In this era, it would seem clients are slower in paying the bills and otherwise honest clients will out right stiff you if they can muster up enough justification. In my 5 years of having my own shop, this hasn't been much of a problem. Except over the last year or so, it seems to be escalating to the point of worrying month to month if someone is going to skip on the bill. I'm hearing similar stories from my structural as well.
Was wondering what peoples feelings were on the topic of engaging a collection agency to collect on delinquent clients. Any small practitioners have good results with this? I understand its not the best approach for maintaining client relations. However if they aren't paying for services rendered, should I really care what they think?
From my experience, and learning the hard way as a young cat trying to do things, if they are trying to stiff you, then get a lawyer/collections. more than likely they probably won't do business with you later and trying to screw you in the end. you might not get all your money if you get a lawyer, but it will spark a fire under their ass. not sure on collections, and that might take too long to even get a penny.
i had to change my methods of payment due to a few arch firms that screwed me. i ask for a deposit and then the total upon delivery of services....
good luck, i would go for the throat and get whats owed....
One of my wife's clients was 14 months late in paying her the remainder of the service fee. Phonecalls and e-mails went ignored. My wife is not in architecture, but the service was in line of typical client-architect contract. <insert prostitution joke here>
I used my best Russian accent (easy for me) and left couple of voice mails: "I call on behalf of such and such... money owned... you send her a check by mail, or I stop by your office next week and pick up check in person". They mailed the check out two days after I left the message. This was a fairly big media company. Noone wants a Russian visit I guess...
Do check your states laws on collection agency rules of conduct. In my case, I did not mention that I was a collector or that I was related to their debtor. I just emphasized my upcoming visit.
Get a close friend to make a call for you. Or I can do it. It was kind of fun the first time.
both to arch firms...and fairly big names in the city i'm in.... this is how i learned the hard way about making sure everything is covered in the contracts.....
if you get a lawyer, more than likely they will try to settle for half of what you owe just so they get you off of their back... then you pay the lawyer what ever... in my case it was a small fee for a letter and phone call.....
i would try the 'russian' route and see how that pans out....i'm sure if the company is about to close, they could care less about credit/collections....
I think b3ta and I should open up "Tony & Vladimir architectural 'protection' services". If our business is slow we can always 'convince' more architects that they need our protection services.
I remember in the '90's dealing with a whole bunch of developers that had clear connections with the mafia. They all got replaced by corporations since then. No idea what happened to the classic mafias since then. It's a much softer world now. You get politely screwed out of money these days. In a way, a healthy dose of fear tends to resolve 'issues' much quicker.
Seriously, send me a message if you'd like me to make a call on your behalf. I was very taken back at how effective this strategy was.
cad - we've been pretty fortunate all things considered (we have mostly non-commercial clients), but another small business guy who helped mentor me - and who did a lot of commercial work - said that he always told his clients on day one that if they didn't pay up after 30 days, he was filing a lien on day 31. he'd be happy to take it off as soon as they received payment and that there was nothing personal about it. it worked most of the time, since their clients were almost always flipping their project in the end.
cad - I read your post and immediately sent my clients invoice #3 (sometimes I get so wrapped up in the work I neglect billing). They've been pretty prompt with their payments so far but I would definitely suspend work on the project if they stopped paying. I think the trick is to always try and maintain some form of leverage (i.e. work accomplished and submitted vs money received). Deadbeat clients aren't the kind of people I would want to do business with in the future.
Our profession tends to experience slow payment simply because we allow it to happen and are afraid to talk to our clients about money. We're always so desparate to "get the job" that we simply refuse to have conversations with our [potential] clients that will a) set the stage for prompt payment, and b) help us identify - before we start work - those clients who are going to be difficult when it comes to payment. It's amazing what you can flush out simply by asking a few direct questions - and putting clear language in contracts - concerning the timing of payments and what happens if payment isn't forthcoming.
It is not a crime, or even a social faux pas, to have very direct conversations with clients about the sources of their funds, their ability to pay your invoices, and your own expectations about payment. It's also not unprofessional to stop work immediately upon a client's failure to pay.
If a new client wants you to do work for them, then gets all squirrelly when you want to talk about money or you ask for a retainer, don't go forward with them. Heck, your grocery store doesn't let you out the door without paying and Exxon doesn't let you pump a tank of gas without swiping your card. Yet, we routinely run up thousands and thousands of dollars in costs with only the vaguest of notions about how we're going to get paid.
It is vital to talk frankly with clients about money and to handle client accounts in a business like manner, including insisting on being paid in a timely manner, and in full, when our services are properly rendered. When we don't do that, we send signals to the client community that we're easy and that they can get away with murder. Don't let it happen.
Clients aren't people and organizations that want you to do work for them -- clients are people and organizations that pay you to do work for them. Design professionals aren't people who do design work -- we're people who get paid to do design work. Most of us love what we do, but that doesn't make what we do a hobby. Think about it.
I agree with quizzical. For future reference there are a number of good books out there about "How To Have Difficult Conversations", many of which give pointers on how to discuss money with prospective clients.
