What If We Pay Cash? The Risks Of A Cash Deal Roof Renovation

Beyond “how much will it cost?” and “when can you get started?” one of the most common questions I get asked when providing customers with roof replacement estimates is “can we pay cash?” I can certainly appreciate a customer asking this. (the implication of course is paying cash = no tax on the price for the service) After all, the cost difference in Ontario between a cash job and a properly invoiced job is an astounding 13%. There are, however, a number of risks associated with cash job transactions. Today’s article will attempt to bring these risks to the forefront and help homeowners make informed decisions when considering a cash deal for their roofing project.
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Benefits Of A Cash Job
A Homeowners’ main benefit of a cash job is obvious. You can get a rather substantial discount by avoiding the tax on services like roofing projects. Considering the average cost of a roof replacement in The Durham Region, the savings could add up to well over $1000.

Contractors who take on cash jobs will increase their overall business. On average, we turn down 25 jobs per year because we chose not to offer cash job options. These 25 jobs would equate to approximately a 10% increase in sales for us.

Risks And Problems With Cash Jobs
Contractor’s risks involved with cash jobs include stiff penalties and possible jail time for any tax fraudulent convictions. These penalties and/or jail time do not include paying back the unreported tax with interest. While these risks have always been present for contractors who take on cash jobs, the CRA and Ministry of Labour have become less tolerant of offenders and have implemented more sophisticated means of catching contractors who engage in cash jobs or unreported tax. These measures have turned cash job proposals for many roofing companies into proposals with too much risk and not enough reward

Contractors also run the risk of facing lawsuits from injured workers who have no WSIB coverage on cash jobs.

There are other risks. However, these are two of the bigger risks that most contractors consider when a cash job option is proposed.

Risks Homeowners Should Consider
With this said, this article is intended to show the risks associated with cash jobs from a homeowner’s perspective. Some of the bigger risks include:

No Warranty Or Recourse Available Paper documentation, such as an invoice, is often the only proof you have that the work done on your home was done as per the written agreement. This invoice can serve as your workmanship warranty and proof of the agreed upon work for an agreed upon price. With out this document, you have little to no chance of winning, should you attempt to take any disagreements regarding the work expectations to the courts.

No Option To Voice Public Opinion On Review Sites Many homeowners are using review sites such as Homestars and Google to gain perspective on the experience other homeowners had from contractors they may be considering. Contractors who mostly offer cash jobs and have no paper trails can easily manipulate these review sites.

For Google, they can simply choose not to use a service called “Google My Business” If you do not use this service, Google Reviews will not be available for your company.

For Homestars, every post requires an invoice. If you do not have an invoice, your review post can be taken down, if the contractor wishes.

These two principles give contractors who take on cash jobs a pretty good advantage in manipulating reviews posted. They can choose not to use Google (you do not need an invoice to post a Google review so shady contractors tend to avoid them), and they can chose to only leave up positive Homestars reviews, while the less than stellar reviews get removed for lack of an invoice.

Workers Are Not Covered By WSIB Or Labour Rights On Cash Jobs The roofing industry has one of the highest premium rates for WSIB. That’s because we have one of the highest accident rates among the trades. If anyone should have WSIB coverage, it’s a roofer! Injuries resulting from roof accidents can cause long term lay-offs. Without proper coverage, persons in this trade can be left with no financial compensation and no ability to earn a living with their skill set. Furthermore, cash jobs do not protect employee’s rights without a paper trail. If a worker wanted to make a claim with the Ministry Of Labour regarding the Employment Standards Act, they will have a hard time proving any claims if the incident took place on a cash job. In extreme conditions, the workers are either legal or illegal immigrants who are working for pay that borders on slave like conditions.

Cash Jobs Can Open The Door For Lawsuits An injured worker with no compensation entitlement or ability to earn money with their skillset can be put into a desperate situation. It’s not uncommon for workers who are put in this situation to attempt to sue either the contractor or the homeowner. If you think this is over dramatic, look into the rights of “invitees” on a property and the obligations a homeowner needs to provide to “invitees” You might be surprised.

Manufacturer’s Certification Means Nothing In a Cash Job One of the advantages of using a certified contractor is that the manufacturer will have a record of the installation. In a worse case scenario where the contractor goes out of business and an issue arises, you will still have the backing from the manufacturer if the contractor was certified. If you do a cash job with the same certified contractor, however, you will not get the support from the manufacturer without a paper trail.

Most Reputable Contractors Do Not Engage In Cash Jobs A lot of cash jobs are the result of newer companies who are desperate to gather as much work as they can. These contractors often lack the knowledge and experience to perform the work at a high quality level. To make up for these short-comings, they are willing to take on cash jobs to gain an edge.

More reputable companies understand these risks are usually foolish and not worth engaging in. They also have a business plan in motion that assures they generate enough interest so they can avoid cash jobs. As a result, the trend is that better quality companies with good reputations tend to avoid cash jobs while, newer, less reputable companies take them on.

Cash job agreements in the roofing industry have been going for decades and they will probably continue for decades to come. What has changed is the sophistication with which the CRA investigates and monitors these agreements. Most, if not all, contractors who engage in cash agreements will eventually get caught. At Logik Roofing, we feel these risks do not add up to good business practices. For that reason, we respectfully decline all cash job proposals.

If you have any questions on this article, please contact our office.

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