments on a car, house, machinery etc. Sure I have had to put down a holding deposit, but if you're that afraid of loosing your money, the only thing you can do is research like hell before you part with any monies.
As a manufacturer like myself, what is there to protect business' where the buyer pulls the pin on a deal?
In these uncertain times, people are loosing jobs, confidence is low and the consumer is also pulling out of deals.
What happens then?
Business' are left in the lurch, so it is a 2 way street and the consumer is not the only ones who can get burnt.
The answer is very difficult and a lot of business' are now asking for large deposits, some non refundable, some with a percentage re-stocking fee etc to cover themselves of such an event.
So, I don't really have an answer, I suggest you take Trents advice.
If progress payments aren't your thing, find another supplier who can fill your financial requirements. There is plenty of competition in the marketplace and with things being slow, you now have real power to pick and choose (hopefully wisely) who is going to get your hard earned dollars.
Tim

[cormorant]

I am a customer not a finance company. Why should I allow the use of my money to a business with no guarantee.

I do not ever pay full progress payments. I will do a deposit on signing of contract for start of work , I will pay 50% of wholesale for electronics etc and will retain title as that is all it is worth if I have to sell it second hand and same goes for work on a boat that is unsalable if incomplete and may or may not be made to standard.

I use external person to inspect progress and quality of product being manufactured to prevent disputes

I use accountants or soliciters trust account and bank guarantee for final payments with a contract and details of dispute resolution. Industry schemes and insurance don't work as they don't act fast enough and are expensive and I avoid them and their long drawn out manner in resolving things

I prefer to pay small deposits with binding contracts for supply and balance on supply after installation, completion and testing. If the business I deal with can't afford to manufacture a retail cost product of $100, 000 ie a wholesale value of $45,000 via a overdraft , personal guarantee or however they wish I won't deal with them as they are obviously not in serious business with sufficient funding behind them. I am happy that that $4500 in interest at (10%) is added to the cost of the product rather than have $100000 of my capital at risk. Have heard all the arguements about the product only being modified for me and bull but seriously if the manufacturer can't satisfy the agreed terms he has nothing to worry about but having his $ at risk is an iimportant part of getting the product as he has some risk and just can't walk away and leave you with a unfinished and unusable product.

I will support smaller up and coming businesses as much as I can and will pay bills ( often earlier) than invioce date if the goods are recieved as agreed.

There is some very good information on this thread

[Scott nthQld]

Trent, its all well and good to say they won't build your custom boat without progress payments, but your notion of transferring risk to the customer is complete BS. A customer IS NOT a creditor and is not there to finance projects on behalf of the company.

Risk cannot be transferred to customers, yet the industry has taken advantage of people's good intentions and the fact that they won't stand up for themselves when it comes to payment, I can't believe any consumer watchdogs have not made any inquiries into such businesses.

The manufacturers are suppliers, and customers inherit no risk when dealing with them, whether they are cash costomers of account customers. Take Fisher for example, their SUPPLIERS were left short when their CUSTOMER (IE Fisher) went bust. Fisher held no risk with the suppliers, and nor should it be the case with any other manufacturer.

When a person goes into business they inherit all associated risks with that business, which is why contracts of sale were brought in, to try and LIMIT the risk, not fork it over to customers.

Also, what's this crap with taking in a case of beer for the workers/owners to establish a 'good' relationship, here's a good business relationship for you from a CUSTOMERS point of view, you have my business, i'm paying you for the boat, covering the expenses incurred, plus a tidy profit for you and the missus, now do the right thing by me and I won't change my mind and take my business elsewhere.......done, simple, how it should be. If the builder wants to get repeat business and/or referrals from the customer, they should be sucking up to me rather than the other way around.

[AnthonyL]

I lost nearly $2000(for electronics) when Mr T''s Tinnies went bust so now I have been ripped off I am concerned how my money can be protected with my next boat purchase.

I will look more closely at the company that I want to buy from and check out their previous credit history.

I am appauled that people can go bust then start up again without paying what they owe for the old business.

[Steeler]

If they need my money "just to survive " in the form of a progress payment then i would think that is financialy hand to mouth.A deposit however is not unreasonable by any means and the balance paid in full once the product or services have been rendered.

