19/12/2022
𝗧𝗛𝗘 𝗕𝗨𝗦𝗜𝗡𝗘𝗦𝗦 𝗢𝗙 𝗗𝗘𝗦𝗜𝗚𝗡 | 𝗚𝗘𝗧𝗧𝗜𝗡𝗚 𝗣𝗔𝗜𝗗
BluPrint
ROYAL PINEDA + 𝗔𝗥𝗖𝗛𝗜𝗧𝗘𝗖𝗧𝗨𝗥𝗘 • 𝗗𝗘𝗦𝗜𝗚𝗡
It is not unusual for architects to have unpaid invoices sitting around months after the due date. Aging invoices are bad for the business because the likelihood of them being paid decreases the longer they age. Many architects are bad at collections for various reasons, most of which stem from the notion that it is in bad taste to remind clients to pay. They neglect the paperwork especially when the amount is small; they don't have a billing and collection system in place; or if they have one, they don't implement it consistently.
A good billing collection system ensures the steady cash flow needed to cover salaries and ongoing expenses. Our firm ROYAL PINEDA + 𝗔𝗥𝗖𝗛𝗜𝗧𝗘𝗖𝗧𝗨𝗥𝗘 • 𝗗𝗘𝗦𝗜𝗚𝗡, bills the client after we've completed specific milestones of the project, namely, the contract proposal, schematic design, design development, construction documentation, and turnover stages. The total professional fee we charge is a percentage of the estimated construction cost, and the payment for each stage corresponds to a percentage of the total fee.
𝗖𝗢𝗡𝗧𝗥𝗔𝗖𝗧 𝗣𝗥𝗢𝗣𝗢𝗦𝗔𝗟
From the very first meeting with the client, we agree on the scope of work, project schedules, fees, and payment terms and conditions. After the meeting, we draft a contract proposal. Creating a comprehensive and detailed contract that clearly spells out the obligations of both parties eliminates misunderstanding and disagreements. Upon signing the contract, our finance department bills the client for a down payment, a percentage of our professional fee. We bill a separate down payment for bespoke furniture for the project, a service we provide in keeping with our philosophy of being a "TOTAL DESIGN" firm. In our contracts, the payment due date is ten days after receipt of the billing statement.
We then proceed with an in-depth interview to ascertain the requirements of the project, and prepare a "wish-list"--- a checklist of things the client wants included in the project. For a residential project, for example, the list asks for the preferred number of rooms and bathrooms, or the type of walk-in closets.
𝗦𝗖𝗛𝗘𝗠𝗔𝗧𝗜𝗖 𝗗𝗘𝗦𝗜𝗚𝗡 𝗦𝗧𝗔𝗚𝗘
At this stage, we study the client's requirements and draw on the firm's philosophy to formulate ideas. The design, technical and interiors departments conceptualize solutions to the requirements. The team produces the schematic design studies for the project, consisting of initial CAD drawings, 3D models, bubble diagrams and space programs. An estimated construction cost is prepared as well.
The schematic design studies are presented to the client for approval. Refinements to the studies are made based on the feedback. Once the studies are approved and signed, our finance department sends the second billing statement to the client.
𝗗𝗘𝗦𝗜𝗚𝗡 𝗗𝗘𝗩𝗘𝗟𝗢𝗣𝗠𝗘𝗡𝗧 𝗦𝗧𝗔𝗚𝗘
The schematic design studies are fleshed out after approval. The team drafts detailed floor plans, elevations, sections and specifications such as the materials and the sanitary, electrical and mechanical systems to be used. The design development plans are presented to the client, and once approved and signed, we send the third billing statement.
𝗖𝗢𝗡𝗧𝗥𝗔𝗖𝗧 𝗗𝗢𝗖𝗨𝗠𝗘𝗡𝗧𝗔𝗧𝗜𝗢𝗡
The technical team drafts construction drawings, detailing the work for the architectural, structural, electrical and other engineering aspects. This stage yields a compilation of plans that make up the "bible" of the project. The general conditions for the construction of the project, specifications for the materials' type and quality, and their manner of construction.
