I have a really hard time finding anything about this out on the internet. I know for a fact I am not the only one who deals with this. In my years of being an architect thank god I have only been stiffed once and it was a small project but a huge trouble I have is getting paid on time. I would say the typical client for me pays an average of 3 months after invoicing. Everything is urgent, urgent, urgent except when it comes to letting go of some of their own money. These are clients I know will pay and I have worked with for years but they always take so long and sometiems have to be reminded many times.
Ive tried so many different things to remedy this and I really want to know what you guys out there do. Ive tried watermarking all my drawings and saying I wont release them until final payment but that just never works. There is just never enough time to wait for the check even if I offer to go pick it up.
When writing proposals I have stated that we will not release final drawings until recieving final payment. I have NEVER not even once gotten a project when I add that clause because I know for a fact my competitors dont do that. Even when i am cheaper they go with the other guy who they dont have to pay before recieving their product.
This has become especially troublesome lately because Its been months since recieving a payment and I probably have 40k out there in invoices waiting to be paid. I cant just go to my clients and say "hey I need the money now so I can feed my family".
For overdue invoices mid-project put the brakes on. When they cry 'urgent' remind them of the outstanding balance. The minute you receive payment deliver the work.
Final payment is another story. Best strategy I know is to make it as small as possible. Assume you're not going to get it and structure your fee accordingly.
I'm a little late to this thread, but here's how we avoid non-payment.
First, follow what others have said, stop work if an invoice isn't paid w/in 30 days. This is written in our contract, including language that states that the architect is not liable for any added costs due to suspension of services due to non-payment.
Second, structure your payments, and the re-payment of your retainer, so that the last 50% of CA fees equal the amount of the owner's retainer that you still have in hand. So if CA is worth $10K, we leave $5K of the retainer (we pay retainer back in stages as the work progresses) to be paid back at completion of CA. So our last few invoices list $X in fees, and a credit of $X, for a net balance of $0. Only one owner in 15 years has done the math and realized how this would work. No owner has ever complained about it. The only thing that throws this out of balance is if we've provided additional services during CA, which does happen from time to time.
But we also don't sign off on any DOB documents at the end of the project unless we've been paid in full, so those additional services always get paid.
I've done the opposite of tintt. I've started adding a 30-day 1.5% late payment fee accrued monthly to all contracts. It's enough to cover late fees and interest from tapped lines of credit.
Also be fastidious about timely invoices. Don't give them an excuse for them to be late if you are always on time.
Finally be aggressive about collecting payment. A good cop-bad cop approach tends to work well. The nice project architect always tries to meet the client's demands while the mean office/project manager is always calling to collect payment. As long as you have provided a high quality of service to meet the contract, you should feel no guilt about demanding timely payment of invoices.
I like the good cop/bad cop thing but Im all my myself here so it might seem a bit bipolar.
Apr 25, 18 11:51 am ·
·
thisisnotmyname
Consider getting a part time person to assist with collections. There are many a-hole clients out there who think that they can treat you poorly because you are "just" a sole practitioner.
For overdue invoices mid-project put the brakes on. When they cry 'urgent' remind them of the outstanding balance. The minute you receive payment deliver the work.
Final payment is another story. Best strategy I know is to make it as small as possible. Assume you're not going to get it and structure your fee accordingly.
See Jaffe's First Law.
Apr 25, 18 12:46 pm ·
·
sameolddoctor
With international clients, I always assume the last payment will not come in. So all expenses + profit should be gotten from the payments before the final one. If the final payment comes in, its much more profit for the firm.
So legit question here, as I'm looking to go out on my own within a couple years: when did it become ok for society to fuck over architects? Between people thinking they don't need to pay for our services and government agencies controlling fees we can charge, it makes me worry that I wouldn't be able to make it if I tried my own thing.
Apr 25, 18 1:08 pm ·
·
jrharvey
I think the problem is the vast majority of people just see us as an unnecessary requirement enforced by the building code. The clients that really do value my service are those that want a good design and see value in having a beautiful building. For all others they just want to get the damn thing built and they know they need an architects stamp to get it permitted. We are not a value we are a necessary evil. Its like having to get your car inspected every year or paying your taxes. I try to avoid clients like that but when your starting out on your own thats like 95% of your work at least for me.
