Stop-work notice for nonpayment: what an architecture or engineering firm checks first

The interest clause that never reaches the invoice

Section 11.10.2.1 of B101-2017 says amounts unpaid 30 days after the invoice date bear interest at the rate the parties enter in the agreement or, if none is entered, at the legal rate where the architect has its principal place of business. A clause like this does nothing until someone computes it and puts it on a statement.

Charging interest is a business decision, and waiving it can be the right call with a good client. The problem is a waiver nobody decided: a clause in every agreement and a zero on every statement. If the firm chooses not to bill it, that choice belongs in the client file with a date and a name.

Illustrative example: a $40,000 invoice sits unpaid 90 days after its invoice date under an agreement with an entered rate of 1% a month. Interest runs from day 30, so about two months at 1% comes to roughly $800, and it grows every month the invoice waits. The numbers are invented; the firm’s own agreements set the real rate.

Before the next billing, pull five facts from each active agreement:

• The form and version, and whether the owner or the firm edited it
• The suspension clause: section number, days of notice, and how notice must be delivered under the agreement’s notice clause
• The interest rate entered, or a note that the line is blank
• The payment terms: due on presentation of the invoice, net 30, or something else
• The termination clause and what it says the firm is paid on termination

Public clients run on their own payment clock

Texas is one example of a state that writes the clock into statute. Under Government Code section 2251.021, a payment by a governmental entity is overdue on the 31st day after the latest of receipt of the goods, completion of the service, or receipt of the invoice; for a political subdivision whose governing body meets only once a month or less, it is the 46th day. Section 2251.042 requires the entity to notify the vendor of an error or disputed amount no later than the 21st day after it receives the invoice, with a detailed statement of the disputed amount. Section 2251.025 sets the interest rate on an overdue payment at one percent plus the prime rate published in The Wall Street Journal on the date the statute names.

The same chapter has a vendor remedy. Section 2251.051 allows a vendor to suspend performance if an undisputed amount is not paid in time and the vendor gives written notice that payment has not been received and of its intent to suspend; suspension cannot start before the 10th day after that notice. Section 2251.002 lists exceptions, among them a bona fide dispute, federal contract or grant terms that prevent timely payment with federal funds, and an invoice not mailed in strict accordance with the purchase order’s instructions. Whether the chapter reaches a particular design contract, and whether to use it, is for the firm’s attorney.

Federal fixed-price architect-engineer contracts carry FAR 52.232-26. The due date is the later of the 30th day after the designated billing office receives a proper invoice and the 30th day after the government accepts the work; progress payments are due 30 days after the government approves the firm’s estimates of work accomplished. An invoice that is not proper is returned within 7 days with the reasons, and an interest penalty is paid automatically, without a request, when the clause’s conditions are met. A different rule cuts the other way: the Disputes clause, FAR 52.233-1(i), says the contractor “shall proceed diligently with performance” pending final resolution of a claim. A private-form suspension habit does not carry over to federal work.

For the list below, a public invoice has two dates worth computing from the day it was received: the date the statute or clause makes it overdue, and the date by which the client should have raised a dispute.

Build the aging list by client, with the clause next to each invoice

The call or letter that matters goes better with one page per client in hand. It joins the receivables aging to the agreement, so the person deciding sees the amount and the contract right on the same line.

• Client, project, and the agreement that governs it: form, version, edited or not
• Invoice number, invoice date, date received if known, and amount
• Due date under the agreement or statute, and days past it today
• Interest rate in the agreement, interest accrued, and whether it was ever invoiced
• Suspension clause: section, days of notice, delivery method, or “none”
• Work still ahead on the project: current phase, next milestone, permit or bid date
• Last contact: date, who spoke, what was promised, and whether it is in writing

Illustrative example: Client A signed a published B101; two invoices are 75 and 45 days past due and the interest line is blank, so the legal rate applies. Client B is a Texas county; its invoice was received 40 days ago and no dispute notice arrived by day 21. Client C signed the firm’s own two-page proposal, which has no suspension clause, and its invoice is 120 days old. Each line points to a different next step, and all three go to the attorney with the agreement attached. The clients and numbers are invented.

Decide the thresholds before the client goes quiet

Thresholds set in the moment are set by the relationship. In public forum threads, architects describe stopping work at points as far apart as 30 days and 120 days past due. Neither is right in general; what matters is that the firm picks its points in advance and writes them down.

A written policy can be three lines. Illustrative example: at 15 days past due, the project manager calls; at 45 days, the principal calls and follows up in writing, restating the invoice numbers and the agreement’s payment terms; at 75 days, the attorney reviews the file and decides whether a notice under the agreement fits. The numbers are illustrative; the firm’s own terms and clients set them.

The list also shows something the attorney will ask for: where the remaining work sits. A project with a permit set or bid documents still ahead is a different file from one where construction administration has ended. What that means for any notice is the attorney’s call, not the billing clerk’s.

When not to hire anyone for this

If one client is late and the agreement is clear, the next call is to a construction attorney, not a consultant. A notice, a demand, a lien or a claim is legal work, and nothing in this guide is legal advice.

An outside review is worth paying for when late payment is one leak among several: additional services done without an amendment, phases complete but not invoiced, consultant invoices passed through a month late, interest never billed. That is the work of an architecture & engineering business consultant who reads records rather than drawings. Our Revenue Review reads the firm’s own agreements, time, invoices and aging, read-only, and puts a monthly dollar figure on each leak the records support. It takes two weeks and never contacts a client. We do not run an architecture or engineering firm, and there are no client case studies on this site yet.

If it is unclear whether a fee is worth it, the next step is a free 20-minute call, which tells a firm with one slow client and nothing else wrong that it does not need the Review.