All the excitement and allure of overseas work amounts to nothing if you don't get the negotiated compensation. Here are pointers from the Architect's Handbook 13th Edition on planning ahead to make sure you have hatched eggs to count.

Risks
The legal system—or lack thereof—and prevailing sense of business custom can mean that foreign clients see little risk in not paying you and, therefore, that they have no obligation to pay.

An unstable currency may plummet, leaving your negotiated fee inadequate if it is calculated in the foreign currency. And, of course, there is little one can do about sudden political instability.

Some countries limit the amount of money you can take out of the country. Some foreign clients—for instance, in Asia—are used to withholding payment until all work or each phase of the work is completed satisfactorily. This, combined with the difficulty of moving currency out of some countries, can create cash-flow nightmares, such as months-long lags between completion of work and payment of billings.

Risk management
Retainers that are sufficient to maintain positive cash flow will mitigate many of the risks of working overseas. Some firms are able to negotiate full payment in advance. Another option is an escrow account, overseen by a trusted third party, from which payments are made as the project proceeds.

Payment in U.S. dollars via a bank wire transfer is another viable option. Some foreign clients choose or are obligated to pay in their jurisdictional currency as a matter of policy or law. In accounting for the project, balance the amount of the payment in local currency with on-site expenses, such as office space, equipment, indigenous workforce, and in-country living and travel.

If you can, buy insurance against currency fluctuations.

Arrange for a secured letter of credit from the client if you are at all in doubt. A client who cannot secure an irrevocable, confirmed, or advised letter of credit—i.e., one that cannot be canceled or is guaranteed by a second bank)—the client's trustworthiness is immediately suspect.

You may be able to get credit risk protection through the U.S. Export-Import Bank. This is an expensive way to protect foreign receivables, but may be the best way for a small firm to protect itself and offer competitive terms, such as 180 days net, to a prospective overseas client.

Copyright 2002 The American Institute of Architects. All rights reserved.