Apr 25, 18 1:27 pm ·
·
joseffischer
Never had a problem collecting as a contractor. Often the owner would receive a check during the final walk even though there would always be minor things that needed to be caught over the next week after the final walk. Not high enough on the pay grade to see or worry about invoicing on the architecture side, but I know it takes between 1-3 months to get paid and the higher ups don't seem to really start hounding clients until month 2...
Apr 25, 18 1:55 pm ·
·
Wilma Buttfit
It isn't that bad. I've been paid late but never not paid at all. If someone is not paying, you need to find out why. If you did a good job, they will pay. (I don't have any clients who think of me as an unnecessary evil, all work with me because they value me.)
I like the idea of an interest charge after 30 days. Most contractors include this. Seems fair, so long as it’s in the original contract and doesn’t scare off the clients.
Apr 25, 18 1:13 pm ·
·
jrharvey
I like the idea in theory but in reality I dont see this happening. Most clients seem insulted that I would even imply they MIGHT not pay or may be late. Even stating in the contract that I wont release final drawings until final payment is enough to make them choose another even more expensive architect.
Apr 25, 18 1:18 pm ·
·
won and done williams
I always include it in the contract and see what if any pushback I get. (Usually there is no pushback.) If you do get pushback, it will give you some indication of who you are dealing with from the outset. It's also an opportunity to layout the payment schedule and what your mutual expectations are. Ultimately, if it's a deal breaker for the client, you can choose to take it out, but do so at your own risk as thinks are likely to get dicey.
Apr 25, 18 1:36 pm ·
·
joseffischer
I was pretty sure AIA docs include this as standard, I know ours has this clause, but the higher ups never actually invoice for the extra
Apr 25, 18 1:55 pm ·
·
jrharvey
Exactly. No matter what they agree to before hand you dont want to push any buttons to a repeat client that actually does provide good paying projects. Obviously taking legal action would sever any relationship with those clients.
How are you invoicing your projects? Are you spreading out multiple invoices across several phases, or are you just doing the work and invoicing at the end?
If cash flow is an issue, and you're experiencing delays in getting those big payments, spread it out across multiple smaller invoices. Bill less, more often.
Apr 25, 18 1:42 pm ·
·
jrharvey
Great question. Currently about 75% of my projects are so small there is no way to really spread it out. The larger projects are spread out into 2 or 3 phases. The final payment is always so difficult to get whether its spread out or not.
It's a common problem. Developers operate on other people's money. It's an interest free loan when they can string you out.
Unfortunately, your repeat clients have been allowed to get away with dragging their feet, which makes retraining them very difficult. If they do eventually pay and if your competitors will get the business if you try to change things, then realistically you just have to decide whether they are worth the irritation.
You provide a service, if that service provides value to your client then you deserve to be paid ... end stop!
You run a business and need to pay staff and overhead and cover costs, if they don't respect that then let them know you'll have to work on projects that respect your "business needs". Don't need to get emotional with them, just matter of fact. They need you and if you position yourself and what you provide as being of value to them then they should recognize that you need to be paid in a timely manner.
Is it common to require a payment in full before handing over any signed and sealed drawings? I am dealing with a slick developer and want to ensure I don't get burned. I don't want to seem rude but I need to get paid!
You're worried about being rude to a guy who you're afraid is going to steal your services?
Asking for payment is not rude. Withholding product until payment is not rude.
Not paying some who has done work for you is rude. It's also illegal (in theory).
May 7, 18 9:30 am ·
·
MDH-ARCH
I agree, I can be a sucker.. I am just curious what other architects typically do?. Some clients give the " I want to make sure we get our permits first" and use that as leverage to not pay right away.
I'm a little late to this thread, but here's how we avoid non-payment.
First, follow what others have said, stop work if an invoice isn't paid w/in 30 days. This is written in our contract, including language that states that the architect is not liable for any added costs due to suspension of services due to non-payment.
