Financing a 2017 Yarder for $1.2M?

[CM1995]

No, they do not run company logging crews anymore. As a matter of fact the one harvest manager that was 100% for this to happen was the one who was head of company crews when they had them.

The way I explained it to him in our meeting was you take a highway contractor, if they have a project they get generally 25% of the contract price up front and then construction draws as they go. Same as a home builder, etc.

Loggers are the only ones that are dumb enough to do the work first and front all of the cost waiting for it to trickle in afterwards.

I told them that I wasn't going to operate that way anymore. I'm going to operate as a contractor on any large scale project would.

We do not get any money upfront in the commercial world. Billing is done every month on the 20th or 25th then wait 30 days at the earliest for a check. Sometimes it gets drug out to 45-60 days. Industrial construction can go 90-120 days.

Worst situation is starting a job at the end of the month then bill next month and wait for 30 days if you are lucky. So 60 days out on pay in that situation.

Retention of 5-10% is held on each pay request to be paid at the end - eventually. We are waiting on retention on a school project that was final'd out and occupied in November of last year.

Lumber prices being where they are is the reason the wife and I getting ready to start our house.

 

[Hallback]

We do not get any money upfront in the commercial world. Billing is done every month on the 20th or 25th then wait 30 days at the earliest for a check. Sometimes it gets drug out to 45-60 days. Industrial construction can go 90-120 days.

Worst situation is starting a job at the end of the month then bill next month and wait for 30 days if you are lucky. So 60 days out on pay in that situation.

Retention of 5-10% is held on each pay request to be paid at the end - eventually. We are waiting on retention on a school project that was final'd out and occupied in November of last year.

Lumber prices being where they are is the reason the wife and I getting ready to start our house.

That's much different than the construction world up here. If you're doing a government project it's just as I stated as we have done many of them when I was partners in CEI. (PRE-2008)

 

[Birken Vogt]

A guy I met was working on building a large medical facility and slipped net 15 on regular billing into his contract. They signed it. When the money started coming due, they were not real happy to notice that. In fact they had no ability to pay so quickly. He allowed them to pay net 30 but made sure they knew they had to stay on top of it. No 60 day billing on that job.

I doubt any timber company would let something like that get past them.

 

[Hallback]

A guy I met was working on building a large medical facility and slipped net 15 on regular billing into his contract. They signed it. When the money started coming due, they were not real happy to notice that. In fact they had no ability to pay so quickly. He allowed them to pay net 30 but made sure they knew they had to stay on top of it. No 60 day billing on that job.

I doubt any timber company would let something like that get past them.

We get paid weekly from some companies and twice monthly from the others.

 

[Hallback]

If somebody's going to do the net 30 after 30 billing on a contract they're going to be paying plus 12% or I won't do it.

 

[farmerlund]

Loggers are the only ones that are dumb enough to do the work first and front all of the cost waiting for it to trickle in afterwards.

Sounds like your farm'n. lol

 

[Hallback]

Sounds like your farm'n. lol

Funny you mention it because I also do some of that.

 

[crane operator]

Loggers are the only ones that are dumb enough to do the work first and front all of the cost waiting for it to trickle in afterwards.

We get paid weekly from some companies and twice monthly from the others.

I always do the work first before I get paid anything. The big guys are the worst about paying, mostly 60 days and you aren't getting any interest $ from them.

Getting paid weekly sounds like you have it pretty good.

 

[92U 3406]

I've heard some of the oil companies are 90 days. Rediculous.

 

[Hallback]

I would imagine you guys have profit margins greater than 3% at best

 

[Welder Dave]

A friend of mine had to agressively ask to get paid after already waiting over 90 days working for one of the oilfield drilling contractors.
I know some gov't. contracts have progress payments if they're satisfied the work is progressing at the right pace.

 

[CM1995]

I would imagine you guys have profit margins greater than 3% at best

Yes my margin is better than 3%. It has to be or we could not stay in business with the amount of material we have to buy.

 

[Acoals]

Yes my margin is better than 3%. It has to be or we could not stay in business with the amount of material we have to buy.

3%? Isn't that like grocery store and LTL freight cutthroat margin territory?

 

[Hallback]

3%? Isn't that like grocery store and LTL freight cutthroat margin territory?

Exactly! We survive on cash flow not windfall profits.

 

[AzIron]

In emergency repair work busted water mains collapsed sewers stuff like that it can take 5 months to get paid but you know that going in and charge accordingly

Seems like a good move on the timber company are they taking interest against financing the machine

 

[MG84]

3%? Isn't that like grocery store and LTL freight cutthroat margin territory?

Thats what i was thinking, I’d hope it’s many times that but IDK, never been in commercial or heavy construction, sounds like I don’t want to be lol. I realize all the numbers are a LOT bigger, and at the end of the day that means more profit, but sometimes it also just ends up moving around big numbers for the same money.

 

[Claudio Gil CPA]

I made a deal with a very large publicly traded timber company yesterday and signed a contract for 10 years worth of work at 18 million board feet per year, More if we need it to keep us busy through the year.
The only catch is we need to purchase a grapple yarder to do these jobs. With the current economic and political climate I don't know of any places that would touch yarder financing right now.
Who would you recommend as our local institutions are out as that is too high of a dollar amount for them.

Do you have a contact at a bank that might be able to help with this?

Another question too: how are your financials? Are they clean, showing profit, do you have a clear understanding of how this contract will impact your bottom line? It shouldn't be too difficult if you're working with a banker in your industry and your financials are clean and up to date.

 

[Hallback]

Do you have a contact at a bank that might be able to help with this?

Another question too: how are your financials? Are they clean, showing profit, do you have a clear understanding of how this contract will impact your bottom line? It shouldn't be too difficult if you're working with a banker in your industry and your financials are clean and up to date.

Washed my hands of it when the timber company wasn't willing to share the risk

 

[Claudio Gil CPA]

Washed my hands of it when the timber company wasn't willing to share the risk

Ah probably a good idea if they weren't willing to get in themselves.