Monitor and Escalate AEC firms should establish internal processes for monitoring and tracking outstanding payments. We recommend automating the system as much as possible and putting it into the hands of AP professionals. There are accounting systems that can automatically issue invoices, collections reminders, and trigger automated calls and texts to designated phone numbers. We recommend emailing, calling, and texting over sending in the mail, and the point of contact should always include the client’s accounts payable or accounting team, not just their project contact. Regularly reviewing accounts receivable aging reports with your project managers can help identify overdue payments and enable timely follow-up, but firms are best served in investing in technology to remove this responsibility from PMs as much as possible. The logic that “a client is more likely to pay on time with a PM they like,” is faulty and puts the blame where it doesn’t belong. It should not be a PM’s responsibility to make sure a client pays; it should be the client’s. Every business has internal systems to pay bills on time regardless of the personal relationships involved. Often in AEC, we regard the client relationship so highly that we divorce it from standard expectations of a business relationship. Stepping outside the project relationship for a moment, do you ignore invoices from the power company until you receive a call from someone on the power company’s end whom you have a relationship with? No. You pay your bills on time because you agreed to and because you know their services will stop if you don’t pay. Hold clients to the same standard. You will always be better served by: Copying the client’s accounts payable on all project invoicing conversations. Billing automatically every 30 days. Implementing automated invoicing and reminders via email (this is important because failed delivery, bounces, or opens can be tracked and dated, creating a written record of activity around the outstanding invoice). Whatever system you use should notify administrators of bounces and opens. Include language for the escalation of collection efforts, such as implementing a collections agency, or pursuing legal action, if necessary. Keep track of which clients are consistently late in payment and flag their accounts; entering into new work with them should be weighed against issues with collection, or addenda to future agreements (such as a capital management fee) should be added to ensure your team gets paid on time. Add stop work contract language.
34
Made with FlippingBook Annual report