8 Common Payment Problems faced by Interior Designers in Singapore

December 15, 2023

8 Common Payment Problems faced by IDs in Singapore

Throughout 2023, as we were working on the HomePay platform, we talked to many experienced Interior Designers (IDs) in Singapore. We wanted to understand the common payment issues they face in their work. From dealing with late payments to not being sure about what clients expect, we heard a lot of concerns. 

Today, we're ready to tackle these challenges and offer our help. Can you relate to any of these issues? Read on to find out!

Clients Unwilling To Make The Last Payment

One of the most significant payment challenges faced by IDs in Singapore is the reluctance of clients to make the final payment. This issue arises when clients refuse to complete the payment until all defects in the renovated space are rectified. While clients may have valid concerns about the quality of work, this practice can have a substantial impact on the cash flow of IDs. Many interior design firms incur significant operating costs, such as prepaying subcontractors, raw material fees, staff’s salary and renting spacious showrooms. The delay in receiving the final payment can create financial strain, affecting the smooth functioning of the ID firm and its ability to meet ongoing expenses.

Delays and Withholding of Payments

Another common payment challenge faced by IDs in Singapore is the occurrence of delays and withholding of payments by clients. These delays can significantly impact the cash flow of ID firms, as the money takes a considerable amount of time to come in. When payments are delayed, it necessitates additional efforts from both individual IDs and administrative staff who have to consistently follow up with homeowners for payment. This process consumes valuable time and resources that could otherwise be directed towards honing design skills, efficiently managing projects, and achieving sales targets to contribute to the growth of the ID firm. The prolonged chase for payments introduces an unnecessary burden on the ID firm, diverting attention from core professional responsibilities.

Clients Unwilling to Make First Payment

At the other end of the spectrum, yet another prevalent challenge faced by IDs in Singapore is the reluctance of clients to make the first payment. While it is common for ID firms to charge an initial fee of 20-30% to commence the design process—a practice that is generally considered reasonable—some homeowners hesitate to pay this amount upfront. This reluctance stems from the industry's negative reputation and prevalent fears among homeowners who might be skeptical about parting with a significant sum without having witnessed any tangible work or progress. Despite the common industry practice of securing an initial payment to initiate the design phase, this hesitancy can create hurdles for IDs, impacting their ability to smoothly kickstart projects and allocate necessary resources. The challenge lies in overcoming the apprehensions of clients and establishing trust in the early stages of the collaboration.

Clients Unwilling to Engage an ID’s Services In The First Place

Sometimes, homeowners are unwilling to engage an ID for their renovation project in the first place. Some homeowners opt to coordinate the entire renovation process independently, believing they can manage it better without professional assistance. This reluctance may also be fueled by the prevalent horror stories within the industry, creating a sense of apprehension among clients. While it is true that homeowners have the capability to handle renovations on their own, the decision not to engage an ID comes with its own set of risks and challenges. Let us share more!

Choosing to forgo professional assistance may lead homeowners to become site project managers, a role that demands considerable time and effort. Coordinating the various aspects of a renovation project, from scheduling deliveries to overseeing installations, becomes the responsibility of the homeowner. This DIY approach often requires taking leaves or even urgent leaves to manage unforeseen issues, which can be a hindrance to work.

Although it might initially seem like a cost-saving measure to bypass the fees associated with hiring an ID, homeowners may end up spending more in the long run. The lack of expertise in the intricacies of the renovation process can result in mistakes, miscommunication with contractors, and the need for redoing works, all of which contribute to increased expenses and potential time wastage. Despite the perceived savings, the decision not to engage an ID may lead to unanticipated challenges, emphasising the value that a professional ID brings to the table— a bao ga liao package that includes a design sense and the ability to optimise floorplans effectively.

Unclear Client Expectations Leading to Miscommunication

Some clients may harbour unrealistic expectations, anticipating completion and flawless outcomes within an impractically short timeframe (don’t be this guy). Despite the IDs' efforts to accommodate these expectations, a lack of proper communication can lead to significant mismatches in what clients envision and what is realistically achievable. To address this issue, IDs must proactively communicate with homeowners from the outset.

IDs are tasked with informing homeowners about various crucial aspects that can influence the outcome of the renovation project. Firstly, establishing and communicating the expected timeline for the renovation works is essential. However, caution must be exercised to avoid overpromising and setting unrealistic deadlines. Additionally, IDs need to clarify that the chosen materials and colours may vary in actual appearance, especially when applied to different surfaces.

To manage client expectations effectively, IDs should communicate the intricacies of the renovation procedure and highlight potential site and technical issues that may arise during the process. This proactive communication helps homeowners understand the complexities involved, fostering a more realistic perspective. Furthermore, specifying the dimensions and delivery dates of required items, such as lights, fans, basin sizes, taps, shower heads, kitchen sinks, and bathtubs, is crucial to ensuring a smooth workflow. By addressing these details upfront, IDs can mitigate potential misunderstandings and create a more transparent and cooperative working relationship with their clients.

Clients Asking for Discounts

Singaporeans love a good discount and will stop at nothing to get the best price possible for anything they are paying for—including the renovation of their own home. Another prevalent challenge faced by IDs revolves around clients negotiating extensively for lower prices and expecting work to be completed at unreasonably cheap rates. However, the "you get what you pay for'' principle holds true in the renovation industry, emphasising the importance of educating consumers about the trade-offs associated with choosing lower-cost options.

For example, IDs often encounter clients who expect superior workmanship and high-quality materials at significantly reduced prices. IDs should communicate to clients that there are discernible differences in material quality based on the chosen price range. Materials that fall within a lower cost bracket may not deliver the same level of workmanship and durability as those of higher quality.

