Pay when Paid |
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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. |
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