The finished drawings are handed over to the client and project manager for bidding. The fourth billing statement is sent afterwards. Revisions to the approved drawings, whether major or minor, incur change order fees based on the man-hours needed for the new scope of work.
𝗧𝗨𝗥𝗡𝗢𝗩𝗘𝗥 𝗧𝗢 𝗙𝗜𝗥𝗠
The projects are turned over to the contractors and project managers for the ex*****on of the construction drawings. We do periodic site visits to monitor the general progress, address site issues, and check whether the design is being followed. Punch-listing of items that need correction is done religiously. After construction is completed, the contractor and project manager turn over the project to us. Because we are a total design firm, we also create custom furniture and accessories for the client. In addition to designing and overseeing the production of the pieces, the interiors team styles the spaces.
When our obligations are finished, we turn over the project to the client, and send the final billing statement that covers the finishing stages and other reimbursable, if any. A separate billing statement for the custom furniture and accessories is sent as well, once they are delivered to and accepted by the client.
𝗧𝗜𝗣𝗦 𝗙𝗢𝗥 𝗘𝗙𝗙𝗘𝗖𝗧𝗜𝗩𝗘 𝗣𝗔𝗬𝗠𝗘𝗡𝗧 𝗖𝗢𝗟𝗟𝗘𝗖𝗧𝗜𝗢𝗡𝗦
𝗘𝗫𝗔𝗠𝗜𝗡𝗘 𝗬𝗢𝗨𝗥 𝗣𝗥𝗢𝗖𝗘𝗦𝗦𝗘𝗦
Improving your collection results starts with examining the billing and accounts receivable management processes. Do you bill regularly? Do you set a standard due date for each payment? Does the format of your billing statement clearly state due and contact persons for questions?
In our contract, we stipulate a payment due date of ten days after receipt of the billing statement. We send soft and hard copies of the billing statement to the client, and secure acknowledgement of receipt through either a transmittal form or email response.
𝗛𝗢𝗟𝗗 𝗪𝗘𝗘𝗞𝗟𝗬 𝗙𝗜𝗡𝗔𝗡𝗖𝗜𝗔𝗟 𝗠𝗘𝗘𝗧𝗜𝗡𝗚𝗦
Set weekly meetings with finance staff to discuss billing and collection procedures. The objective is to hold persons accountable for following up and possible improvements to existing procedures. Our finance staff updates us on the status of client billings and other accounting-related matters in our ManCom meeting every Monday.
𝗠𝗔𝗞𝗘 𝗬𝗢𝗨𝗥 𝗧𝗘𝗥𝗠𝗦 𝗢𝗙 𝗣𝗔𝗬𝗠𝗘𝗡𝗧 𝗖𝗟𝗘𝗔𝗥 𝗙𝗥𝗢𝗠 𝗧𝗛𝗘 𝗚𝗘𝗧-𝗚𝗢.
In the initial meeting, explain your billing procedures clearly. Explain the terms and the billing schedule. Add a clause in the contract stating that late payment will incur additional charges.
𝗔𝗦𝗦𝗜𝗚𝗡 𝗦𝗢𝗠𝗘𝗢𝗡𝗘 𝗧𝗢 𝗙𝗢𝗟𝗟𝗢𝗪-𝗨𝗣 𝗨𝗡𝗣𝗔𝗜𝗗 𝗜𝗡𝗩𝗢𝗜𝗖𝗘𝗦.
Most of the time, clients don't pay simply because they forget, so it's best to remind them promptly. We assigned our Administration Manager to handle follow-ups and maintain good professional relationships with clients. Our standard procedure is to call a client three days before the due date, then remind again a day before.
𝗞𝗘𝗘𝗣 𝗖𝗢𝗠𝗠𝗨𝗡𝗜𝗖𝗔𝗧𝗜𝗢𝗡 𝗢𝗣𝗘𝗡.
Update the client on the project's progress regularly. This way, they are apprised of development and made aware that a milestone has been achieved, and a billing statement will be on its way.
✉️ G/F W Tower Building 1117 39th Street,
Bonifacio Global City, Taguig, Philippines 1634
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