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Getting Paid Up Front

BulgarBlogger

Is it possible to get paid up front for a certain phase of a project or does that turn clients off from working with you? That should solve the payment issue for most architects...

 
Jan 11, 15 11:33 pm
Carrera

Think about it, everything we buy is paid up-front…..even can’t buy a burger without paying first…why have we done this to ourselves….paying up front makes sense.

Jan 12, 15 1:22 am  · 
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BulgarBlogger

So then why haven't architects done this? Every firm I've worked at, the principal has been okay with getting paid AFTER certain work has been complete. I am not talking about a retainer here... I'm talking about progress payments.

Jan 12, 15 9:05 am  · 
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When you buy a product you take it home in hands, when you buy a service it is yet to be performed.

Jan 12, 15 9:23 am  · 
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Non Sequitur

Would you pay your contractor before he fixes your roof?

Jan 12, 15 9:40 am  · 
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null pointer

Are you new to this?

Have you ever head the word "retainer"?

Jan 12, 15 10:33 am  · 
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BulgarBlogger

That's why we have laws.... no- I'm not new to this... just a thought. Why can't we shift the dynamic between owner and Architect, where the Architect get's paid up-front for his/her services. If the Architect does not deliver the product the Owner paid for, the Achitect gets sued. By "Product the owner paid for", I am not talking about the Owner being picky about quality, but "product" in terms of what was stipulated in the contract. 

Jan 12, 15 10:52 am  · 
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geezertect

Why can't we shift the dynamic between owner and Architect, where the Architect get's paid up-front for his/her services.

Because the owner (generally a professional builder or developer) doesn't want to, and in a glutted market for architects they have all the leverage.

Jan 12, 15 11:39 am  · 
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proto

i request a retainer for any project that the client is not living in currently

(so, basically anything but residential remodel)

Jan 12, 15 12:13 pm  · 
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proto

Almost 10yrs later, this has shifted since then. Every project requires a retainer now.

Feb 11, 24 10:36 am  · 
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mightyaa

Retainer up front; figure out what your concern is and base it on that.  So, if it's a billing delay, like their process takes a couple weeks after they get the bill, it'd be enough to carry the work for one month plus two weeks.  If it's because I think they'll bail, I set it at my anticipated profit.  A blanket retainer could be used if you are niched into just a particular kind of project.  I also waive it for repeat clients.

I've also heard of using a accrual billing system where you bill anticipated and scheduled time for the upcoming month.  That way you get the check when the work is being performed versus living with the payment delay.  I don't like that because it screws up year end books a bit and dealing with the business manager is a pita needing more coordination... (basically, a lot more management is needed between the front desk and staff)

A method I normally use is top-end loading the billings...  It's a fixed fee, but break out the billing so the front end gets the larger invoicing regardless of time anticipated.  Sort of like knowing SD's will take 10% of the time, but setting up the billing to make it 15% and reducing the CA at the back end.

Asking for it all up front is a no-go given the length of typical projects I normally deal with.  We're talking 8 months to CD's and a year long construction.  No one would pay that up front.

Jan 12, 15 12:19 pm  · 
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BulgarBlogger

Asking for it all up front is a no-go given the length of typical projects I normally deal with.  We're talking 8 months to CD's and a year long construction.  No one would pay that up front.

I was saying pay each phase up-front; i.e.: Schematic Design, DD, or CD. 

Jan 12, 15 2:47 pm  · 
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Saint in the City

^ A retainer with a little front loading accomplishes exactly the same thing, with the added PR benefit of not asking for payment before services are rendered.

Jan 12, 15 3:24 pm  · 
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BulgarBlogger

NO- there's a big difference between a retainer and getting paid up-front for each phase. A retainer is a one-time deal. You do it at the beginning of the project.

Jan 12, 15 3:38 pm  · 
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Saint in the City

Now I'm wondering if you've ever billed a project?  Can you tell us what you are trying to accomplish that a retainer, some front end loading, and proper management of subsequent billing cycles does not accomplish?

Jan 12, 15 4:08 pm  · 
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BulgarBlogger

You are right... I have never billed a project. BUT I listen to all that happens in the office. I pay a lot of attention to all sorts of things. 

That being said, I can't tell you how many times I've heard principals say- "they haven't paid us yet." This notorious phrase is at the center of my question: why can't you only work on things you've been paid for?

An architectural office is not a restaurant. A restaurant is technically "hospitality" and there are certain expectations of what it means to provide "good hospitality". 

Business on the other hand is a completely different animal. What does it mean to be a good business man? Well- many things, but I would assume one of them is: getting paid!

