Customer deposits

[yellowvanman]

For the REAL requirement of having to put customers deposits in a 3rd party bank account, how is this actually done? Is it easy enough?

 

[gr7]

We opened an additional business bank account specifically for this purpose, your bank will be able to sort this out for you. Not sure if this is the correct way to do it, it is just my interpretation of the REAL code.

 

[SolarCity]

We have never done this. Seems a bit of overkill to me.

 

[Markc]

We do also have a deposit account but on my REAL Audit last week she seemed to have an issue with this (As with many things!) as she still deemed it as a company asset. HOWEVER when I then explained we also register the job via REAL it is covered by their deposit insurance scheme and so the money is safe guarded. She was happy then.

 

[yellowvanman]

Mark

Can you explain further about registering the job via Real?

 

[Markc]

Part of being a member if REAL is you can register the job online with them via their insurance backed scheme. You register the job and deposit / contract price and they insure this to the client directly. The policy documents are sent direct to the client. So if you go bust before commencing the install the customer is protected. As a REAL member it's free. Additionally the client can for £35 insure the warranty you give the client again in case you go bust the warranty you offer is protected. The client has to pay for this element themselves.

 

[Worcester]

Being a member of REAL, you will have signed up to their customs and practice guide - check it out here:

Consumer Code - Scheme - REAL Assurance Scheme

In simple terms, all money taken in advance of a job starting MUST be deposited in a SEPERATE "Client" account (think of paying a solicitor the deposit when you bought your house)

You must not take more than 25% deposit
You must not take more than a total of 65% (i.e. an additonal 35%) more than 21 dyas beofre the scheduled install date.
Money's taken in advance can only be used to buy materials for this specific job / deposit on hire equipment etc.

i.e. you can't use to as cash flow for your business

(Most business fail with full order books! - ususally due to cash flow - they are using the next job to pay for this one - REAL is designed to protect the consumer form that. So if you want to grow your business you need to be proberly capitalised.)

Setting up this bank account is easy - just go speak to your bank manager and tell them what it's for

Then, seeing as you are a REAL member, these deposits are insured on behalf of the customer in case you go 'bump'. It is a very good schene, designed to give confidence to the consumer, and especially useful if you are a small business, it's one more thing you can give confidence to your cutomser with.

When you've got the deposit, you just register it via the REAL Assurance / Insurance website (it's FREE for REAL members) and you're done
Insurance - Members - REAL Assurance Scheme

Remember to give the customer this guide Consumer leaflet A5 version to print double-sided when you are getting them to sign the contract.


My emphasis below:

If a member requires the consumer to pay a deposit when the contract is signed, this will constitute a reasonable percentage of the estimated overall costs of the work as set out in the contract, for example 15 per cent. It should not exceed 25 per cent under any circumstances. Members will only use this money for work under the contract, for example for purchasing goods. Members will repay it promptly if the contract is cancelled in line with the conditions set out in section 6.2 of this Code. This is a very important requirement of the Code.

If the member subsequently requires a further advance payment to be made by the consumer, this must constitute a reasonable percentage of the overall costs of the work and will only be used for work under the contract, for example for purchasing goods. Under no circumstances can the deposit and the further advance payment, taken together, exceed 60 per cent of the estimated overall costs of the work. Members can only require a further advance payment no more than three weeks before the agreed delivery date of all the goods to be installed. Members will set out clearly in the contract the amount and timing of all payments required.

Members must place the deposit and the further advance payment, if required, in an account specially set up in the consumer's name (such as a 'client' or other third party account). This must be separate from those accounts linked to the member's own credit and banking facilities. Guidelines for setting up and administering these arrangements are available from most banks. The money in this account should only be used with the consumer's consent. (This can be obtained in advance when the consumer signs the contract.)

In this way, if the member falls into receivership, administration or bankruptcy before the contract has been completed, the consumer will be able to recover his or her money. In such a case the money held in the special account should either be refunded to the consumer or passed directly to another member who has agreed to complete the contract in line with section 9.5, below.

The scheme administrator launched the Deposit and Advance Payment Insurance Scheme in November 2010. All members are required to take part in it unless they can demonstrate that they already have equivalent cover in place. Members will continue to keep consumers' money separate from the money in their own bank accounts as set out above.

