Problems with collecting late payments from clients is an increasingly common complaint among architects. Whilst an obvious thing to say, being paid on time is an important element to keeping a practice going, especially a smaller practice where an unpaid invoice can be the difference between survival and insolvency.
A lack of cashflow is one of the most common reasons for a business falling by the wayside, and Recent news reports that a number of architect firms across the UK have closed their doors in recent years due to struggles with finances. Well established company Gareth Hoskins Architects for example has announced the decision to cease their UK operations as a result of unpaid architect fees, citing a six-figure outstanding debt alongside a challenging trading environment leading to multiple project delays.
As for any business, having a robust credit control process and dealing with outstanding invoices effectively and in a timely manner is vital. In the fast-paced world of architecture and design however, it is not uncommon for clients to fall behind on payments or refuse to pay altogether. In an ideal world, practices shouldn’t be spending their time worrying about unpaid invoices and chasing overdue payments. And yet, late payments are happening and it’s sometimes down to the architect to chase these crucial, business-sustaining payments.
While larger practices have finance departments to nurture and maintain a relationship with a client, it’s often a different story for smaller practices. The first step in dealing with unpaid architect fees is to have a clear contract in place that outlines payment terms and conditions. This will serve as a reference point if any disputes arise and can help avoid confusion or misunderstandings. It should also include provisions for late payment penalties or interest charges.
Agreeing payment terms – 30 days is normal – and agree a schedule of regular payments. Avoiding tying payments to completion of work stages is advisable, which could mean working for several months without payment as well as the potential for unforeseen delays. Firms should ideally be asking a client about their payment process as soon as they can after being awarded the project.
If a client – whether domestic or commercial – has fallen behind on payment and a firm is not being successful in addressing the issue themselves, instructing a professional debt collection service may be required.
As Sinclair Taylor, we talk our clients through the pre-legal options available (with possibility of litigation further down the line if needed) and which would be best practice in their particular circumstances. In many cases, it may be possible to negotiate a payment plan or adjust the scope of work to accommodate for the customers situation.
We often find that it is simply a breakdown of communication, and our experienced collections team and legal professionals are able to help mediate towards a resolution, protecting our clients’ reputation and recovering what is owed.
Our debt recovery service is delivered on a no collection, no fee basis. Our processes are bespoke to your needs but can include letters, outbound telephone, SMS to encourage engagement with the account holder and emails. We have high success rates of recovery in this sector, so if unpaid fees are affecting your architect firm, we can help.
Speak to our team today.
