Dear A/E Professional,

Welcome to November 2009 edition of the AEC Managing Partner Newsletter. 

In this Issue:

1.Client Service Does Not Mean Working For Free
2. Incentive Compensation & Bonus Benchmark Survey
3. Five Ways to Increase Cash Flow
4. Cash Flow and Collections Webinar now Available for Immediate Download
5. Upcoming Events

Client Service Does Not Mean Working For Free As I travel around the country and have the privilege of working with some of the finest firms in the country. Some firms are large, some are small, some compete on price to market their work and others position themselves to be selected on the basis of qualifications. I find that they all have a lot in common. Some of them are good things and some of them are bad things. For example, they all say they can't find enough good people -- yet they are doing very little to find good people. Many of them say that they need to get more people involved with the marketing effort -- yet the only plan they have is to lecture employees about the need to get involved with marketing. However the one thing they all have in common is their belief that they give the best possible customer service. I have to say that most of the firms I have consulted with provide a very high level of customer service. They always return phone calls and e-mails. They rearrange their already overloaded schedules to accommodate their client's wishes (or whims). No client request is too small, too large or too unreasonable. They sometimes seem to be on call 24 hours a day 7 days a week. I think our efforts to accommodate our clients are extraordinary and often go far beyond the call of duty. I also think this is a great way to do business and a great way to build long term relationships with your client. The only problem I have with this way of doing business is that most A/E professionals confuse client service with free service. When I ask my clients or seminar attendees why they don't charge a fee for all of their efforts that are clearly beyond the scope services, they couch it in terms of "I don't want to nickel and dime them"; "I don't want to lose them as a client"; "This is part of our customer service"; "It only took a couple of days"&.. To tell you the truth, I don't believe them. The real reason they don't ask for more money is because they are uncomfortable asking for it. They haven't received any training in how to ask and haven't made the effort to acquire these skills. They have a problem justifying it in their own mind so how could they possibly explain it to the client? Let me give you some ideas on how to justify it to yourself and to your clients. We are in a service business and offer our clients -- our expertise, our time and our level of service. If the client request something that was not contracted for we are entitled to additional compensation. If the client requests a service be performed by tomorrow for something that might normally take 3 to 4 days, we are entitled to additional compensation for delivering a higher level of service. Think of FedEx. They charge one price for early morning delivery, another for late morning delivery, and another for afternoon delivery and another for 2 day services. Does it cost FedEx any more to deliver the package late morning rather than afternoon? Probably not -- but they are charging for a higher level of service. Their clients are willing to pay for this higher level of service and in most cases so are your clients. Assume you have a fixed fee contract that calls for monthly job meetings and the client requests meetings every 2 weeks. They are demanding more of your time - time that could be used to earn revenue on another project. In this context time certainly equals money. If you give it away for free it costs you money. When asking to be compensated for additional meetings, don't forget that it is not only the meeting time that needs to be compensated -- there is meeting preparation and follow-up. Doing work for free diminishes the value of your services and your profession. If you give it away for free, how much is it worth to the recipient. Do yourself, your employees and your profession a favor and don't confuse client service with working for free! More Articles

Incentive Compensation & Bonus Benchmark Survey - Immediate Download Are you tired of paying $445 for industry benchmark surveys?  If you are tired of paying outrageous prices for A/E industry benchmarking surveys, you are not alone. My commitment is to produce surveys that equal or exceed competing surveys in every way. There are charts, tables, graphs and narrative that will allow you to benchmark your company against your competition. The survey results are be presented in a way that will allow you to immediately zero-in on areas of your company that need the most attention.  Now Available for Immediate Download for $227 Tell Me More