Second, structure your payments, and the re-payment of your retainer, so that the last 50% of CA fees equal the amount of the owner's retainer that you still have in hand. So if CA is worth $10K, we leave $5K of the retainer (we pay retainer back in stages as the work progresses) to be paid back at completion of CA. So our last few invoices list $X in fees, and a credit of $X, for a net balance of $0. Only one owner in 15 years has done the math and realized how this would work. No owner has ever complained about it. The only thing that throws this out of balance is if we've provided additional services during CA, which does happen from time to time.
But we also don't sign off on any DOB documents at the end of the project unless we've been paid in full, so those additional services always get paid.
I worked with a structural engineer many years back who hired his mother ( old scottish woman ... sounded like Robin Williams as Mrs. Doubtfire ) to phone and collect on invoices. Funny to chat with but sharp as a tack and tough as nails with the mouth of a shipyard worker. The structural eng got his bills paid and had enough to drive a classic jaguar convertible on the weekends. She new all the tricks and everything got paid in 30-60 days.
To tag team on the good-cop/bad-cop -- early in my career I worked for a husband-and-wife duo who had trouble getting clients to pay. They were, in turn, chronically late with my own pay, eventually to the tune of 3 months worth. The big issue was that they would call the clients and frankly, be too nice -- and it was immediately obvious that the relationship of trust and intimacy that was so carefully cultivated between architect and client did NOT allow for a firm dialogue about accounts owed.
I agitated and ultimately the architects paid their accountant to make the calls. This ended up working much better, because it was very matter-of-fact and took things away from the realm of the chummy, designer/owner relationship and to the world of BUSINESS, which the owner does understand. It just kind of took all emotion out of it and let the architect maintain distance from such matters.
The accountant honestly called 1x per week and then with increasing frequency until bills got paid. Accountant was able to be firm in a way that architect wasn't. Highly recommended. In all honesty you could probably pay someone to do this via task rabbit or something. Or ask your freshly retired brother-in-law or something. You just need someone mature and business-like.
May 7, 18 11:59 pm ·
·
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The woes of getting paid
I have a really hard time finding anything about this out on the internet. I know for a fact I am not the only one who deals with this. In my years of being an architect thank god I have only been stiffed once and it was a small project but a huge trouble I have is getting paid on time. I would say the typical client for me pays an average of 3 months after invoicing. Everything is urgent, urgent, urgent except when it comes to letting go of some of their own money. These are clients I know will pay and I have worked with for years but they always take so long and sometiems have to be reminded many times.
Ive tried so many different things to remedy this and I really want to know what you guys out there do. Ive tried watermarking all my drawings and saying I wont release them until final payment but that just never works. There is just never enough time to wait for the check even if I offer to go pick it up.
When writing proposals I have stated that we will not release final drawings until recieving final payment. I have NEVER not even once gotten a project when I add that clause because I know for a fact my competitors dont do that. Even when i am cheaper they go with the other guy who they dont have to pay before recieving their product.
This has become especially troublesome lately because Its been months since recieving a payment and I probably have 40k out there in invoices waiting to be paid. I cant just go to my clients and say "hey I need the money now so I can feed my family".
What do you guys do?
3 Featured Comments
For overdue invoices mid-project put the brakes on. When they cry 'urgent' remind them of the outstanding balance. The minute you receive payment deliver the work.
Final payment is another story. Best strategy I know is to make it as small as possible. Assume you're not going to get it and structure your fee accordingly.
See Jaffe's First Law.
if you aren't billing monthly, start doing it
if you are billing by phase completion, stop
get a retainer that is in proportion to your monthly project risk
I'm a little late to this thread, but here's how we avoid non-payment.
First, follow what others have said, stop work if an invoice isn't paid w/in 30 days. This is written in our contract, including language that states that the architect is not liable for any added costs due to suspension of services due to non-payment.
