Tradies: Confirm Customer Funds Before Work

For a contractor, one of the hardest payment risks is committing labour, materials and time before knowing whether the customer has the ability to pay.

The contractor’s payment problem

An invoice or promise to pay does not itself prove that funds are available. Too often, contracted work is completed but when it comes time to pay, the customer refuses, disputes the work or only has part of the agreed amount. Payment upfront is a big ask for any customer, and even suggesting this will almost certainly lead to losing the job. This situation needs a solution. A solution where contractors are absolutely certain that their payment is available, and the customer is absolutely certain that the work will get done.

Funding confidence without immediate settlement

Escrow provides this certainty of funds for the contractor. Payment for the work is held securely in an escrow account, while the job is completed. The customer can not voluntarily withdraw or retrieve the funds, so the contractor can be certain that the money is still there. When the job is completed, both parties confirm to release payment to the contractor. The contractor can independently verify the funding status before completing the work via the GoEscrow app or directly from GoEscrow. The transactions can even be arranged such that partial payment is released at different stages of the work, ensuring that the contractor gets the necessary capital to complete the job.

The simple steps of using GoEscrow

Both the Contractor and the Customer create GoEscrow Accounts.
The parties create the transaction and any necessary details within the GoEscrow app.
The Customer deposits the payment for the job into the GoEscrow Account.
The Contractor can see that the payment is being securely held, and so they are clear to complete the work.
Once the work is done, Contractor and Customer confirm within the app, and the payment is sent directly to the Contractor.

A real world example

Joe is a concreter who advertises his specialty concrete driveways online. Sally see’s Joe’s Ad and decides to go with him for her new driveway. Joe quotes $5000 for the job and Sally agrees. Joe doesn’t know Sally personally, and so he doesn’t want to just hope that she will pay him in full when the driveway is finished. Sally doesn’t know Joe, and even though his Ad looks good, she doesn’t want to pay $5000 until the work is done. Joe and Sally decide to use GoEscrow and they create their transaction within the app. Sally deposits the $5000 into her GoEscrow account and Joe can see that it is being held securely until the job is finished. Joe now feels comfortable to complete the work since he can see that the payment is waiting for him. The driveway is finished and Sally is satisfied, so both parties confirm within the app and Joe receives his payment.

But what if?

What if Sally never confirms to release payment?
- GoEscrow’s Anytime Escrow service has a confirmation window. If Sally doesn’t confirm release or dispute release within this time, the payment will be automatically released to Joe. (Sally may just forget to confirm, in which case Joe will receive his payment when the window expires)
What if Sally never deposits the payment into escrow?
- Joe can see the funding status of the transaction in the GoEscrow app. If he can see that Sally has not deposited the payment, then he should not complete the work.
What if Sally deposits the payment and then withdraws it while Joe is doing the work?
- Sally can not withdraw the payment by herself. She would need to create a dispute, and Joe would need to confirm the dispute for her to receive the money back. This means that Joe can be sure that the money won’t disappear for some unknown reason.

What escrow does not replace

It does not replace a clear scope, quotation, contract, variation process, invoice or the legal requirements applying to the work. If a work variation requires additional funding, the parties may agree to another separate escrow to cover the cost. GoEscrow simply secures the transaction from one party to another, if there are more requirements like building approval and external sign-off, these may be eligible for a more complex escrow agreement.

Check the transaction yourself

Do not rely on a screenshot or message saying that payment has been made. When using GoEscrow, verify the transaction status through GoEscrow itself. For more information on fake-payment screenshot scams, see this page: Fake Payment Screenshots and Bank Transfer Scams: What Sellers Should Check

Frequently asked questions

Can I use GoEscrow for subcontracting?

Yes, GoEscrow can be used in subcontractor transactions. In a similar fashion as previously mentioned, GoEscrow can be helpful to secure a payment to the subcontractor while they complete work. It is important to remember that if an escrow agreement with a customer relies on another escrow agreement (to a subcontractor), then the original escrow agreement could be affected by the dispute of the subcontractors agreement. In cases such as these, it is best to consult with a financial planner before entering into the transaction.

What if the customer sends me a screenshot of payment?

A screenshot is not the GoEscrow funding confirmation. When GoEscrow is being used, the seller should rely on the transaction status in GoEscrow and wait for confirmation that the funds are in escrow before doing the work. see: Fake Payment Screenshots and Bank Transfer Scams: What Sellers Should Check

Does GoEscrow check the contractors work?

No. GoEscrow manages the financial interaction. It does not inspect or certify the work or job and does not independently verify its quality, condition, authenticity, ownership or title.

Who says the funds can be released to the contractor?

The GoEscrow product is designed around payer-controlled settlement: once the applicable conditions are met, the payer authorises settlement and GoEscrow remits the funds to the payee in accordance with the transaction and its terms. GoEscrow transactions can be organised with a variety of settlement conditions which should be tailored to the specific transaction at hand.

What happens if contractor and customer disagree?

The funds can remain in escrow while the matter is addressed under the applicable GoEscrow cancellation or dispute process. The outcome depends on the circumstances, party instructions and the GoEscrow Terms of Use; using escrow does not guarantee a particular dispute outcome.