Monday, March 25, 2013

6 Tips for Getting Paid Now – Not Later

If your invoice goes unpaid for more than 45 days, something is wrong! Get on the phone, go visit the client, send an email, DO SOMETHING! But don't let the non-payment issue continue. If there is a problem, address it immediately, and ask the client to provide a firm date when your invoice will be paid. The longer you wait, the harder it is to collect your money.

Here are 6 proven strategies for motivating your delinquent clients to pay you, and quickly:

1. Stop work! If non-payment of invoices exceeds 60 days, stop work and notify your client of this action in accord with the provisions of your contract. Refer to article 9 of AIA Document B101-2007 for guidance.

2. Don't design for free. Limit the amount of concept designs you will prepare under basic services. Stop designing "till you drop." Most projects will sustain two concepts. On selection of the preferred design, develop it and move on to the next phase. Be sure to get a written acceptance and sign-off by the client. To make this work, be sure you understand the specific needs and scope of the project. Good upfront listening is the key in making this requirement work.

3. Get a retainer up front. Hold the retainer throughout the duration of the project and apply it to the last invoice. In many ways this helps guarantee that final payment will not be held hostage for any disagreements, real or unreal. Also consider holding the retainer until you've received final payment, all final paperwork, guarantees, warranties, maintenance manuals, asbuilt drawings, and other traditional deliverables.

4. Review the contract with your client. Do it in person! Pay particular attention to billing procedures and timing. If the client has any specific requirements or format for billing and payment, review and understand them. Review the information with your accounting department as well. Be sure that you and your client understand Article 6 of B101, "Cost of the Work," as it affects your billing and project costs. Don't leave money on the table because you didn't include all project costs.

5. Adjust your billing rates. If the project is of a long duration – more than a year – be sure to allow for adjustment of hourly billing rates. Raises, benefits, and other overhead factors can easily strip away profits if not monitored and adjusted. Understand what your overhead factors are. Many state and federal agencies limit overhead costs, and specific items such as marketing costs are deleted from the calculations.

6. Learn to put your pencil down. Designing, changing, and constant tweeking will guarantee that you will loose money. Once the client has signed off, proceed to completing the documents in a most efficient manner. If any changes are instituted by the client after signoff, or because of other factors such as code revisions, get paid for your work efforts.

You might be better off working on your strategic or business plan than taking on a commission or project on the cheap! Fee shoppers will keep dragging your fee down. Do you want to be known as the "cheapie" in town? Better still, do you want to stay in practice? Learn to say no! Be fair, be honest, and get a proper fee for your work; and stay away from the shoppers and fee cutters.

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