Jan 12, 15 5:26 pm  · 
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What you have witnessed is know as the beggar’s waltz.

beggar’s waltz n. An involuntary and often impromptu form of theater, performed on demand
and often without rehearsal, usually in an effort to get paid for work that one has completed.
See Jaffe’s First Law.

Excerpt from The Hamptons Dictionary.

Jan 12, 15 6:14 pm  · 
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awaiting_deletion

Bulgar I learned to write proposals after 2 years out of school and then I quickly made a lateral move after going vertical in company. I literally put in my 2 weeks after getting promoted. I knew too much. So ever since I have been studying each firm I work or consult for. To me the fee proposal process is quite intriguing...............a lot has to do with type of work or premise for such work................... If it's strictly prospective design for jobs that use design to get financing or a sale there is a really good chance you will end up doing it for free and if anything get paid little up front if at all. The only reason you take the risk is there is the off chance you seal a large deal. This is realtor mentality and most developers and savvy owners use this 'prospective' work bait to just get free work from young aspiring architects. The "it's good for your portfolio" bullshit .........................then there is work that requires the license I NEVER FILE ANYTHING WITHOUT FULL PAYMENT UPFRONT which often means the rest of my fee, if I get objections that are my fault I finish the job..............I also recommend moving the funds around with regard to payment schedule, in other words do not match payment schedule to phases. Some clients you know will bail once you get the CDs done so you lopside the payment schedule, you basically do not deliver CDs until half or more of CA is paid...............bid phase if you can should be hourly or additional, in other words value engineering should cost the client your time...............lastly the most successful firms on collecting funds I know bill weekly. If client doesn't pay quickly you stop working immediately............hope that helps

Jan 12, 15 8:46 pm  · 
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sameolddoctor

NEVER WORK BEFORE YOU GET THE RETAINER

Jan 12, 15 9:09 pm  · 
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awaiting_deletion

Retainer (long and drawn out).........what movie sameddoctor, what movie?

Jan 12, 15 9:14 pm  · 
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BulgarBlogger

Some clients you know will bail once you get the CDs done so you lopside the payment schedule, you basically do not deliver CDs until half or more of CA is paid

I don't understand... in order to be in CA, you need to have CD's complete...

Jan 12, 15 11:38 pm  · 
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awaiting_deletion

payment schedule must not necessarily equal phase schedule.

in other words, you ask for another retainer and full payment for CD phaes prior to issuing the CD's.

or, you know that the fee is say 20%SD-20%DD-40%DD-20%CA, but you make the payment schedule 20-20-50, etc...

Jan 12, 15 11:58 pm  · 
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awaiting_deletion

or, if you are concerned the clients will bail, simply make CA phase a separate contract.

There's about a zillion ways to shuffle the process and payments

Jan 12, 15 11:59 pm  · 
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urbanity

are you willing to pay the project consultants that you hire up front? 

Jan 13, 15 11:26 am  · 
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Saint in the City

^ well -- but Bulgar would likely say 'yes' to that since in his scenario he gets paid up front. 

Bulgar:  I think you're attempting to avoid non-payment, which is smart.  But, with a retainer, some fair front-loading, and regular billing cycles -- monthly, twice a month, weekly if they'll bite -- you get the same result as your pre-pay idea, with none of the public relations fallout.

Most clients would rather keep it simple.  Keep it fair for both you and them.

Jan 13, 15 12:35 pm  · 
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haruki

I always get a retainer up front and stipulate in my contract that it is to be applied to the FINAL INVOICE and then make sure during the course of the project to bill frequently enough such that I don't expend work in excess of the retainer amount give or take. This method hasn't failed me yet. 

Jan 13, 15 1:16 pm  · 
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BulgarBlogger

are you willing to pay the project consultants that you hire up front? 

Of course- it's just money... numbers.... as long as I get paid, I don't care! :)

Jan 13, 15 1:20 pm  · 
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EthanHarris22

Getting paid up front for a specific phase of a project can be feasible and even beneficial for both parties. It helps ensure cash flow for the architect and can signal commitment from the client. However, some clients may prefer traditional payment structures. It's essential to communicate transparently about payment terms to find a solution that works for everyone involved.

Feb 11, 24 6:05 am  · 
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Bench

These AI bots are getting weirder ...

Feb 11, 24 4:37 pm  · 
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proto

Only consultant asking to be paid early for us: surveyors around here ask for 50% up front. We do invoice the owners in order to get into the surveyors schedules & only pay the surveyor once paid. We don’t float fees to the owner.

Feb 11, 24 10:39 am  · 
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In Spain. The usual down payment should be between 30% and 40% of the total amount. Often you will also find yourself with an intermediate and a final payment.

Feb 12, 24 2:54 am  · 
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