It works okay with small contractors who inventory one kind of product or deal with just a few factories -- they have a 30 day credit line which means they don't have to pay until a few weeks after they've collected the balance from the customer. It can be a problem for a very small out-of-the-home contractor but those can be the ones consumers need to worry about. Not so with interior designers who provide a widely diverse kind of product and without a showroom cannot establish 30 day credit lines (I do happen to have those credit lines with most of my regular suppliers but then I've specialized in the lighting a rarely do an full on interior job). Large general contractors who build large buildings or tract homes are covered by very large financing lines from banks so aren't concerned about the 20% limit. There's loopholes in everything as I won't even start on the smallest job without a $500.00 to $1000.00 retainer on hourly fees. As the installation is from a third party service, I an only selling materials and can collect as much up front as I want, 50% being the normal deposit. I can also have them sign an agreement that they are the builder-contractor, that they are aware I am a designer consultant, and that I can act as an agent in collecting and distributing money to installers. This kind of accounting would not work with a specialized, small contractor as their installers are on salary and they have control of their time.
(But, yes, this is a consumer protection state -- it's hard to pull of a con in this state and believe me, they were rampant).
Hmmm. There are bad people everywhere. I have a friend, an elderly friend who has been conned a couple of times. Most recently, some guy said he was cutting down trees in the neighborhood and would she like for him to take down a tree in her yard that had died. She said yes (why, I don't know). Then he said he needed money upfront, so she gave him $300 cash and as far as I know, that was the last she saw of him. Small peanuts, but irritating. I don't think the 20% law would have helped her.
One would have to be aware of the law -- only brick-and-mortar established contractors are audited. Giving a perfect stranger $300.00 without references is tantamount to going out in the middle of the street and setting the money on fire.
