How to Protect Your Contracting Business from Unethical Clients or Contractors

As a contractor, you’ll work hard to keep your business on the up-and-up. Every now and then, you may encounter clients or other contractors who don’t share the same opinions. Although you can usually just decline questionable offers, there are times when even associating with someone who’s doing wrong can get you in trouble. Here are a few red flags to watch for as you determine who to work with.

  1. Asks You to Bend the Rules

Predictability is the hallmark of a successful business relationship. And while you might have to deal with unexpected situations from time to time, you must have a basic framework that you can all agree on before you get started. Some clients and professionals don’t want to work within a designated framework. This might come out in many different forms, such as:

Be careful what you agree to do, even if it seems small. Someone who is willing to break the rules when it would be easy for them to follow it may make bigger requests once you’ve got more invested in the project.

  1. Doesn’t Want to Verify Basic Requirements

Clients and contractors will probably take time to vet your qualifications before agreeing to work with you. You should do the same. As a contractor, you know that someone asking you for proof of an active license, insurance, references and other things isn’t a matter of trust or credibility–it’s liability. You wouldn’t feel insulted during this part of the process, so neither should they. If someone acts offended because you asked them for evidence of their experience or ability to pay for the project, that might mean that they don’t have it.

  1. Wants to Pay You in Cash or Another Unusual Method

As a part of running your business, you’ll need to pay people and be paid for your services. The way that clients and contractors handle payment gives you insight into the way they run their own finances. For example, there are several state and federal laws designed to protect construction workers from wage theft, but they depend on a formal payment system. A contractor who wants to pay you in cash, or a subcontractor who wants you to pay them in cash, is probably trying deliberately to avoid detection. The last thing you want is to get caught up in a scheme that makes you liable for their actions.

  1. Refuses to Put Anything in Writing

Making sure that everyone is on the same page for various aspects of a construction project requires quite a bit of information put in writing. As a contractor, you’ll provide a detailed estimate or bid of your costs and expectations, so that other contractors and clients can review it and decide if it meets their needs. But what if they don’t want to do the same? Some people like to give a rough quote of their plans and then follow up with a detailed written explanation. You’ll want to wait until you get that detail before you agree to do the work or make any movement on the project.

  1. Expects You to Trust Them Without Reason

Reliable people take time to establish credibility with you. Dishonest, untrustworthy people try to get you take their word for it. If you’ve been working with a contractor or subcontractor for years, you might have ways to shorten the process that still guarantee everyone gets what they need. Be wary of professionals or clients who try to imply you should have that level of rapport on your first or second meeting. You don’t have to assume everyone is lying. Taking steps to verify the truth of their statements is simply good business.

As a licensed contractor, sometimes you have to learn which projects not to take, as well as the best ones for you. To find out more about becoming a licensed contractor, visit CSLS today!