OSPE - The Voice - June 2020 - 34

ENGINEERING ACADEMY

The Art of Getting Paid:

COLLECTING UNPAID ACCOUNTS
Written by Harp Khukh, Corestone Law

providing sizeable discounts for immediate payment; payment
plans; allowing security to be pledged for unpaid fees; a mutual
agreement to suspend services; and to suspend collecting previous
unpaid fees as long as current work is being paid for in advance.

I

n the past few months, every facet of our lives has been
drastically affected by COVID-19, none more so than
our employment and businesses. Our Government
recognized many engineering services as essential and
much of the engineering community has been able to
continue working remotely. The amount of work available has
reduced, however the overhead expenses for sole practitioners,
small and large firms alike have remained. This has become a
considerable concern despite our Government's best efforts to
provide various emergency response benefit programs.
Since mid-March 2020, our courts have been operating at
reduced capacity and we have seen our practice shift focus to
certain areas. For our engineering clients, most of our services
have been collecting unpaid fees for services rendered and, to a
lesser extent, ensuring our client's contracts for current or future
work protect them during this uncertain time. As such, due to the
present applicability, we have updated and expanded upon this
article which originally appeared in the Winter 2014 issue of The
Voice.
Before we get into our legal discussion, we should recognize
that COVID-19 has resulted in significant changes in the ways
that business is being conducted in our society. With respect to
financial matters, we are encouraged to be flexible and cooperative;
our Government has encouraged employers to keep employees
on, banks to defer mortgage payments and landlords to defer
rent payments. In that spirit, we should consider being flexible
when unpaid accounts are due to pandemic related financial
issues, and we have seen the following techniques being used:

34

THE VOICE Summer 2020

New Construction Act
If you are providing construction related services which fall
under Part 1.1 of the new Construction Act, R.S.O. 1990, C.30. (the
"Construction Act"), which is the new Prompt Payment Regime,
then ensure that billing practices are consistent with the new
rules. The Prompt Payment rules became law on October 1, 2019.
Our article for the fall issue of The Voice will focus exclusively
on the Prompt Payment and Adjudication amendments of the
Construction Act.
Avoiding Legal Disputes
If you have had any involvement in a lawsuit, you will know
that the process can be stressful and expensive. The best way to
avoid a lawsuit for an unpaid account is to employ good business
practices that start prior to the contract for services being signed.
In the following, we have compiled a list of good practices to avoid
unpaid accounts and good practices to collect unpaid accounts.
In compiling this list, we sought the assistance of several of our
engineering firm clients.
Good Practices to Avoid Unpaid Accounts
* To provide a clear and concise fee arrangement/budget and
payment terms and to ensure the client understands it;
* If the fee arrangement/budget increases, provide the client with
written confirmation and/or seek client approval;
* Secure a signed contract with clear terms regarding invoicing
and payment;
* The contract should allow you to suspend and terminate services
for non-payment;
* The contract should allow you to charge interest after the term
date to pay the invoice;
* Require a retainer/partial payment prior to commencement of
work;
* If work is completed in phases, require a retainer payment prior
to commencement of each phase;
* For extended projects, provide invoices in short increments;
OSPE - The Voice - June 2020

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