To address this challenge, we recommend that IDs should emphasise the concept that clients can only choose two out of three factors: "Cheap, Fast, or Good." This means that if clients prioritise cost-effectiveness, they might experience compromises in terms of speed or quality. Proper education on these trade-offs is crucial for clients to make informed decisions and set realistic expectations regarding the outcomes of their renovation projects. By fostering this understanding, IDs can build stronger relationships with clients and navigate negotiations more effectively, ensuring a fair balance between cost, speed, and quality.

Risk of Embezzlement

The risk of embezzlement increases as ID firms grow in size and the number of sales staff increases. As the business expands, it becomes increasingly difficult for IDs to closely oversee all projects and transactions conducted by their staff. Without careful supervision, this situation can create opportunities for staff members to convince clients to make under-the-table payments directly to their bank accounts or through cash transactions.

The potential consequences of embezzlement are severe, leading to financial losses for the ID firms and damaging their reputation. To mitigate this risk, IDs need a robust system that provides full oversight of their sales, projects, and relationships with homeowners. 

Tracking Sales in Real-Time Accurately

As interior design firms experience growth and expansion, accurately tracking sales in real-time becomes a crucial aspect of their operations. Sales targets play a pivotal role in keeping everyone motivated and assessing the performance of individual IDs. In a larger business setting, the ability to monitor sales in real-time allows management to gain insights into the overall health of the business, identify areas of improvement, and provide targeted support or training where necessary.

Accurate sales tracking enables management to evaluate the effectiveness of each ID's design and project management skills, helping them understand the factors that contribute to lower or higher sales performance. This real-time visibility into sales data allows bosses to make informed decisions, implement strategies for business growth, and ensure that the entire team is aligned with organisational goals!

How HomePay Can Solve These Problems

As we look into the many payment challenges faced by interior designers in Singapore, the situation may seem bleak. But don’t you worry! HomePay has features to make things smoother and safer for both homeowners and interior designers. Let's see how HomePay is making a positive difference in the world of interior design payments.

HomePay acts as a trusted third party

HomePay operates with a MAS-approved digital wallet where all funds are held securely in a DBS custodian account.. To ensure a fair and balanced payment process, HomePay adopts a systematic approach according to the ID firm's progressive payment structure. At each progressive payment milestone (or what we call 'tranche'), 50% of the tranche is disbursed to initiate the project, facilitating the commencement of works. The remaining 50% is securely held in escrow until the completion of that milestone. This meticulous structure not only safeguards client funds but also ensures that interior designers receive compensation proportionate to the work accomplished at each stage. With a third party like HomePay facilitating payment, homeowners are more likely to trust the ID and also more willing to part with their money!

Clear Contract Terms

HomePay streamlines the contractual process, aiding both interior designers and homeowners in establishing transparent and comprehensive terms from the project's outset. In this collaborative environment, ID firms have the capability to upload their customised contracts, encapsulating essential elements such as terms and conditions (T&Cs), warranties, and other pertinent clauses. These contractual details serve as a foundational agreement that homeowners are required to endorse before the commencement of any work. By providing a clear contractual framework, HomePay ensures that both parties are aligned in their expectations, minimising potential misunderstandings and promoting a smoother renovation journey.

HomePay Sets Up Clear Payment Tranches

On the HomePay platform, IDs are able to establish transparent payment tranches, benefitting both homeowners and themselves. Through this feature, homeowners gain a precise understanding of when and how much to pay at each stage of the project. This meticulous breakdown eliminates ambiguity and provides homeowners with a structured payment schedule, fostering a sense of confidence and control over their financial commitments.

For IDs, this functionality not only aids in minimising uncertainties for homeowners but also ensures that their hard work is duly compensated. With pre-defined payment tranches, IDs can anticipate the timely inflow of funds upon completion of each project milestone. This systematic approach alleviates cash flow concerns, allowing IDs to concentrate on delivering exceptional design and project management services rather than navigating financial uncertainties. By synchronising payments with project milestones, HomePay facilitates a more efficient and reliable financial ecosystem for both parties involved in the renovation process.

Effectively Manage Your Business Operations

HomePay provides an integrated platform that empowers Interior Designers (IDs) to efficiently oversee every facet of their business operations. Notably, management can seamlessly track all actions performed by Sales IDs and homeowners, ensuring real-time updates on work progress, rectification processes, and payments made to the business wallet. This feature enhances on-site issue management, enabling swift responses to emerging challenges during the renovation process. The platform's capability to document signed contracts and job progress facilitates a smoother handover process, ensuring continuity in the event of a salesperson leaving the job midway. HomePay's commitment to transparency and accountability not only reduces the likelihood of embezzlement but also safeguards the financial integrity of ID firms. This comprehensive tool allows IDs to concentrate on business growth confidently, equipped with the means to prevent and detect any irregularities in financial transactions.

Solve Payment Problems with HomePay

By addressing issues like delayed payments, client expectations, and the risk of embezzlement, HomePay ensures a streamlined and secure renovation experience for both homeowners and IDs. With HomePay, clients gain confidence knowing their funds are secure in a MASS-approved wallet and DBS Custodian Account, According to the ID firm's progressive payment structure, at each progressive payment milestone (or we call it 'tranche'), 50% of the tranche is disbursed to initiate the project, facilitating the commencement of works. The remaining 50% is securely held in escrow until the completion of that milestone. Clear contract terms, timely receivables, further solidify HomePay's commitment to making any renovation journey stress-free and cost-effective. Choose HomePay as your trusted renovation payment platform, and embark on a transformative experience where financial security meets convenience. Reach out to us and onboard with HomePay today!