Second, structure your payments, and the re-payment of your retainer, so that the last 50% of CA fees equal the amount of the owner's retainer that you still have in hand. So if CA is worth $10K, we leave $5K of the retainer (we pay retainer back in stages as the work progresses) to be paid back at completion of CA. So our last few invoices list $X in fees, and a credit of $X, for a net balance of $0. Only one owner in 15 years has done the math and realized how this would work. No owner has ever complained about it. The only thing that throws this out of balance is if we've provided additional services during CA, which does happen from time to time.
But we also don't sign off on any DOB documents at the end of the project unless we've been paid in full, so those additional services always get paid.
All 17 Comments
Offer a small discount, a percent or a few percent, for paying right away.
I've done the opposite of tintt. I've started adding a 30-day 1.5% late payment fee accrued monthly to all contracts. It's enough to cover late fees and interest from tapped lines of credit.
Also be fastidious about timely invoices. Don't give them an excuse for them to be late if you are always on time.
Finally be aggressive about collecting payment. A good cop-bad cop approach tends to work well. The nice project architect always tries to meet the client's demands while the mean office/project manager is always calling to collect payment. As long as you have provided a high quality of service to meet the contract, you should feel no guilt about demanding timely payment of invoices.
I like the good cop/bad cop thing but Im all my myself here so it might seem a bit bipolar.
Consider getting a part time person to assist with collections. There are many a-hole clients out there who think that they can treat you poorly because you are "just" a sole practitioner.
Have the wife or maybe a waitress call?
For overdue invoices mid-project put the brakes on. When they cry 'urgent' remind them of the outstanding balance. The minute you receive payment deliver the work.
Final payment is another story. Best strategy I know is to make it as small as possible. Assume you're not going to get it and structure your fee accordingly.
See Jaffe's First Law.
With international clients, I always assume the last payment will not come in. So all expenses + profit should be gotten from the payments before the final one. If the final payment comes in, its much more profit for the firm.
So legit question here, as I'm looking to go out on my own within a couple years: when did it become ok for society to fuck over architects? Between people thinking they don't need to pay for our services and government agencies controlling fees we can charge, it makes me worry that I wouldn't be able to make it if I tried my own thing.
I think the problem is the vast majority of people just see us as an unnecessary requirement enforced by the building code. The clients that really do value my service are those that want a good design and see value in having a beautiful building. For all others they just want to get the damn thing built and they know they need an architects stamp to get it permitted. We are not a value we are a necessary evil. Its like having to get your car inspected every year or paying your taxes. I try to avoid clients like that but when your starting out on your own thats like 95% of your work at least for me.
Never had a problem collecting as a contractor. Often the owner would receive a check during the final walk even though there would always be minor things that needed to be caught over the next week after the final walk. Not high enough on the pay grade to see or worry about invoicing on the architecture side, but I know it takes between 1-3 months to get paid and the higher ups don't seem to really start hounding clients until month 2...
It isn't that bad. I've been paid late but never not paid at all. If someone is not paying, you need to find out why. If you did a good job, they will pay. (I don't have any clients who think of me as an unnecessary evil, all work with me because they value me.)
I like the idea in theory but in reality I dont see this happening. Most clients seem insulted that I would even imply they MIGHT not pay or may be late. Even stating in the contract that I wont release final drawings until final payment is enough to make them choose another even more expensive architect.
I always include it in the contract and see what if any pushback I get. (Usually there is no pushback.) If you do get pushback, it will give you some indication of who you are dealing with from the outset. It's also an opportunity to layout the payment schedule and what your mutual expectations are. Ultimately, if it's a deal breaker for the client, you can choose to take it out, but do so at your own risk as thinks are likely to get dicey.
I was pretty sure AIA docs include this as standard, I know ours has this clause, but the higher ups never actually invoice for the extra
Exactly. No matter what they agree to before hand you dont want to push any buttons to a repeat client that actually does provide good paying projects. Obviously taking legal action would sever any relationship with those clients.
How are you invoicing your projects? Are you spreading out multiple invoices across several phases, or are you just doing the work and invoicing at the end?
If cash flow is an issue, and you're experiencing delays in getting those big payments, spread it out across multiple smaller invoices. Bill less, more often.
