Hi

I'm an office manager for an architectural firm. We're trying to collect from some of our more delinquent clients. I checked with the AIA to see if there's a recommended rate for finance charges (late fees) but no dice. It seems everyone does 1.5-2%. Any suggestions?

Also, a recommendation for a decent collection agency would be appreciated. Thanks for all your help guys!!

Melissa

If the money was in your bank what rate would it be making?

Does the interest compound?

They are making interest off of what they owe you... That is if they have the money. I'd start looking at not moving forward unless your have payment. We are starting a policy where we won't release drawings until we are paid in full. Too many clients think that we are going to finance their project. It can be a huge problem.

We're running a business here, not a charity / not for profit.

Hi

I'm an office manager for an architectural firm. We're trying to collect from some of our more delinquent clients. I checked with the AIA to see if there's a recommended rate for finance charges (late fees) but no dice. It seems everyone does 1.5-2%. Any suggestions?

Also, a recommendation for a decent collection agency would be appreciated. Thanks for all your help guys!!

Melissa

It should be specified in your service agreement/contract with the clinet. Here I loosely use bank rates (and bump it up) but it's a specific amount - currently 12%pa - it need to be high enough to be a penalty and make the collection process on a default worthwhile - otherwise there's little incentive for the defaulter to come clean.

And I agree with Archjake - unpaid accounts mean service provision ceases until it's resolved

I would also bump it right up as you are not a lending facility. What if it was you who had to borrow money to pay the bills because your client haven't paid you yet.

It should be specified in your service agreement/contract with the clinet. Here I loosely use bank rates (and bump it up) but it's a specific amount - currently 12%pa - it need to be high enough to be a penalty and make the collection process on a default worthwhile - otherwise there's little incentive for the defaulter to come clean.

And I agree with Archjake - unpaid accounts mean service provision ceases until it's resolved

I agree that this should be previously stated somewhere - at least a court will see it that way!

By the way a tip:

On every project I submit to our planning body here I do so as the applicant and this is a requirement of our agreement. For the following reasons:

1. All correspondance relative to the application is received by you and you can ensure all is attended too and not left as an out for the client,

2. It has worked to be a great source of new clients- "Hey I saw your application for the project in Boolawoopa and wondered if you could do similar for me!", and

3. It allows you to demand full payment of fees with the threat of withdrawl of the application otherwise!

Another tip and one learnt the hard way!:

Never ever do upon approval only fee proposals! You may on behalf of the client enter into much more work, printing costs etc then previously considered and unless your contract has considered absolutely all aspects of where this may come from (client, other consultants, planning authorities etc) you can be way out of pocket if the approval is never granted.

Never ever do upon approval only fee proposals! You may on behalf of the client enter into much more work, printing costs etc then previously considered and unless your contract has considered absolutely all aspects of where this may come from (client, other consultants, planning authorities etc) you can be way out of pocket if the approval is never granted.

All good points; though a question off the topic. How would you factor in a reasonable additional charge for protracted planning processes- especially when you are pushing design wise (Though staying within the planning framework)?

If you are refering to upon approval type proposals I generally double (or more) my fees to take that into consideration and to allow for the risk in doing so!

What about within a standard contract?

richard/nicholas...I do a LOT of this sort of work and over the years have developed some pretty tight formulae

I run a fixed fee - with fees payable "at time of application" this generally means that the client writes out a cheque for the coucnil fee, and one for me at the same time!

No fee, I don't lodge. My agreement also includes an hourly rate for "additional services" - I usually absorb some, but if it becomes protracted I make sure the client is aware and knows that additional fees under the agreement will be payable. Then I just bill monthly on te basis of work done. This way I am still "important" to the client, can show what's happening and the client "participates" to the extent that they understand how difficult it is and why further fees should be payable.

Really - any hourly rate jobs - bill monthly on a 7 of 14 day invoice - clients soon learn that you're the same as any other professional (eg lawyer) and expect to get paid!

nicholas - the RAIA Engagement contracts are too cumbersome and scare people away

I set out what I'm going to do, what the fees are for each service/stage, then add "standard conditions of engagement"based loosely on RAIA and experience, checked legally a few years back - and wait for the client to sign. No signature - no progress.

And the agreement is thight enough (but in a friendly format) to stand up to a court challenge/debt recovery if need be.

nicholas - the RAIA Engagement contracts are too cumbersome and scare people away

I set out what I'm going to do, what the fees are for each service/stage, then add "standard conditions of engagement"based loosely on RAIA and experience, checked legally a few years back - and wait for the client to sign. No signature - no progress.

And the agreement is thight enough (but in a friendly format) to stand up to a court challenge/debt recovery if need be.

It sounds good that you are using non standard forms tdmc but it's nearly impossible for the rest of us to do this without exposing ourselves to lots of risk. What do you mean "checked legally" was this tested in court?

well credit card companies get away with it, i just found out this morning my apr jumped to 32 % on one of my cards