AECManagementSolutions.com
Dedicated to helping architects and engineers earn the profits they deserve
Home | Subscribe to Newsletter | Seminars and Services | AEC Management Blog | Contact Us | Tell a Friend | Search | Member Area
home | Seminars and Services | Cash Flow & Collections Seminar
 

Cash Flow & Collections Seminar

Printer-Friendly Format

Do you aspire to be average? When it comes to being paid for your hard work, being average just isn't good enough!

Did you know that the average A/E firm has 66 days of sales in accounts receivable? The sad truth is that many firms are doing far worse. It is not unusual for firms to average well over 100 days.

Why are we in this position? Our instincts are to blame the client. After all, it has always been this way. Clients are slow to pay and if we demand timely payment, won't they just go somewhere else?

The truth of the matter is that we have only ourselves to blame! Did you know that the vast majority of clients can be trained to pay in 40 days or less?

I know that you are skeptical - but please let me tell you a little story.

A number of years ago, I was the Chief Operating Officer (COO) for a 100 person+ Architectural Firm with 3 offices. As the COO, I was directly responsible for the overall financial success of the firm. Accordingly, I had an incentive plan that rewarded me for the overall financial performance of the firm. At the end of our fiscal year, the company had done quite well with a 16%+ profit and I was entitled to a minimum bonus of $30,000.

start quoteLet's face it - it's your money and it is not profit until you collect it.end quote
-- Herb Cannon

Shortly after the year-end results were in, I was having lunch with the owner when he informed me about how pleased he was with the financial results and that I was certainly entitled to my bonus. However (this is when I started to hold onto my wallet), he didn't see how he could possibly pay me the bonus when our accounts receivable stood at 98 days. He thought that while it was not explicitly spelled out in my employment contract, I should be held to a standard of bringing our accounts receivable to at least the industry average. Once I brought the accounts receivable average down to less than 70 days, he would gladly write my check.

Well there I was, sitting in a restaurant and I was not a happy camper. I had joined the firm 5 years ago as the Chief Financial Officer when the company was in deep financial trouble. The losses for the fiscal year prior to joining the firm were substantial. I was given a mandate to turn the company around and produce a profit. While it wasn't easy, I was able to produce a profit every year. After three years, the results were so good they made me the Chief Operating Officer and established an incentive compensation plan as further motivation. So after producing a 16% profit, the rules were being changed and I had to earn my bonus all over again.

My choices were to quit and walk away, sue the company I was working for, or to reduce the accounts receivable to less than 70 days and collect my bonus. Well I was certainly focused. I went back to the office and developed a plan with a goal of reducing the outstanding accounts receivable by 10 days per month.

The plan I developed was so powerful that I reduced outstanding accounts receivable by an average of 13 days a month for the next 4 months - bringing the accounts receivable down to 46 days of revenue.

When I walked in to the owner and showed him that we were now at 46 days he was more than happy to write me a check for $30,000. Of course, he also had $1,000,000 more in cash available due to the improved collections. Over the next few months, we actually reduced the outstanding accounts receivable to less than 40 days.

By the way - can you guess how many clients or projects we lost?

The answer is zero. That's right! None of these techniques cost us one single client or project! In fact, most clients were appreciative of the effort and our process.

If you reduce your accounts receivable by one-third to one-half, how much "extra" cash would you have? Think about what that means and the dollars involved for your firm.

What would you do with that money?


Pay yourself a well deserved bonus?
Pay your employees a bonus?
Pay-off your line of credit?
Get your consultants paid up to date?
Pay cash for your children's college?
Pay off any personal debts?
Better fund your retirement account?
Increase the market value of your firm?

Let's face it - it's your money and it is not profit until you collect it. Shouldn't your money be in your bank account rather than your clients?

I am now offering this program as an in-house seminar to the design community on a confidential basis.

Let me tell you about the program:

The program is a one-day "in-house" seminar that teaches you a systematic process how to be paid for your hard work more quickly.

Here is a small sample of what we will cover during our session:

Why are collections so important to everyone in the firm?

Most architects & engineers have little if any business training and don't realize that 66 cents out of every dollar that comes into a typical architecture firm goes back to the employees in payroll, taxes and benefits.

What are the key terms do you need to incorporate in your proposal or contract to set the stage for prompt payment?

We spend a great deal of time on schedules, liability and other legalities that are important to the client. Why not spend a little time outlining our expectations for prompt payment?

What key event provides the stage for a prompt processing and payment of your invoices? This secret is one of the most effective techniques and can reduce payment time by 30 days or more for many clients.

What are the invoicing techniques that will speed payment? One key invoicing technique can reduce payment time by 30 days!

Who in your firm should be responsible for collecting? If everyone is responsible - no one is accountable! This program assigns responsibility every step of the way.

Why is collection only 10% of the effort? This is not a "get tough program!" Collection calls are a largely a thing of the past. We put our time in up front and reap the cash flow benefits throughout the project.

The program consists of a 4 to 5 hour in house seminar where we go through together the importance of collections to everyone in the firm.

What you get:

  • A master workbook for use by the seminar participants.
  • Collection tracking template - so everyone can access the latest information.
  • Follow- Up Scripts - so you know exactly what to say when speaking to a client.
  • All the forms & electronic templates you will need to implement the program.
  • Same day follow up with your financial manager to review problems and develop solutions specific to your firm.

    Don't be embarrassed! I know that many firms are a bit embarrassed by the large amount of uncollected accounts receivable on their books. Please be assured that I have seen far worse! I work on a confidential basis and I will never reveal your companies name to anyone without your permission.

    For more information, please Contact Us




    ·  Seminar Testimonials