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Streetwise Answers

We are a new specialist flooring sub contractor. We are trying to negotiate credit terms with a new supplier. It's not easy - I'm sure you know.
We need to use this supplier for a £300k contract we have with a very credit worthy client. The materials we need to buy from this supplier is around the £100k value mark.
I'm going down the line of proposing to this supplier that they allow us Net 60 days for all the materials, we put all materials on site and claim them in our first valuation.
My question is; generally speaking, should a contractor accept this or should I discuss this with them first?
Any thoughts are welcome.
Best regards

Hi Paul

You most certainly should discuss this with the Contractor.

Depending on the terms of your contract, you may have no entitlement whatsoever to be paid for materials on site!

In any event, if the contract does expressly provide for payment for materials on site, the provision is usually qualified by something along the lines of "...provided that the value of such materials and goods shall be included as and from such time as they are reasonably, properly and not prematurely so delivered and are adequately protected against weather and or other casualties"

In other words, not only has there got to be an expressiopn provision you will also have to satisfy certain criteria, and deal with matters such as protection, security insurance etc.

This is far from straightforward and you should think the matter through carefully, and take advice if necessary.

It also begs the question as to whether or not your business is adequately funded to undertake this project. Lack of funds is not unusual in a start up situation, but you have to deal with this carefully and do not tell the Contractor that you have a shortage of funds, because he may see that as an opportunity to gerty his flooring for nothing, by starving you of funds and causing your insolvency.

It sounds harsh but we are seeing that strategy more and more.

Best regards


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