Collecting a fee 8

[AELLC]

I am a one-man shop specializing in structure design for tract and custom home builders, and a small custom home project I invoiced almost a year ago is still not paid ($1200)...the invoice was to the General Contractor for the house construction.

What would be a good next step, to notify my State Registration of Contractors?

 

[Triangled]

Glass99,
You're collections management is precarious. I think if you looked at this supporting pillar of your business like an unbraced slender compression member, you might consider some additional supporting methods. But then again, Perhaps you have sufficient support elsewhere. Wouldn't mind having several Porsche's worth in my outstanding receivables! Happy for you!

 

[glass99]

Triangled,
The slowness sucks and it frustrates the pants of me. It takes monumental amounts of effort to speed it up which could be used gainfully on things like marketing or doing nice creative engineering. My strategy has been to pick only a few bills which are super late, and then go nuclear with formally worded letters, joint checks, etc. I really have to create enough intensity on an individual that it dominates their attention and they get agitated enough to get over whatever the hangup is. Its better than a constant grind of whining, and usually on the next job they pay in 30 days. My mentality is that once I decide that a bill has to be paid, its black and white, and I don't let go until they give me a check. But that takes a lot of emotional energy!

My business strategy revolves around doing big firm work at big firm rates with small firm overhead. As such, my margins are quite good so the whole logic that many big firms struggle with about cash flow and financing is not super relevant. Part of the slowness of payment is that I don't have an accounting department to chase down payments. The main thing that bugs me about the slowness is just the longer its outstanding the higher the risk is that they won't pay at all.

I have considered hiring a bookkeeping service to keep on top of billing and collections on a more automated basis. Does anyone do this?

 

[AELLC]

glass,

I haven't had such problems until recently. It is driving me crazy. I think the solution is to let it be handled by an independent bookkeeper, as you suggest. Maybe even a "moonlighting" bookkeeper.

The definition of a structural engineer: overdesign by a factor of 1.999, instead of the usual 2.

 

[Triangled]

it took an extraordinary amount of emotional energy for me to drive a rented car on ireland's narrow roads on the left side of the road with my stick shift in my left hand. and i forgot how much energy it took to learn to drive when i was 16. but now i drive unconsciously, just checking my dashboard routinely to verify gas in the tank, velocity, oil pressure tire pressure, such that most of my emotional energy is now concentrated on the xm radio station. i rotate the oil now routinely, not because i am alerted by grinding or hammering sounds (did that), but because of an established routine of replacement every so much distance/time. as smart as you are, you can do this for your business too.

 

[CELinOttawa]

Well done, and good ending...

Interestingly I predicted the downturn in the New Zealand economy back in 2007 based on slowed payments to the very large company I was working for at the time... This was based on advice my father gave me: It is not the work which slows first, but the payment for work. There are economic reasons for developers and others to continue work Engineers and Architects do for them, but the payments are often coming from their previous (of even future financing) of work. So it is the performance of jobs other than the job you are working on which predicts payment of your bills, and as a result, makes your accounts a good litmus test for both individual firms and the economy as a whole.

 

[glass99]

Triangled - yes, you are right, bill collection is something you get better at like anything else. Every day that passes I have a little less shame about asking for my money. I appreciate your wisdom on the topic.

What is a good target for the size of an accounts receivable? I understand the industry standard for larger firms is about 100 days. A colleague claims to have hit 40 days, though I am skeptical/jealous.

 

[glass99]

Should speed of payment be one of those fundamental criteria when you are doing marketing? Do you pursue potential clients based on their creditworthiness?

In my world we are all chasing the innovative work and sexy architects, but should we be instead focusing on how many days they take to pay? I don't want to turn into one of those fusty old man firms where they obsess about liability but do crappy conservative design for even crappier margins. My first priority has always been working with client who I trust and communicate well with and shares design priorities, not necessarily with good money managers. I am actually a bit mistrustful of architects with good accounting departments because they use those clever bean counters to get out of paying bills.

 

[CELinOttawa]

Glass:

First duty to the public, Second duty to my family and Profession... For the latter two getting paid is the number one measure of success.

 

[CELinOttawa]

Sorry, should have made my point more clear: Get serious about your bills, and yes a professional accountancy could be a great service for you.

 

[AELLC]

I still haven't gotten the check from this deadbeat - despite his promise.

The definition of a structural engineer: overdesign by a factor of 1.999, instead of the usual 2.

 

[glass99]

AELLC - you got this person's attention with your formally worded threat email, now you have to keep them on topic with softer follow ups:

"I just checked my mail box, and didn't find anything from your office - can you offer any update on when you will be able to process the payment?"

This joker only owes you $1200 right? Its not like they are going to have to mortgage their house to get that done.

 

[MacGyverS2000]

AELLC - you got this person's attention with your formally worded threat email, now you have to keep them on topic with softer follow ups:

No.

Now is the time you follow through with the punishment detailed in your letter. If you do any less, you will be immediately viewed as a pushover, and you might as well kiss any hope of payment goodbye.


Dan - Owner

http://www.Hi-TecDesigns.com

 

[CELinOttawa]

Agreed; Break out the consequences.