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Pay when Paid


Dear Dave
We do mostly private civil site development work. Our clients are primarily architects. Their policy is to pay us when they are paid by their client and this brings me to my question. Is this a common practice in the profession or something unique to our particular area? I have to tell you that this really hurts us. We know for a fact that our invoices can sometimes sit in the architect’s office for several months before the architect even gets around to sending his invoice to the client. Our cash flow is killing us.
JS OH

Dear JS
Believe it or not, there are a number of architects who pay their consultants right away. But pay-when-paid is a fairly common practice nationwide and you are certainly not alone in dealing with the problems this presents.

A few standard ways firms try to cope is to be sure that they time their invoicing to the architects to make sure their invoice reaches the architect in time to be included with the architects' schedule for billing to their clients. Some engineers will offer a fee discount (or some enhanced or additional services) to the architect in exchange for immediate payment. Other engineers, with stout backlogs, will raise their fees to drive away their worst clients or as an offset to the added expense of a lag in payment times. Having a strong marketing program (and a choice of clients from which to pick and choose) is by far the best long-term solution.

 

 
 
Wahby and Associates