For the matter at hand, I have seen some success with simply having your accountant (or, as your situation may be, your "accountant" who may also conveniently double as your wife/friend/sister/whatever) call and say "Hi, I'm the accountant for so-and-so firm, and I note here that you are 2 months late with your payment. Can we talk about making arrangements for payment?"
In my experience, if you're a small firm, chances are you work very closely with your clients, and they may have developed a familiarity with you that crosses the bounds of a respectful business relationship. Sounds like that may be happening to you? I feel like it can be a hazard in this profession, especially in residential work in which you are literally becoming very intimate with your client's lives. At that point it can help just to have a brand new, unrelated, firm and business-like voice start calling the client. It reinforces the "it's not personal, it's business" feeling and keeps you out of it - and hopefully snaps them into realizes that they legally owe you money. You can have your "accountant" add on "Unfortunately, by the terms of your contract, it looks like I'm going to have to charge you a late fee of X%. Since this is the first time, I'd be happy to waive that fee if you'll process a payment today."
You might consider setting up a paypal account to allow clients to pay by credit card, also. That way you can actually get them to process payment right over the phone when your "accountant" calls.
If all THAT doesn't work, then I'm sorry, you have some deadbeat clients and you'll have to send them a notice that you're stopping work until payment is remitted, and after that, warn them that you'll file a lien if their account isn't brought current by XX days.
I find the new, business-like voice using cold, business terminology can help remind lapsed clients about their business relationship with you.
Thanks for all the great responses everyone. There is certainly an art to getting paid promptly while still maintaining a friendly relationship.
The good cop/bad cop routine seems like a good one and mentioned a few times here. If expereinced this and it seemd quite effective. At a small firm I worked for, the guy would have his wife call in collections, it just so happened that she was also the part time bookkeeper. It was great because he could just focus on keeping the clients excited about the project. While his wife who had no other contact with them, other than billing, could get nasty if she had too.
1.Getting paid in full - upfront - is one method to insure prompt payment - nothing wrong with that! eh?
2. Dun & Bradstreet (D&B CREDIT) will absolutely get your clients attention. it really works!!!!!
3. No documents issued until payment for them is received is another way to separate the winners from losers.
But the best way is to do the work with excellence - if the client doesn't pay - lien the property - you will see how fast they pay. oh, and tell them in advance that is SOP to insure clients don't walk out on you when its time to pay their bill for services rendered.
Oct 24, 10 10:32 am ·
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collections for small firms
In this era, it would seem clients are slower in paying the bills and otherwise honest clients will out right stiff you if they can muster up enough justification. In my 5 years of having my own shop, this hasn't been much of a problem. Except over the last year or so, it seems to be escalating to the point of worrying month to month if someone is going to skip on the bill. I'm hearing similar stories from my structural as well.
Was wondering what peoples feelings were on the topic of engaging a collection agency to collect on delinquent clients. Any small practitioners have good results with this? I understand its not the best approach for maintaining client relations. However if they aren't paying for services rendered, should I really care what they think?
i've said it before; have bat will travel.
From my experience, and learning the hard way as a young cat trying to do things, if they are trying to stiff you, then get a lawyer/collections. more than likely they probably won't do business with you later and trying to screw you in the end. you might not get all your money if you get a lawyer, but it will spark a fire under their ass. not sure on collections, and that might take too long to even get a penny.
i had to change my methods of payment due to a few arch firms that screwed me. i ask for a deposit and then the total upon delivery of services....
good luck, i would go for the throat and get whats owed....
One of my wife's clients was 14 months late in paying her the remainder of the service fee. Phonecalls and e-mails went ignored. My wife is not in architecture, but the service was in line of typical client-architect contract. <insert prostitution joke here>
I used my best Russian accent (easy for me) and left couple of voice mails: "I call on behalf of such and such... money owned... you send her a check by mail, or I stop by your office next week and pick up check in person". They mailed the check out two days after I left the message. This was a fairly big media company. Noone wants a Russian visit I guess...
Do check your states laws on collection agency rules of conduct. In my case, I did not mention that I was a collector or that I was related to their debtor. I just emphasized my upcoming visit.
Get a close friend to make a call for you. Or I can do it. It was kind of fun the first time.
Thats funny steelstuds...I may just take you up on that!
Maybe you and beta can start your own collection agency ala tony soprano.
Binary was this contract work for an architectre firm or work billed directly to the client?
both to arch firms...and fairly big names in the city i'm in.... this is how i learned the hard way about making sure everything is covered in the contracts.....
if you get a lawyer, more than likely they will try to settle for half of what you owe just so they get you off of their back... then you pay the lawyer what ever... in my case it was a small fee for a letter and phone call.....
i would try the 'russian' route and see how that pans out....i'm sure if the company is about to close, they could care less about credit/collections....
I think b3ta and I should open up "Tony & Vladimir architectural 'protection' services". If our business is slow we can always 'convince' more architects that they need our protection services.
I remember in the '90's dealing with a whole bunch of developers that had clear connections with the mafia. They all got replaced by corporations since then. No idea what happened to the classic mafias since then. It's a much softer world now. You get politely screwed out of money these days. In a way, a healthy dose of fear tends to resolve 'issues' much quicker.