Great question. Currently about 75% of my projects are so small there is no way to really spread it out. The larger projects are spread out into 2 or 3 phases. The final payment is always so difficult to get whether its spread out or not.
Congratulations on your career choice.
if you aren't billing monthly, start doing it
if you are billing by phase completion, stop
get a retainer that is in proportion to your monthly project risk
It's a common problem. Developers operate on other people's money. It's an interest free loan when they can string you out.
Unfortunately, your repeat clients have been allowed to get away with dragging their feet, which makes retraining them very difficult. If they do eventually pay and if your competitors will get the business if you try to change things, then realistically you just have to decide whether they are worth the irritation.
in california, architects have lien rights similar to contractors.
design professionals lien prior to permit and the mechanics lien after permit.
retainers for new clients, or existing clients who are not so good about paying their bills...
You provide a service, if that service provides value to your client then you deserve to be paid ... end stop!
You run a business and need to pay staff and overhead and cover costs, if they don't respect that then let them know you'll have to work on projects that respect your "business needs". Don't need to get emotional with them, just matter of fact. They need you and if you position yourself and what you provide as being of value to them then they should recognize that you need to be paid in a timely manner.
If not cut em loose and delete their file.
Is it common to require a payment in full before handing over any signed and sealed drawings? I am dealing with a slick developer and want to ensure I don't get burned. I don't want to seem rude but I need to get paid!
You're worried about being rude to a guy who you're afraid is going to steal your services?
Asking for payment is not rude. Withholding product until payment is not rude.
Not paying some who has done work for you is rude. It's also illegal (in theory).
I agree, I can be a sucker.. I am just curious what other architects typically do?. Some clients give the " I want to make sure we get our permits first" and use that as leverage to not pay right away.
If it comes to that agree to have them withhold a small percentage. Small enough to take to small claims court.
I'm a little late to this thread, but here's how we avoid non-payment.
First, follow what others have said, stop work if an invoice isn't paid w/in 30 days. This is written in our contract, including language that states that the architect is not liable for any added costs due to suspension of services due to non-payment.
Second, structure your payments, and the re-payment of your retainer, so that the last 50% of CA fees equal the amount of the owner's retainer that you still have in hand. So if CA is worth $10K, we leave $5K of the retainer (we pay retainer back in stages as the work progresses) to be paid back at completion of CA. So our last few invoices list $X in fees, and a credit of $X, for a net balance of $0. Only one owner in 15 years has done the math and realized how this would work. No owner has ever complained about it. The only thing that throws this out of balance is if we've provided additional services during CA, which does happen from time to time.
But we also don't sign off on any DOB documents at the end of the project unless we've been paid in full, so those additional services always get paid.
I worked with a structural engineer many years back who hired his mother ( old scottish woman ... sounded like Robin Williams as Mrs. Doubtfire ) to phone and collect on invoices. Funny to chat with but sharp as a tack and tough as nails with the mouth of a shipyard worker. The structural eng got his bills paid and had enough to drive a classic jaguar convertible on the weekends. She new all the tricks and everything got paid in 30-60 days.
To tag team on the good-cop/bad-cop -- early in my career I worked for a husband-and-wife duo who had trouble getting clients to pay. They were, in turn, chronically late with my own pay, eventually to the tune of 3 months worth. The big issue was that they would call the clients and frankly, be too nice -- and it was immediately obvious that the relationship of trust and intimacy that was so carefully cultivated between architect and client did NOT allow for a firm dialogue about accounts owed.
I agitated and ultimately the architects paid their accountant to make the calls. This ended up working much better, because it was very matter-of-fact and took things away from the realm of the chummy, designer/owner relationship and to the world of BUSINESS, which the owner does understand. It just kind of took all emotion out of it and let the architect maintain distance from such matters.
The accountant honestly called 1x per week and then with increasing frequency until bills got paid. Accountant was able to be firm in a way that architect wasn't. Highly recommended. In all honesty you could probably pay someone to do this via task rabbit or something. Or ask your freshly retired brother-in-law or something. You just need someone mature and business-like.
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