Dealing with non-paying architecture clients
Not getting paid is one of the very common risks that many architects face.
We’ve written about risk management for architects before, and you need to always prepare for these issues, even if you trust your clients.
In the experience of PlanMan users, clients can not pay for several reasons –
They forgot
This is the most common and the most obvious reason why your invoices are unpaid. If you’re sending your invoices at an inconvenient time and not following up – payment delays can happen without any ill will from the clients’ side.
Because of their internal conflicts
A sudden management or policy change may leave you as a contractor hanging.
Because they learned they can’t do what they wanted
This is common in the pre-design phase of the project where the client learns that their initial plan can not be implemented for technical or whatever other reasons.
Even though you’ve done your part with the initial drafts, the project does not continue – and they decide to bail.
Because they’ve gotten away with that in the past
Some business people are just unethical. They never last long, but they do damage to others.
They could’ve left someone else without payment, and the contractor never pursued any legal action, or they know collecting payments would be nearly impossible even despite court orders – and they act that way.
They have cashflow problems
…which is ultimately none of your concern, even though you will want to stay patient. Figure out why you are working with clients that plan poorly and stay in touch with them until they pay for your work.
Ways to make your clients pay
There are several ways to try and make non-paying clients pay.
Here’s what you can do:
Start a conversation
We’ve created an advanced client communication module in PlanMan for a reason. You always need to be on the same page with your client and especially when it concerns your payment schedule.
Very often, an email would not be enough, though. People have no problem ghosting an email for days and weeks, but if you have a phone call or even pay your client a visit, you will usually have more influence on them paying that invoice.
We understand you might be leaving your comfort zone doing this, but that’s often useful. If you feel intimidated – remember that they are intimidated more.
See how hard it gets if you don’t vet your clients properly and make contracting easy.
Get legal help
Get in touch with your legal counsel and ask them to review the situation. Very often, a simple legal letter about a potential lawsuit gets the client paying.
While you are getting legal help, make sure your contract gets tweaked to help you avoid these problems in the future.
Leverage your online presence
If you’ve been branding yourself like we recommend and have built up a significant online presence, some of your clients may not want to trigger any public complaints from you.
If they are directly confronting you – hint that you may be exposing them to your network.
Chalk it up to experience and move on
This is tough and unjust, but you may need to experience it once. Make sure you extract as much value from this lesson as possible, though.
Here’s how to avoid begging your clients for money:
Revise your contract
Make sure your contract takes care of this – so you can send the client a “stop work” letter, warning them that you will stop working unless they pay. Your contract needs to cement everything so that you have a bulletproof case if any other client attempts that again.
Have a seasoned architect in your area go through your contract, and ask a legal professional to review it too. There is never a contract that is too good.
Portion your deliverables
Make sure each meaningful project stage is accompanied by an invoice – and don’t proceed unless the previous invoices have been paid.
By all means, definitely structure your payments so that you hold on to the construction documentation before you get paid for all your work.
What works best for many architects is billing by the hour during pre-design and after the delivery of construction documentation. All other design phases get billed by the deliverable.
You can ask for upfront payments or 50/50 splits.
Find better clients!
This is the cold hard truth – if you are fighting with clients over money – get better clients.
Figure out why exactly they did not pay and what other types of clients may have the same problem. Define that target market …and avoid it completely.
Revise your marketing strategy – perhaps you need to switch to another channel that would bring you better-paying clients. Check out our guide on marketing for architects for ideas and inspiration.
Understand why you got there
Sure, the situation may have been your client’s fault, but why have you as a professional, ended up there? If that is the type of client, or something you did wrong, or the economy was bad – find a reason and draw conclusions from it.