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
Original Message:
Sent: 05-19-2016 12:21
From: Gordon Rogers
Subject: collecting fees
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."
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Gordon Rogers AIA
EAS Department Executive
Kitchell CEM, Inc.
Phoenix AZ