Collecting Fees from Reluctant Clients

Prevention is often the best medicine for many things in life, and this includes collecting fees from reluctant clients.  It is far more efficient (and less stressful) to put systems in place that encourage timely payment of fees than it is to constantly chase clients for late payment. 

Here are some ideas to consider when reviewing your approach to invoicing and collecting fees:


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 (preferably a standard NZIA AAS) that outlines conditions relating to payment of fees, suspension of services and management of disputes.


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.


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

  • 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, licenses, etc.)
  • 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.
  • 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!)

Managing Expectations: 

Almost inevitably, the fees set at the outset of a project will change as the project changes, and/or there will be a mis-match of perceived progress versus fees invoiced:

  • In compiling the initial fee proposal, take at least as much effort (if not more) to explain what is NOT included as what is included.  Alert your client to the prospect of fees for other consultants and regulatory approvals.
  • Educate your client about the reasons fees may change, before they change.  Where the project scope or timeline changes, alert your client to the potential fee implications.
  • Put the effort into explaining the scope of work, progress achieved, resources expended and any other verification required to indicate to the client that each fee invoice is appropriate to the work done (ie the fees are a reflection of “value” provided).  This is particularly important where the work varies from the initial fee agreement.
  • Maintain ongoing communication between fee invoices, with regular client updates to discuss the project and to demonstrate the work that the work is proceeding as expected, or if not, why not.

Suggestions for recovering late fees:

  • Send a reminder:   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.
  • 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.  Use your problem solving skills to reach a solution that is acceptable to both parties.
  • Escalate to formal action:  It’s business, not personal:  maintain your objectivity.  Before escalation, swap positions:  put yourself in your client’s shoes and bear in mind that what for you is “business as usual”, for them may be a stressful strange and uncertain process with real tax-paid dollars at stake.  Or perhaps they are hardened commercial bargainers who routinely put pressure on all whom they deal with.  They may have misunderstood something, or may have genuine gripe which you have yet to accept, or they may just be generally nasty.  Whichever the case, don’t do anything until you can understand their side, and your potential worst case outcome.  Consider the value of your fees in arrears against your likely time costs and stress of recovering them.  Consider whether pressure applied will be returned with a vengeance.  Then – perhaps – convert those assessments to a (generous) discount on the fee applicable only if paid by a date certain.  Failing that:
  • The General Conditions of NZIA AAS map out a clear process for disputes resolution and this covers fees too (Clauses D7 and D12).
  • Any payment claims under the Construction Contracts Act 2002 can use the dispute provisions under the Act.
  • The Disputes Tribunal (Small Claims Court) 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 should 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:

  • clear payment terms in your Offer of Service and contract
  • structured invoices that detail a breakdown of services and fees
  • invoicing on a regular basis
  • ongoing communication

When payments are late:

  • follow up with a reminder once an account is overdue
  • call your client and keep the dialogue friendly and professional
  • be prepared to “do a deal”
  • understand your options for taking formal action and consider the likely outcome, time, costs and stress involved.

Further reading

On managing debtors, refer to the  NZIA Practice Note PN 3.212 Getting Paid:  Managing your Debtors and Reducing Financial Risk.

There are several relevant articles on the NZACS website, in particular:

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?

Fee recovery – a real-life example

Over the past 18 months or so, the Editor decided to test the actual process of fee recovery, as a learning process:  certainly not as an economic exercise!  All figures are “rounded”.


The original fee was $3900.  There was no doubt or quibble about the services delivered, or potential for a counter-claim:  the client (a company) was just a classic non-payer, and refused to “engage”, presumably reckoning that there was no prospect that recovery action could be economically justified.  Whilst I could have written it off, I was not inclined to do so!

When my fee claim was not paid after several emails and promises, I served a CCA Payment Claim for that sum plus the contract rate of interest to that date.  There was no response, so I compiled a Summary Judgement application from the helpful information and templates on the Justice Dept website, seeking judgement on the original sum, plus interest, plus the lodgement/uplift costs of $450.  The client did nothing in response, and after I appeared in Court a few months later and the client failed to respond, I got my judgement, now at $4900.  But that is the easy bit:  you still have to get the money!

I then instructed a lawyer who assured me all his costs would be met from the recovery from my client:  no recovery = no legal fees.  This took another few months, filing fees of $540, and miscellaneous disbursements of about $200 which I paid out in the hope of recovery.  My client hedged and dodged, but the lawyer was ruthless (presumably to get his $2400 fees!), I waived some of the accumulated interest, and the client paid up – now $8200 – the day before being put into liquidation.

Lessons learnt:

My (unpaid) time for all this was about 15 hours, and if I had been realistic, or stressed about the issues, that would be significant in assessing whether it was all worth the effort.

The contract rate of interest is the leverage you have for recovery, but there have been legal cases which have decided that interest could not be applied because the client’s specific attention was not drawn to it at the outset.

The usual response to an assertive fee recovery is for the client to counter-claim damages for your alleged failings:  if this is even remotely possible, you must tread very carefully!  NZACS has had plenty of claims where architects have commenced Summary Judgement proceedings with the belief that it will be a sure bet for fee recovery, only to have the debtor respond with a counter-claim.  In such instances, the claim will be declined judicially.

Generally speaking, it is better to seek legal advice before seeking a Summary Judgement, and if you do enter into negotiations with the debtor, try to maintain some “wriggle room” instead of locking yourself into a course of action you may later regret.