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OPINION
AEC firms struggle to retrieve all of the revenue they bill out, however there are some solutions firms can use to counteract commonplace issues. Accounts receivable and collections
T he AEC industry is a complex collaboration comprised of architects, engineers, developers, owners, contractors, and sub-contractors, to name a few. With all of the different parties involved, it can be hard to trace where all of the money pertinent to the project is going. It is common to have to wait for the money to trickle down to your company.
Stephen Dominguez
Say your team bills more than $100,000 for the month. You feel like you are doing great and will have plenty of profit left over, but at the end of the year there is no money left over. Where did it all go? The bottom line is that AEC firms struggle to retrieve all of the revenue they bill out. We are seemingly one of the only industries that struggles to be compensated for the work we do; but why? Here are some of the problems with how our industry handles invoicing: ■ Work first, invoice second. Our companies do all of the work and deliver the product before receiving the cost. Our society cannot go to a grocery store and take what we want, just to be billed for it 30 days later, but that is exactly what we are doing with our documents. Our clients are not motivated to make timely payments if they have already received what they need. ■ Late billing. Project managers and principals juggle a lot on their plate, and it is easy for billing to be the task that gets moved to the bottom of the pile, keeping us in a constant state of trying to reconcile debts.
Lack of follow up. We can get in the habit of sending the invoices out, checking the project off of the list, and moving on to the next task at hand. We can forget to follow up with the client and the invoice is out of sight and out of mind.
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■ Fear of our clients. Revisit once more the analogy of a grocery store; should the cashier feel bad for making you pay for the products you want and the price you were made aware of before you ever made it to the check-out line? If you fear your client will be upset for paying for your services then they may not be the best client to serve. ■ Collection period. Studies show that the average period to collect cash is more than two months from the invoice date. While these issues have become commonplace and seemingly unavoidable in our industry, I’d like to provide some solutions we can use to counteract them. Here are some of the ways we can avoid having a large accounts receivable balance:
See STEPHEN DOMINGUEZ, page 8
THE ZWEIG LETTER MARCH 25, 2024, ISSUE 1530
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