6 Payments & Invoicing Flashcards
(24 cards)
What 3 key things are important to ensure successful payments?
- Correct and accurate cashflow
- Correct assessment of the risks
- Written agreement between parties
What is important to ensure a healthy company cashflow?
Calculation of an optimum payment structure
What should be covered in the written agreement with regards to payments? (2)
- Amount of payment
2. Frequency of payments
How can past experiences assist with payment? (3)
- Learn form experiences with past clients
- Learn what to enforce
- Know when to include for upfront stage payment
What are key payment considerations? (5)
- Type of project
- Type of client
- Position of the practice in the industry
- Risks associated with project
- Stages that the project could become too labour intensive
What ensures a long terma dn short term success of a practice?
Cashflow
What are the 6 types of payment structures?
- One off payments
- up front stage payments
- Monthly stage payments
- Monthly percentage progress payments
- End stage payments
- Time and expenses
What are one off state payments? (4)
- Often for stages 0-1
- Often for the formulation of a brief
- For design concepts
- For feasibility studies
What are up-front stage payments?
Can be a percentage of the total work cost paid prior to the commencement of works
What are monthly stage payments? (2)
- Paid monthly and established at the fee proposal stage in fee draw down
- Risk for architects as work levels and amounts change by work stage
What are monthly percentage progress payments? (3)
- Paid monthly and established in the fee proposal
- Invoices issued along side a project progress sheet
- Indicate percentage of work completed each month
What are end stage payments? (3)
- Architect is paid at the end of each stage
- Large risk as working in areas of total work complete
- No account for WIP
What are time an expense payments? (4)
- Paid monthly and established in the fee proposal
- Important that team members and delegation of fees are explained to the client
- Time sheets often issued with invoices
- Types of expenses must be explained to the client
What is important to consider with payment structures? (3)
- Shifting of contractural implications
- Think about the movement of money
- Think about market forces that affect cashflow (industry and client)
What are AAWOs?
Additional Architectural Work Orders
What is important to remember about AAWOs? (3)
- Timing of issuing them is crucial to company cashflow
- Always raise them with client when first notice them
- Professional duty of care the client
When are AAWOs useful? (2)
- In the event where clients withhold money
2. If a claim is raised and lost then architect can make a counter claim for additional time spent
How long does the Asset Based Finance Association predict architects wait for payment?
71.2 days (10 weeks)!
What are the risks to the architect for non payment of fees? (3)
- Company overdraft interest
- Salaries for staff
- Consider what is meant by ‘last day of the month’
What are the key timings to consider on payments?
- When salaries are paid
- Prior to outgoings (bills asset purchases)
- Prior to expense claims
What do architects often misrepresent when it comes to fees and payment?
That their services are a business transaction
In the event of non payment, what should be the architect’s first move?
Refer the client back to the appointment contract and that it is their obligation to pay the fees
Who’s role should it be to chase payments?
- Director
- Office Manager
- Keep project relationships separate from fees
- Can tarnish design relationships
What can an architect do if payment is not received?
Terminate services
