Typically architects work with a contract (memo of understanding, letter form of agreement, contract but never, ever, on a verbal handshake… riiihhhttt!) which delineates the services to be performed and the fee to be paid. Frequently the contract also defines the “how and when” that payments are to be made.
Did you know that if an architect requires payment at completion of the services, there are more avenues available when payments go wrong? Did you know that if an architect allows payment to be made within some duration after work is completed, credit has been extended and a different set of “rules” apply when trying to secure payment?
I have a question from Rebecca, an architect in St. Louis. She says her firm (which does primarily small residential projects) has had more requests to pay architectural fees by credit card. Normally they say they don’t and they work out a payment plan. With the tight economy, they are trying to evaluate whether accepting credit cards and/or Paypal would help their business.
For starters, my personal view: They should be called “charge” cards and not “credit” cards – a charge card is paid off every month (I think it’s this mindset that has caused a big portion of the entire country becoming over extended; please think about it.). With that said, let’s discuss accepting credit cards. Philosophically professional services would be similar to “going to home improvement store and buying materials”… might we not want to stay head and shoulders above that? But considering the convenience issue, doctors accept credit cards (attorneys and CPAs do not). Determine your own stance on the issue.
Have you ever had a dispute with a merchant? If you have, and you couldn’t work it out and you charged the purchase, you could execute “charge back” rights within a specified period after incurring the cost (i.e., 90 days or so). Consider what your policy will be if a client pays for architectural services by charge card, gets contractor pricing on the project, and later decides he/she doesn't like something that was drawn. Will he/she contact their charge card company and ask for a credit?
The cost to accept charge cards can well offset a slim profit margin. Contact the bank that holds your business accounts and ask about its fees. Also contact your local “warehouse” store (Costco offers credit card processing for a percentage less than most banks).
I’m all for finding alternate ways to do business that makes sense and solves a real problem. I think the problem should be clearly stated and the philosophy to solve it should be sound, then the solution will become evident.
Comments (3)
I've been accepting credit card payments for several years now. There have been several advantages to both the client and I including the ease of payment and the "rewards" a client can get as points on the card usage.
I like taking credit cards as I keep the client's card info on file and ask if it's okay to charge to the same card when I e-mail an invoice (which is always based on progress and at least monthly). I usually get an e-mail back within 24 hours that it's okay to charge to the same card. A nice way to handle accounts receivable. And it's interesting that the clients that are the most savvy about money (CFO's, treasurers, small business owners, etc.) are the most prone to use a credit card as they like the "float" and the rewards. Let's face it, paying a 4 or 5 figure invoice on a credit card goes a long way to that next vacation plane ride.
I tend to think of taking credit cards as a service and a win / win for us all. Many, many professionals (including lawyers) take credit cards and I see this trend continuing. The only down side is the processing fee that's incurred when I take a credit card. So I look at this as the cost of doing business (and include it in my overhead calculations) and second, I've shopped around to get the best deal I can on these fees.
For a small practitioner like myself I really can't imagine not taking credit cards as payment.
Posted by Bud Dietrich AIA | February 15, 2010 7:38 AM
Posted on February 15, 2010 07:38
Our estate planning attorney accepts credit cards (has since at least 2002 when we first hired him and definitely still does). I accept them, although I don't advertise it! I used to have the link to Paypal on my website - but then decided I would let people ask if they wanted to pay via that method. I also sometimes offer it as an option if I am afraid someone might not pay otherwise or may take way too long to pay. I would rather have the money now. I have already performed my services and have heard back from them that everything is fine and a payment will be coming. But when that payment doesn't come, I offer the paypal method and since I have it in writing they are satisfied I feel better about it. I like Louis B Smith's $1k limit - I think I'm on a similar limit although I have no written policy.
Posted by Tom Fallon | February 13, 2010 3:20 AM
Posted on February 13, 2010 03:20
My firm accepts credit card for limited services. We don't accept credit cards for anything more that we can afford to have charged back. So essentially if it's under $1,000 we will take a risk. On many projects the fees will exceed most folks credit card limits in any event unless they are reeeeeaaallly well heeled. In that event I don't think they would have a problem with a check.
Posted by Louis B Smith, AIA | February 12, 2010 12:55 PM
Posted on February 12, 2010 12:55