Cheers.

Steve.

[cbs]

Steeler,

I don't know of any custom plate builder in Australia that doesn't operate without progress payments. Plain and simple, no progress payments no boat built to your needs and wants.

Cheers

Trent
It should read:

"I don't know of any custom builder that doesn't operate without progress payments."


If you are having a custom boat built, then chances are that you could be the only person in the market for that particular vessel. Why would a a builder want to risk what could be several million dollars on a single project (not all boats are small) with the chance that the customer never turns up with the money at the end?

I was once witness to a build where a customer held out on paying the final bill on a 70fter which was the straw that broke the camels back causing insolvency and closing the company. It was done purposely to get the boat cheaper. Lots of people lost money all round except for the client who kept his along with the boat. It was a shame as this particular builder was in the final stages of contract negioation for a very large superyacht worth many many millions. Of course that evaporated when this happened.

Most custom builders build at most a couple of projects at any one time.

An off the shelf boat, which has a much larger market appeal is a different story.

[Trent Butler]

Well as usual the typical "keyboard hero" reply comes from Scott nthQLD - this crap reminds me of why I have only made a handful of posts since I joined this site six years ago.

Good luck to those who go through the process of building a custom plate alloy.

Trent

[Steeler]

Hi

We can all agree to disagree.

Group hug time ????????????????:D:)

Cheers

Steve

[Scott nthQld]

Keyboard hero my ass, just pointing out the flaws in your argument. Customers do not take risk in a business when they purchse anything end of story. If a builder cannot build an ally boat with a wholesale value of 50k, the they are hardly solvent aren't they.

I ask you again, what about fishers suppliers? Fisher held no risk at all when they bought anything from them, so why did fisher's customers have to pay for Fisher's directors and owners risk in their own business?

Sounds like you're the keyboard hero, no idea about anything i;d suggest, just spruiking what has been ingrained through working for a boat builder.

Ask any of the many business owners on here: who takes the risk, them or their customers?

[MICHAELG]

Trent

I don't know what the answer is but is this an option.

As most custom builders are privately owned business, would they be willing to disclose their financial records if requested for review as a condition of the deposit?

I am pretty sure I know the answer to that:P . I think most people would run if they saw the figures given how most are operating

my thoughts anyway

michael

ps I like the building insurance model idea- were is Marine Queensland?

[STUIE63]

I have said it before I am sure you can come to an arrangement with a builder that you only pay a deposit and not progress payments but you will pay for it as he will pass the costs on
Stuie

[TimiBoy]

By the time it's sorted, the Economy'll be gangbusters again and we won't need it...

If I ever have a platey built, I'll make them build it here!

The only real solution if you are worried is buy your boat from someone who doesn't require progress payments. Or don't buy a boat in hard times. Good luck...

Cheers,

Tim

[Dodgy_Back]

Pay your deposit with Master card and if you don't get what you paid for you can get acredit from your bank.

More often than not , these days I try to pay deposit with the mastercard and I have applied to the bank for refunds twice now and did,nt have a problem getting the money back.
No contracts to stuff around with !!

If you want to fight a contract you need to go legal and that will cost more.

Mick

[Tim_N]

Sorry to burst your bubble Scott, but business' are always at the mercy of the customer, be it a debtor or a creditor.
If the customer goes bust, what happens to the supplier?
It is a supplier chain thing. The supplier becomes the customer who becomes a supplier who sells to a customer etc etc.
Just ask any Fisher supplier ATM. They have done their dough cold.
A business is in effect just another customer, the said business still has to buy their supplies, it is a nasty food chain which ends at the consumer.
There are lots of processes, transactions and dealings before a product or service reaches it end point.
Your view is from an end user, not one a couple of steps back in the chain. The truth is, everyone is at risk when the poo-poo hits the fan.
Example is the Storm Financial fiasco. People and business above and below the Strom group have been fried. People take risks all the time, although most often they are not aware of it. One chink in the chain and it all falls down.
Tim

[cormorant]

Trent

I don't know what the answer is but is this an option.

As most custom builders are privately owned business, would they be willing to disclose their financial records if requested for review as a condition of the deposit?

