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The Practice Management Knowledge Community (PMKC) identifies and develops information on the business of architecture for use by the profession to maintain and improve the quality of the professional and business environment.  The PMKC initiates programs, provides content and serves as a resource to other knowledge communities, and acts as experts on AIA Institute programs and policies that pertain to a wide variety of business practices and trends.

    

  • 1.  RE: collecting fees

    Posted 05-17-2016 11:21 AM

    As architects, we want to be practicing architecture.  We want to design.  However, we forget that architecture is a business, and we need to treat it as such. 

     

    I've worked at firms that send a huge bill at project completion and are then surprised when the client has sticker shock and refuses to pay.  I've also worked at firms that invoice monthly, but don't follow up when invoices get 60, 90 days out. 

     

    In my own practice, we'd developed a proactive system which begins with our proposal or contract.  It states very clearly, "Fees for services rendered and reimbursable expenses accrued will be invoiced via email on a monthly basis (by the 7th of each month) with payment due on the 21st of each month.  Outstanding balances will incur interest at a rate of 18% per year."  I actually give them a week leeway, and on the 28th of each month an email is sent reminding them that their payment is past due.  This email is critically important.  If the client missed the invoice email, this gives them the opportunity to catch up.  If they have any concerns about the invoice, it gives them an opportunity to ask.  If payment is not received by the time the next invoice is scheduled to be emailed, interest will be added.  Simple as that.  Their bank will do it, their credit card company will do it, their utility provider will do it.  Why not their architect?

     

    Say what you're going to do, and then follow through with it.  Then they know you are serious.  Chances are, if they are a business owner too, they will understand and appreciate what you're doing.

     

    Legacy Architecture Logo - for E-mail Signature

     

    Jennifer L. Lehrke, AIA, LEED AP, NCARB

    President, Principal Architect & Historic Preservation Consultant

    Legacy Architecture, Inc.

    605 Erie Avenue, Suite 101

    Sheboygan, WI 53081

    P:  (920) 783-6303

    M:  (920) 980-9420

    jlehrke@legacy-architecture.com

    www.legacy-architecture.com

    www.facebook.com/LegacyArchitecture

    www.linkedin.com/in/JenniferLehrke

    www.houzz.com/legacy-architecture

     

    Please note: We moved to 605 Erie Avenue.

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  • 2.  RE: collecting fees

    Posted 05-19-2016 12:21 PM

    Some of the posts have mentioned charging interest. Please check your State usury laws before putting the word "interest" in a contract. It is illegal in California to charge more than 10% "interest". But I can call them late fees and assign a percentage of the outstanding balance per month for late fees. In our case I use, "1.65% of the outstanding balance per month in late fees will be charged to overdue invoices."

    ------------------------------
    Gordon Rogers AIA
    EAS Department Executive
    Kitchell CEM, Inc.
    Phoenix AZ



  • 3.  RE: collecting fees

    Posted 05-21-2016 07:52 PM

    Good points.  To  touch on a few,

    1.  AIA's B105 (Owner-Architect, residential or small commercial project) uses the term "initial payment" instead of retainer; says it will be credited to the the final invoice.  I think that deals with the "retainer is owner's money" issue.

    2.  Same form uses the "interest" word for late payments.  I like the "late fee" suggestion from California.

    3.  Might consider a statement that says money received will be applied first to late payment charges, then to professional service fees.  Makes it harder for client to skip paying the "penalty".

    4.  Think about adding text in (ask your lawyer if enforceable) to limit professional liability "to compensation received".  No payment = no liability (if you can make it stick).

    5.  Having formal step of getting owner's acceptance of design is a good one; helps to make collecting for extra work due to untimely change requests a bit easier.  Consider spending the time to meet with owner and review design at end of each phase; maybe have a stamp on each page for them to sign and date.  Present this step as a communication tool -- "we want to know what you expect us to include in the drawings" -- not as a "we do this to cover ourselves" activity.

    6.  If the project is big enough, and especially if there is a lender involved, consider your state's lien laws - you may have to give notice that you are reserving your right to lien, "just like any contractor will", in order to collect.  Otherwise, the time limit for filing a lien may lapse before you realize you haven't been paid, taking your leverage away. The odds that you will be auctioning the client's property on the courthouse steps are very low, but construction lenders will watch to be sure you're taken care of.

    7. Talk to whoever processes payments for the client before you send the first bill.  Is there anything that they like to have to speed the payments along?  (How can we make it easy for them to write our check?)  Is there a certain date of the month that they pay on, and how far ahead of that do they need your invoice?

    8. If consultants are involved, get their invoices promptly.  I really don't know how some engineers stay afloat - bills come late, miss our billing dates, then go out perhaps 2 months after the work was done, then client pays slow ...

    9. If there is an agreed amount for compensation, have a place on your invoice to show that, to show any changes to the cap, to show how much has been billed, and how much has been paid.

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    Joel Niemi AIA
    Joel Niemi Architect
    Snohomish, WA