Seriously, send me a message if you'd like me to make a call on your behalf. I was very taken back at how effective this strategy was.
cad - we've been pretty fortunate all things considered (we have mostly non-commercial clients), but another small business guy who helped mentor me - and who did a lot of commercial work - said that he always told his clients on day one that if they didn't pay up after 30 days, he was filing a lien on day 31. he'd be happy to take it off as soon as they received payment and that there was nothing personal about it. it worked most of the time, since their clients were almost always flipping their project in the end.
cad - I read your post and immediately sent my clients invoice #3 (sometimes I get so wrapped up in the work I neglect billing). They've been pretty prompt with their payments so far but I would definitely suspend work on the project if they stopped paying. I think the trick is to always try and maintain some form of leverage (i.e. work accomplished and submitted vs money received). Deadbeat clients aren't the kind of people I would want to do business with in the future.
Our profession tends to experience slow payment simply because we allow it to happen and are afraid to talk to our clients about money. We're always so desparate to "get the job" that we simply refuse to have conversations with our [potential] clients that will a) set the stage for prompt payment, and b) help us identify - before we start work - those clients who are going to be difficult when it comes to payment. It's amazing what you can flush out simply by asking a few direct questions - and putting clear language in contracts - concerning the timing of payments and what happens if payment isn't forthcoming.
It is not a crime, or even a social faux pas, to have very direct conversations with clients about the sources of their funds, their ability to pay your invoices, and your own expectations about payment. It's also not unprofessional to stop work immediately upon a client's failure to pay.
If a new client wants you to do work for them, then gets all squirrelly when you want to talk about money or you ask for a retainer, don't go forward with them. Heck, your grocery store doesn't let you out the door without paying and Exxon doesn't let you pump a tank of gas without swiping your card. Yet, we routinely run up thousands and thousands of dollars in costs with only the vaguest of notions about how we're going to get paid.
It is vital to talk frankly with clients about money and to handle client accounts in a business like manner, including insisting on being paid in a timely manner, and in full, when our services are properly rendered. When we don't do that, we send signals to the client community that we're easy and that they can get away with murder. Don't let it happen.
Clients aren't people and organizations that want you to do work for them -- clients are people and organizations that pay you to do work for them. Design professionals aren't people who do design work -- we're people who get paid to do design work. Most of us love what we do, but that doesn't make what we do a hobby. Think about it.
I agree with quizzical. For future reference there are a number of good books out there about "How To Have Difficult Conversations", many of which give pointers on how to discuss money with prospective clients.
For the matter at hand, I have seen some success with simply having your accountant (or, as your situation may be, your "accountant" who may also conveniently double as your wife/friend/sister/whatever) call and say "Hi, I'm the accountant for so-and-so firm, and I note here that you are 2 months late with your payment. Can we talk about making arrangements for payment?"
In my experience, if you're a small firm, chances are you work very closely with your clients, and they may have developed a familiarity with you that crosses the bounds of a respectful business relationship. Sounds like that may be happening to you? I feel like it can be a hazard in this profession, especially in residential work in which you are literally becoming very intimate with your client's lives. At that point it can help just to have a brand new, unrelated, firm and business-like voice start calling the client. It reinforces the "it's not personal, it's business" feeling and keeps you out of it - and hopefully snaps them into realizes that they legally owe you money. You can have your "accountant" add on "Unfortunately, by the terms of your contract, it looks like I'm going to have to charge you a late fee of X%. Since this is the first time, I'd be happy to waive that fee if you'll process a payment today."
You might consider setting up a paypal account to allow clients to pay by credit card, also. That way you can actually get them to process payment right over the phone when your "accountant" calls.
If all THAT doesn't work, then I'm sorry, you have some deadbeat clients and you'll have to send them a notice that you're stopping work until payment is remitted, and after that, warn them that you'll file a lien if their account isn't brought current by XX days.
I find the new, business-like voice using cold, business terminology can help remind lapsed clients about their business relationship with you.
One of our chinese clients went to jail. He might even be executed. They owe us $300,000. FUCK.
Thanks for all the great responses everyone. There is certainly an art to getting paid promptly while still maintaining a friendly relationship.
The good cop/bad cop routine seems like a good one and mentioned a few times here. If expereinced this and it seemd quite effective. At a small firm I worked for, the guy would have his wife call in collections, it just so happened that she was also the part time bookkeeper. It was great because he could just focus on keeping the clients excited about the project. While his wife who had no other contact with them, other than billing, could get nasty if she had too.
Wish my wife had better accounting skills!
SOD....wow, I'm glad I'm only dealing in the single thousands for the most part.
1.Getting paid in full - upfront - is one method to insure prompt payment - nothing wrong with that! eh?
2. Dun & Bradstreet (D&B CREDIT) will absolutely get your clients attention. it really works!!!!!
3. No documents issued until payment for them is received is another way to separate the winners from losers.
But the best way is to do the work with excellence - if the client doesn't pay - lien the property - you will see how fast they pay. oh, and tell them in advance that is SOP to insure clients don't walk out on you when its time to pay their bill for services rendered.
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