I am pretty sure I know the answer to that:P . I think most people would run if they saw the figures given how most are operating

my thoughts anyway

michael

ps I like the building insurance model idea- were is Marine Queensland?



I can tell you to do a search on builders insurance in any state and find me a bunch of happy vegemites other than the insurer. Nice mareting just like mortgage insurance but usefull in very limited circumstances.

Fishers suppliers if they had good advice should have got personal and bank guarantees before supplying goods. We get out customers to supply us with them otherwise we don't supply product and people who deal with small companies get into the habbit of doing this. Yes it costs time and money and we lose customers but better to lose them than spend our lived dealing with bad debts.

[finga]

Forget about boats...
life isn't all boats, beer and prawns...
how could Upstart have protected himself with his shed?

[PinHead]

I own and operate a business..I supply and install air conditioning...I will not do any job on a domestic level unless the customer pays me the unit cost prior to me installing them. I have been caught before to the tune of 14k and it won't happen again. You pay me for the units before I buy them and final payment is due when the units are installed and running. At least that way, if the customer does not pay I am not stuck with a bill for the units..i am out of pocket for the materials and labour only. AND...that is not due to me being hard up for the money..it is the way I operate my business...simple as that.

As for boat purchases..the previous boat I had, I paid 5k deposit...no contract and I paid the remainder on inspection of the boat when it arrived here. it sometimes boils down to trust between people.

[PinHead]

I can tell you to do a search on builders insurance in any state and find me a bunch of happy vegemites other than the insurer. Nice mareting just like mortgage insurance but usefull in very limited circumstances.

Fishers suppliers if they had good advice should have got personal and bank guarantees before supplying goods. We get out customers to supply us with them otherwise we don't supply product and people who deal with small companies get into the habbit of doing this. Yes it costs time and money and we lose customers but better to lose them than spend our lived dealing with bad debts.

I would not sign a personal guarantee for anything and anyone that does is crazy.

[megafish71]

I own and operate a business..I supply and install air conditioning...I will not do any job on a domestic level unless the customer pays me the unit cost prior to me installing them. I have been caught before to the tune of 14k and it won't happen again. You pay me for the units before I buy them and final payment is due when the units are installed and running. At least that way, if the customer does not pay I am not stuck with a bill for the units..i am out of pocket for the materials and labour only. AND...that is not due to me being hard up for the money..it is the way I operate my business...simple as that.

.

And what is wrong with a small manufacturing business running their business the same. I run my small manufacturing business in a very similar way. Its a safer way of running a small business. So seeing most custom boat building business are essentially small business, so why cant things be the same?

Ron

[tigermullet]

Forget about boats...
life isn't all boats, beer and prawns...
how could Upstart have protected himself with his shed?

Dunno! Upstart got done like a dinner but there's always that chance that we run across a confidence trick - and they are hard to spot and predict.

Many have learned to reduce the risk in any transaction, usually as result of taking a hit like Upstart. If you do enough dealing, then it's just luck if you don't get taken for a ride now and then. It will happen even with the best of intentions and plans to reduce risk.

I'd love to be in a situation where I could insist on full disclosure and get some person to give guarantee and indemnity but it's rare to find some one so 'green' or desperate that they would give it.

Most everybody knows the answer to, "What do you call a guarantor?"

"A fool with a fountain pen.";D

[disorderly]

Also, what's this crap with taking in a case of beer for the workers/owners to establish a 'good' relationship, here's a good business relationship for you from a CUSTOMERS point of view, you have my business, i'm paying you for the boat, covering the expenses incurred, plus a tidy profit for you and the missus, now do the right thing by me and I won't change my mind and take my business elsewhere.......done, simple, how it should be. If the builder wants to get repeat business and/or referrals from the customer, they should be sucking up to me rather than the other way around.

You have a lot to learn about life yet ,Scott..;D

Only running a very small business ..it can be difficult to get tradies,truckies,machine operators etc to drop what they are doing and deliver a good or service in a certain timeframe for a fair price ...a carton of beer or a kilo of fish goes a long way to obtaining a premium service and a quick callback on the next job..;);D

Scott

[cormorant]

I would not sign a personal guarantee for anything and anyone that does is crazy.