Where a member uses a consumer's money, paid in advance, to purchase goods, and where those goods are delivered to the member, the member will hold the goods on trust for the consumer and will keep them separate from its own goods and those of third parties. The member will keep such goods properly stored, protected, insured and identified as the consumer's property. The consumer should be able to inspect or repossess the goods at any time. The legal title to those goods, or the proportion of them that has already been paid for, should pass directly to the consumer. In this way, if the member falls into receivership, administration or bankruptcy before the installation takes place, the goods will remain the consumer's property.

Gordon

 

[confounded]

Part of being a member if REAL is you can register the job online with them via their insurance backed scheme. You register the job and deposit / contract price and they insure this to the client directly. The policy documents are sent direct to the client. So if you go bust before commencing the install the customer is protected. As a REAL member it's free. Additionally the client can for £35 insure the warranty you give the client again in case you go bust the warranty you offer is protected. The client has to pay for this element themselves.

We pay the £35 for our customers so we can claim (and provide) we offer a 5 year insurance backed warranty. Some of the other schemes we investigated were twice this amount. Seemed a small price to pay to reassure customers.

 

[TedM]

Have you checked with REAL that that is OK?

It could invalidate the insurance and insurance companies being what they are, they don't need much excuse to not pay out.

 

[confounded]

Have you checked with REAL that that is OK?

It could invalidate the insurance and insurance companies being what they are, they don't need much excuse to not pay out.

Yes, infact fact they allow you to pay by card on the phone. Ideally you should have the customer policy number that they got for the deposit protection but the last one I did was just by customer details. Invoice sent to me and policy details sent to customer.

 

[Markc]

We pay the £35 for our customers so we can claim (and provide) we offer a 5 year insurance backed warranty. Some of the other schemes we investigated were twice this amount. Seemed a small price to pay to reassure customers.

How do YOU pay for this? The documents are sent direct to the client and not you? Do you pay this as a final invoice discount?

 

[Markc]

Have you checked with REAL that that is OK?

It could invalidate the insurance and insurance companies being what they are, they don't need much excuse to not pay out.

Have to agree with you here TedM. It's a choice of the client not the installer.

 

[Markc]

After having a REAL Audit it was made plan and clear to us we are NOT here to sell insurance schemes or policies. To insurance back the warranty you offer the client it has to be an impartial decision and not influenced buy the installer. (Real Auditor words and not mine).

Not that I'm saying there is anything wrong with offering an insurance backed warranty, it's just what we were told only two weeks ago by REAL!

Is £35 really going to make a big difference to the job anyway?

 

[confounded]

After having a REAL Audit it was made plan and clear to us we are NOT here to sell insurance schemes or policies. To insurance back the warranty you offer the client it has to be an impartial decision and not influenced buy the installer. (Real Auditor words and not mine).

Not that I'm saying there is anything wrong with offering an insurance backed warranty, it's just what we were told only two weeks ago by REAL!

Is £35 really going to make a big difference to the job anyway?

We were just looking at a way of offering an insurance backed warranty as many of our competitors offer them and some customers requested them (seeing them as the norm). I was told by QNAW that we can offer to pay for the customers to extend their deposit insurance and it seemed a simple way to do this.

I will double check with REAL that this is acceptable practice and post when I know more.

 

[Echo]

I spoke to a gentleman from REAL at ecobuild last week about buying the £35 IBW on the clients behalf (paid for directly by us) and he said that this is fine, and a good idea, apparently its something they are going to look at including when you join REAL and it will be paid for by our fees.

 

[confounded]

I spoke to a gentleman from REAL at ecobuild last week about buying the £35 IBW on the clients behalf (paid for directly by us) and he said that this is fine, and a good idea, apparently its something they are going to look at including when you join REAL and it will be paid for by our fees.

Thanks Echo, all my dealings with QANW suggested this was an acceptable process.

 

[Markc]

Can only pass on what we have been told.

 

[t4sltd]

This insurance excludes electrical and mechanical breakdown and manufacturer's warranty and is capped at contract price with £500 excess.
IWABIZ cover is back to back (actually provide useful cover as far as I can see) but is more expensive.
As everyone else gets the cover I see it as becoming yet another cost of doing business rather than a marketing tool.