6 Payments & Invoicing

Question 1

What 3 key things are important to ensure successful payments?

Answer 1

1. Correct and accurate cashflow
2. Correct assessment of the risks
3. Written agreement between parties

Question 2

What is important to ensure a healthy company cashflow?

Answer 2

Calculation of an optimum payment structure

Question 3

What should be covered in the written agreement with regards to payments? (2)

Answer 3

1. Amount of payment

2. Frequency of payments

Question 4

How can past experiences assist with payment? (3)

Answer 4

1. Learn form experiences with past clients
2. Learn what to enforce
3. Know when to include for upfront stage payment

Question 5

What are key payment considerations? (5)

Answer 5

1. Type of project
2. Type of client
3. Position of the practice in the industry
4. Risks associated with project
5. Stages that the project could become too labour intensive

Question 6

What ensures a long terma dn short term success of a practice?

Answer 6

Cashflow

Question 7

What are the 6 types of payment structures?

Answer 7

1. One off payments
2. up front stage payments
3. Monthly stage payments
4. Monthly percentage progress payments
5. End stage payments
6. Time and expenses

Question 8

What are one off state payments? (4)

Answer 8

1. Often for stages 0-1
2. Often for the formulation of a brief
3. For design concepts
4. For feasibility studies

Question 9

What are up-front stage payments?

Answer 9

Can be a percentage of the total work cost paid prior to the commencement of works

Question 10

What are monthly stage payments? (2)

Answer 10

1. Paid monthly and established at the fee proposal stage in fee draw down
2. Risk for architects as work levels and amounts change by work stage

Question 11

What are monthly percentage progress payments? (3)

Answer 11

1. Paid monthly and established in the fee proposal
2. Invoices issued along side a project progress sheet
3. Indicate percentage of work completed each month

Question 12

What are end stage payments? (3)

Answer 12

1. Architect is paid at the end of each stage
2. Large risk as working in areas of total work complete
3. No account for WIP

Question 13

What are time an expense payments? (4)

Answer 13

1. Paid monthly and established in the fee proposal
2. Important that team members and delegation of fees are explained to the client
3. Time sheets often issued with invoices
4. Types of expenses must be explained to the client

Question 14

What is important to consider with payment structures? (3)

Answer 14

1. Shifting of contractural implications
2. Think about the movement of money
3. Think about market forces that affect cashflow (industry and client)

Question 15

What are AAWOs?

Answer 15

Additional Architectural Work Orders

Question 16

What is important to remember about AAWOs? (3)

Answer 16

1. Timing of issuing them is crucial to company cashflow
2. Always raise them with client when first notice them
3. Professional duty of care the client

Question 17

When are AAWOs useful? (2)

Answer 17

1. 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

Question 18

How long does the Asset Based Finance Association predict architects wait for payment?

Answer 18

71.2 days (10 weeks)!

Question 19

What are the risks to the architect for non payment of fees? (3)

Answer 19

1. Company overdraft interest
2. Salaries for staff
3. Consider what is meant by ‘last day of the month’

Question 20

What are the key timings to consider on payments?

Answer 20

1. When salaries are paid
2. Prior to outgoings (bills asset purchases)
3. Prior to expense claims

Question 21

What do architects often misrepresent when it comes to fees and payment?

Answer 21

That their services are a business transaction

Question 22

In the event of non payment, what should be the architect’s first move?

Answer 22

Refer the client back to the appointment contract and that it is their obligation to pay the fees

Question 23

Who’s role should it be to chase payments?

Answer 23

1. Director
2. Office Manager
3. Keep project relationships separate from fees
4. Can tarnish design relationships

Question 24

What can an architect do if payment is not received?

Answer 24

Terminate services