Is it a red flag if a contractor only wants cash payment?

Yes, a contractor demanding cash-only payment is a major red flag in Ottawa and throughout Ontario. This practice often indicates potential tax evasion, lack of proper business registration, or worse - it could be a scam.

Legitimate contractors in Ottawa should offer multiple payment options including cheques, e-transfers, or credit cards. They need proper paper trails for warranty purposes, insurance claims, and to comply with Ontario's Construction Lien Act requirements.

Why Cash-Only is Problematic

When contractors insist on cash only, they're often trying to avoid leaving a paper trail. This makes it nearly impossible for you to prove payment if disputes arise, warranty claims are needed, or if you need to file a construction lien. Under Ontario's Construction Lien Act, you need documented proof of payments to protect your holdback rights and establish payment timelines.

Cash-only contractors also frequently lack proper WSIB coverage, liability insurance, or even basic business licenses. Without these protections, you could be liable if workers are injured on your property. Always verify WSIB clearance certificates at wsib.ca/clearances before any work begins.

What Legitimate Ottawa Contractors Should Provide

Professional contractors will provide detailed written quotes, proper invoicing, and accept traceable payment methods. They should be registered with the City of Ottawa if required for their trade, carry proper insurance, and provide HST numbers when applicable.

For electrical work, ensure they're Licensed Electrical Contractors through ESA (check at esasafe.com/contractor-locator). For gas work, verify TSSA certification at tssa.org. These licensed professionals understand the importance of proper documentation and payment trails.

Proper Payment Structure in Ontario

Follow Ontario's Construction Lien Act guidelines: never pay more than 10% upfront, maintain 10% holdback until 60 days after project completion, and make progress payments tied to completed work milestones. This protects you from liens and ensures quality completion.

If a contractor pressures you for large upfront cash payments or claims they can offer discounts for cash to "save on taxes," walk away immediately. Contact the City of Ottawa Building Code Services at 613-580-2424 if you suspect unlicensed work, or report suspected tax evasion to Canada Revenue Agency.

Red Flag Checklist

Beyond cash-only demands, watch for door-to-door solicitation, no fixed business address, pressure for immediate decisions, quotes significantly below market rates, or reluctance to provide references. Legitimate Ottawa contractors are busy enough that they don't need to pressure homeowners or cut corners on proper business practices.

Always get multiple quotes, verify licenses and insurance, check references, and ensure proper permits are pulled through ottawa.ca/building before work begins.