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Tuesday, October 21, 2014

Question

Can someone tell me if receiving subcontracts to clean offices is as beneficial as bidding on contracts myself?


Answer

Obviously, the contract holder has the financial advantage since all the proceeds from the job go to that company. In a subcontract arrangement, the primary contractor holds back some funds to pay for costs of job procurement, invoicing, inspections, and other office expenses, as well as a profit for the company.
That is not to say that a subcontractor cannot make an adequate income from the work, but your question was about what was most beneficial. To receive the full payout for the job is clearly the most favorable arrangement, but there may be circumstances where subbing is economically acceptable, such as in a carpet cleaning subcontract where the payout is $.22 a sq. ft. and that is what you normally charge for this sort of work. You get steady work at a rate you can live with and all are happy, if the contract holder is faithful and pays on time and without a hassle.
When considering subcontract work, attention needs to be given to the solvency and payment reputation of the contract holder. One who doesn’t pay for work done or delays payment for weeks and weeks, is not providing any benefit to you, and you are better off managing the whole operation for someone else.
And make sure you are truly being treated as a legitimate subcontractor and not as a glorified employee. See http://www.icanatex.com/Answer.asp?ID=3157, just answered, for more on subcontracting.

Lynn E. Krafft, ICAN/ATEX Editor
lekrafft@juno.com