Here are some recommended steps 8 :
1. Assess a client’s financial health using “big data” 2. Review the client’s credit score by running a credit report 3. Ask for references 4. Check the client’s financial standings 5. Calculate the client’s debt-to-income ratio
Protection From Client’s Bankruptcy If a client goes bankrupt, the architect and subconsultants will often be further down the list in payment priority, which is why it is important to stay as up-to-date with collections and billing as possible. It is also imperative that any documents signed following a bankruptcy, like an “Assignment of Architect’s Contract” do not include language that requires an architect or firm to give up rights to their work. The Language Many large firms have inhouse legal teams who ensure language such as the examples below make it into their firm’s standard verbiage, but it is important to develop a familiarity with this language and its implications, particularly when sitting across the table from clients who may be redlining it. There is no “one size fits all” contract – what’s important is to understand what can be lost if key language gets redlined or if line items are completely unfulfilled. Example Contract Recommendations Blank Entries: Do whatever it takes to train your teams not to leave any blank entry in a contract blank. These fields often pertain to multipliers, fees, or other details that if left blank invalidate the line item. Your standard language should be highlighted, locked, whatever it takes to make sure that no blank fields remain on a signed document. Payment Terms: The client agrees to make all payments within thirty (30) days from the date of invoice. Failure to comply with the payment terms may result in late payment penalties or interest charges. Late Payment Penalties: In the event of late payment, the client shall be liable to pay a late payment penalty of [X*]% per month on the outstanding balance until the payment is made in full. * Typical late fees are between 1%-2%
8. https://www.allianz-trade.com/en_US/insights/determining-customer-creditworthiness.html
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