Five Ways to Improve Cash Flow 1. Always Ask for a Retainer If you don't ask for a retainer you are leaving cash flow on the table. Even if most of you clients won't agree to a retainer, it is still possible to generate a decent amount of positive cash flow. Let us assume that we book $10,000,000 of new business during the calendar year and we have a policy of always asking for a 10% retainer. Let us further assume that 70% of the time the client will not agree to pay a retainer. That would leave us with a 30% success rate and an improved cash flow of $300,000. Make it a policy to always ask for a retainer -- the worst that could happen is that they say no. 2. Streamline Your Invoicing Process Analyze every step of your invoicing process to eliminate redundancy and maximize efficiency. Make prompt accurate invoicing your top priority. All Invoices should be out the door not later than 5 business days after month end. Prompt invoicing sends the message that the money is important. Invoices sent 30 days after the fact sends the message that the money is not important. 3. Send Electronic Invoices Make it a company resolution to send all of your invoices via e-mail as a PDF attachment starting January 1st 2010. Electronic invoices get there faster and you can request a return receipt that acknowledges the client has received the invoice. This minimizes the likelihood of them "losing" the invoice or "having no record of receiving that invoice". 4. Develop a Systematic Way to Follow-up for Payment Sending out an invoice and hoping for the best is not a plan -- it is wishful thinking. Develop a procedure that will confirm the client has received the invoice; approved the invoice; passed it on to accounting for payment. Once the invoice is over 30 days a friendly call needs to made for collection. 5. Integrate a Collections Component in to Your Incentive Compensation Plan Collections absolutely must be a component of your incentive compensation plan. Make it a policy that incentive payments will be calculated on the basis of collected revenues only. This will certainly get the partners and project managers' attention and dramatically increase your cash flow.

Dramatically Improving Cash Flow and Collections Webinar - Immediate Download for $127 In good economic times, collecting money on a timely basis can be an extraordinary challenge. In tough economic times, it can seem near impossible. Over the last 25 years in the A/E industry, I have personally developed a comprehensive system to dramatically reduce any company's outstanding accounts receivable. This system is not some untested theoretical exercise - it has been implemented at dozens of firms over the years with outstanding results. Our recent Webinar, Dramatically Improving Cash Flow and Collections is now available on CD. This fast moving 70 minute Webinar, will show you how to dramatically reduce your accounts receivable and put more money in your bank account where it belongs. Webinar Available for Immediate Download

Incentive Compensation Video & Workbook Incentive Compensation is a key component to maintaining a 20%+ profit on net revenues - even in a down economy. AEC Management Solutions Inc.'s Profit by Design Series presents Incentive Compensation, a 2-disc video and workbook series. This product features:  Main Presentation Video & Workbook  Real World Examples Video & Workbook  Excel Spreadsheet Video & Workbook  Tell Me More

Society for Design Administration - Hampton Roads Chapter Herb Cannon will be speaking at the Principals Appreciation Day event in Norfolk, VA on Wednesday November 19th. If you are not familiar with the Society for Design Administration, I encourage you to visit their website Visit Society for Design Administration

Leaping Out of Recession Webinar - November 19, 2009 Presented by Bill Long of Trinium Resources Group  Based on the Best Practices of firms that have successfully survived this recession, this webinar features items that will both increase your revenues and decrease your expenses in the near term, thus allowing you and your company to remain competitive -- and leap out of this recession. Tell Me More

Want to Reprint an Article from AEC Managing Partner? As a publisher of a print or web-based publication, you are hereby granted the right to reprint any article contained in this newsletter with the following provisions 1) The words "By Herbert M. Cannon" must be included immediately following the article title. 2) The following "resource box" is included following or preceding each article. Herbert M. Cannon, President of AEC Management Solutions, Inc. and Publisher of AEC Managing Partner Newsletter, is a management consultant, seminar provider and speaker exclusive to the A/E Industry. He is available to speak at company meetings and conferences. For more information contact Herb via e-mail hcannon@aecmanagementsolutions.com. Or visit his website at www.aecmanagementsolutions.com 3) You quickly notify us of any publication, either in print or on the Internet. Notification may be made via e-mail at hcannon@aecmanagementsolutions.com 4) You send us a hard copy of any printed publication in which one Herb's articles appear. Printed issues may be sent to 183 Higgins Road Matawan, NJ 07747

I am looking for guest writers for my monthly newsletter. I you have an idea for an article, please send an e-mail to hcannon@aecmanagementsolutions.com

I hope to see everyone at one of my seminars or speaking engagements.

Regards,

Herb Cannon
AEC Management Solutions, Inc.