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After being awarded a contract to install flooring materials
for a particular job, Smith Floors’ practice is to take delivery
at its warehouse of the flooring materials specified under the
contract, inspect the flooring materials to ensure that they
conform in both quality and quantity with the specifications for
the particular job, inspect the job site to verify that
installation may proceed, and deliver the flooring materials to
the job site a few days in advance of the installation date to
allow the materials to “acclimate” to the environment.
Smith Floors typically bills its customers a “service
charge” ranging from 10 to 20 percent of the cost of the flooring
materials to be installed. The service charges cover Smith
Floors’ cost of receiving, storing, inspecting, and delivering
the flooring materials to the job sites. Smith Floors bills its
customers for the flooring materials as soon as possible to avoid
expenses associated with financing the purchase of the flooring
materials. However, Smith Floors sometimes does not receive
reimbursement for the cost of the flooring materials for several
months. Smith Floors does not charge interest when reimbursement
for the cost of the flooring materials is delayed.
After a job is completed, Smith Floors retains (for
approximately 1 year) scrap or excess flooring materials to
ensure continuity in the dye lot for a particular job in the
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Last modified: May 25, 2011