When it comes to collecting fees from reluctant clients, prevention is often the best medicine.  It is far more efficient (and less stressful) to put systems in place that encourage timely payment of fees than to constantly have to chase clients for late payment. 

There are a number of ways that your systems and conduct can encourage prompt payment of fees, and these are covered in the first part of this article.  The second part of the article looks at steps you can take to recover late fees.

Encouraging prompt payment

1.            Manage Expectations:  Take time to explain your services to your client, especially any limitations to your scope of services that are not included in your offer, including those provided by other consultants.  Outline any areas of foreseeable risk to the budget or programme that may affect your scope of work and fee.  And importantly, keep your client updated throughout the design process about changes or circumstances that are likely to have an impact on fees.

2.            Terms:  Be clear about your payment terms at the time of engagement.  Don’t be afraid to discuss these at your initial client meeting, and make sure your invoicing and payment terms are stated upfront in your Offer of Service.  Ensure you have a signed contract in place that outlines terms for fees, payments, suspension of services, and management of disputes before beginning work.

3.            Transparency:  Most people want to understand where their money is going, particularly when large sums are involved.  It’s helpful if invoices have a breakdown of the services or tasks provided.  Consider how you can align your Offer of Service, the contract, and the structure of your invoices so that clients have a better understanding of the services they are being provided and what they are being charged for with each invoice.

4.            Frequency:  While traditionally architects have charged by stage, invoicing on a regular basis (e.g. monthly) has a number of benefits:

a)            It’s better for your cashflow.  Regular payments are the lifeblood of your business helping you to keep on top of your own regular payments (salaries, rent, licences, etc)

b)            It’s better for your client’s cashflow.  No one likes a surprise large bill.  Smaller, regular payments are typically easier to digest for most clients.  Developing a regular pattern of invoicing also sets some expectation about payment of your fees.

c)            If a client is unhappy with an invoice or with work carried out, your exposure is more limited if the bill covers a shorter period of time (e.g. a month as opposed to the entire detailed design phase!)

5.            Regular Communication:  Regular invoicing should be backed up with regular client communication to discuss the project and to demonstrate the work that has been carried out.  This provides an opportunity for clients to air any issues along the way and generally reduces the likelihood of disputes over fees.

Recovering late fees

Even when you have great systems in place, sometimes fees are not paid on time.  Steps for recovering late fees are outlined below.

1.            Send a reminder:  Sometimes people just forget.  A gentle reminder with the accompanying invoice or statement of account is often sufficient to induce payment from a client who has forgotten to pay the bill.

2.            Pick up the phone:  Good communication will resolve many issues in the practice of architecture and a friendly phone call is often the best way to get to the bottom of why a client has not paid your account.  The reasons could range from dissatisfaction with the services provided to more personal reasons (such as cashflow) on their side.  Consider their viewpoint and use your problem-solving skills to reach a solution that is acceptable to both parties.  A negotiated resolution may result in a better outcome than further, more formal action.

3.            Escalate to formal action:  If a client persists in withholding payment of fees, you may decide to pursue formal action.  In weighing up whether to pursue legal action, consider the value of your fees in arrears against your likely time and costs for recovering them.  This value judgment will be unique to each situation.  Options for taking formal action include:

  • The General Conditions of NZIA AAS map out a clear process for disputes resolution and this covers fees too (Clauses D7 and D12).
  • Any invoices issued as payment claims under the Construction Contracts Act 2002 can use the dispute provisions under the Act.
  • The Disputes Tribunal (Small Claims Court – https://disputestribunal.govt.nz/ ) can be used to settle small claims up to $30,000.  It’s a good idea to seek legal advice first to provide guidance on the outcome you might expect and how best to present your claim.
  • To escalate a debt recovery issue further, you will need to consult a lawyer experienced in debt recovery to discuss options.

In summary

Put systems in place to encourage timely payment of fees.  These will include:

•             managing client expectations about changes that may affect your fee

•             clear terms for payment in your Offer of Service and contract

•             structured invoices that detail a breakdown of services and fees

•             invoicing on a regular basis

•             regular communication

When payments are late:

•             follow up with a reminder once an account is overdue

•             call your client to find out why but make sure you keep the dialogue friendly and professional

•             understand your options for taking formal action and take into account the likely outcome, time and costs before pursuing legal action.

Further reading on managing debtors:

•             NZIA Practice Note PN 3.212 Getting Paid:  Managing your Debtors and Reducing Financial Risk.

•             On the NZACS website:

•             Get your fees and scope agreement agreed and signed

•             A Sad Tale about Fees

•             Outstanding Fees:  Will a Fee Claim Dispute Lead to a Negligence Claim?