Running the Business · Part 2
Supply-house relationships and credit: the account, the terms, the personal guarantee, and the notice your supplier sends your customer
A supply-house account is the first credit a new contractor gets and the one that decides whether the next ten jobs can be materials-in-hand. This lesson explains how the account works, what the application's personal guarantee means for the entity you just chose, why paying on day 28 instead of day 45 is worth more than any discount, and the piece of paper that surprises new contractors most: the preliminary notice your supplier is legally allowed to send to your customer, and what to tell the customer before it arrives.
What the full lesson covers
- Open the account in the exact licensed name, with the license number, EIN, and certificate of insurance; expect a personal guarantee on the application, which reaches past the LLC or corporation to you.
- Pay the statement in full inside the terms, every month, from the first month. A supply house's credit decision on the $8,000 water heater order in year two is made by the payment history from year one.
- Use a resale certificate only for fixtures you will report tax on; never for pipe and fittings, which you consume (lesson 1.6).
- Your supplier can send your customer a preliminary notice within 20 days of the first delivery (Civil Code 8200, 8204). It is not a lien and not an accusation; tell the customer it is coming and why, before it arrives.
- If you do not pay the supplier, the supplier can lien your customer's property. That is the customer's problem, then the customer's lawyer's problem, then yours.
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More lessons in Getting Work
- 1Where the first ten jobs actually come from
- 2Supply-house relationships and credit: the account, the terms, the personal guarantee, and the notice your supplier sends your customerYou are here
- 3Subbing to general contractors: how to get on the list, what they check, and the four clauses in the subcontract that matter
- 4Property managers, home-warranty companies, and realtors: volume vs. margin, and the paperwork each one lives on
- 5Google Business Profile, reviews, and referrals: the only marketing that matters in year one, and the two laws that govern reviews
- 6Advertising law for a licensed contractor: the number on every ad and the van, the word you can never use, and what a misleading ad costs
- 7Pricing models: hourly vs. a flat-rate price book, the service fee, and good/better/best, inside the rules for service calls
- 8Estimating as a method: takeoff, labor units, materials, overhead recovery, markup vs. margin, and contingency
- 9Estimate vs. quote vs. bid: the legal difference, and the moment a number becomes a contract
- 10Public works: DIR registration, prevailing wage, certified payroll, and apprentices. A separate world; know it before you bid
- 11Template: the estimate worksheet, blank and worked
- 12Template: the price-book starter. Forty service tasks, each with the line that builds its price
- 13Template: the first-90-days marketing plan. Thirteen weeks, one page, nothing paid