I don't give em but I do get them. Most small businesses when dealing with their banks give personal guarantees as a business guarantee would be worthless as they don't yet have a business. They have no choice and a lot probably don't understand the consequences or are well enough advised to extinguish them once business has history and turnover.

In one business I participated in we supplied product and the choice was given to supply personal guarantee , bank guarantee, have full 6 monthly credit check supplied to us at their cost or to pay up front as we were previously getting bad debts owed to us. By using an external credit , debt chasing firm who was securitising our debt I was surprised how many people offered guarantees and it gave us cheaper debt collection arrangements. Would have been happy to accept a limited bank guarantee. We rarely had issues from then on but other supplies got all our crap and sent one broke.

As for the aircon one if I were the client I would ensure that I paid them direct the receipt for aircon issued by the wholesaler was issued in my name and arrange direct delivery and be happy to pay you to install etc. Dealing with the public is a weird one like dealing with some tradesmen is weird and it only takes one bad one to wipe a couple of months of profit. To me it is all about posession and proof of ownership and ensuring the other party has a lot steeper hill to climb to persue or screw me.

In business I try and protect myself and business first and personally the same and am happy to walk away if the risk is not worth it.

I got old and grumpyearly by getting screwed when young in business and got good advice then - don't finance other peoples business - cash is king and so is posession with documentation. .

As for the shed. Small deposit only and no progress payments if they can't finance a shed and need my money I wouldn't deal with them. .Ensure deposit receipt details what it is for and that is is refundable. Happy to advance $ for approved plans once through as long as it is done in my name and I have full duplicate documents. Some people are just crooks and are damm good at it and I still get burnt but it is the scale I get burnt on that I limit - ie I limit the risk a smuch as I can and if the business wants my business they have to take some of that risk that I will pay them or offer an alternative like trust accounts.

[Mindi]

.........................Small deposit only and no progress payments if they can't finance a shed and need my money I wouldn't deal with them. .Ensure deposit receipt details what it is for and that is is refundable. Happy to advance $ for approved plans once through as long as it is done in my name and I have full duplicate documents. Some people are just crooks and are damm good at it and I still get burnt but it is the scale I get burnt on that I limit - ie I limit the risk a smuch as I can and if the business wants my business they have to take some of that risk that I will pay them or offer an alternative like trust accounts.


this is good advice...hasnt been much of this behaviour going on in the sorry saga unfolding in this thread....pity about that.

[Steeler]

Hi All

Through to the keeper this one.

Cheers

Steve

[finga]

Hi All

Through to the keeper this one.

Cheers

Steve
Oh, come-ooon. Have a go ya mug :)

[PinHead]

And what is wrong with a small manufacturing business running their business the same. I run my small manufacturing business in a very similar way. Its a safer way of running a small business. So seeing most custom boat building business are essentially small business, so why cant things be the same?

Ron

the differene between what I ask the money for is a finished product..I can deliver that product to the door as a complete itme...with progress payments it is not a finished product...but everyone can run their business any way they want..it is up to their customers if they feel comfortable dealing under the conditions.

[Steeler]

Oh, come-ooon. Have a go ya mug :)


Hi Finga

Keeping a low profile,my recent thread regarding freedom of speech got me a blue light. Loss of 5 DEmerit points and do not pass go and do not collect $200.00

Luv Ya Mod5

GROUP HUG TIME

Cheers

Steve

[PADDLES]

again it comes down to what conditions of sale a buyer will accept. i work for a fairly large engineering firm who designs/constructs fairly large things on behalf of our clients. we (as a buyer) generally create our own contracts and conditions of sale as per the australian standards. the seller generally has to provide us (the buyer) with bank guarantees of 10% of the contract value in order to meet the australian standard contract and therefore do business with us. most businesses treat this as normal. as a contrast, there are some rather large offshore businesses however that do the opposite and enforce their own conditions of sale or they won't sell, our clients then have to decide just how much they want their stuff. i agree with pinhead, there's an element of trust in any transaction and an element of the unknown ie. you just don't know how nasty the person might become if you dud them so why tempt fate and pay dearly.