Accounts receivable are the lifeblood of your law firm. After all, you need to have steady, dependable cash flow to maintain a healthy practice and the income that comes with that. Unfortunately, when nearly half of Americans struggle to pay bills, ensuring their lawyer is paid on time may not always be their highest priority. However, you work at a law firm, not a lending institution, so you need to make sure you get compensated. Take the following steps to minimize delinquent payments.
They should outline details such as:
Educate everyone in your firm about your policies and procedures, and explain them to the client. Make sure they’re presented in simple language. Have clients review and sign a copy upon intake, and send an abbreviated copy home with them.
When clients know precisely what they’re paying for, it builds trust and showcases your value. For instance, instead of listing “planned mediation” on their invoice, explain everything that went into that planning, such as research, interviewing experts, and developing strategy. Always include nonbillable work as well – let them know how many hours you worked on their behalf without charge. This will help them fully understand and appreciate the effort and time it takes to move their case forward.
If multiple people are working on the matter, add additional details such as their name, title, and hourly rate specific to the services they performed.
Achieving this is far easier with a law practice management system that allows you to easily track time and activities contemporaneously, whether you’re at the office, courthouse, coffee shop, or airport. You can then compile all your unbilled time and generate a professional looking invoice within the same system with just a few clicks.
Call them to explain when a big charge is coming instead of shocking them when they open their invoice. If you anticipate an unusually high charge, you should consult and discuss it with the client before even engaging in any of the work so they know what it may cost and why it is important.
They’ll give you and your work greater value, and they’ll make you a higher priority. Furthermore, it will decrease confrontation if you have to follow up about a late payment.
Identify something beyond your client's matter that they are interested in or brings them joy that you can talk to them about. An easy way to do this is to ask them how their weekend was or if they have anything planned for the upcoming weekend. Take note of what they say and reference it in following conversations.
In addition to checks, allow clients to pay invoices with PayPal, credit card, or electronic funds transfer.
Send invoices to your clients via a secure client portal. You’ll know immediately when the invoice arrives and the client opens it, so you can make bills due on receipt.
When you complete a project, bill immediately instead of waiting until the end of the month. This way, it will still be fresh in the client’s mind.
If you aren't able to generate your invoices very quickly, explore law practice management software with built in time and billing functionality so you can easily record your time and quickly generate invoices.
Make sure the client received the bill (your client portal will tell you immediately). If it has been received, send a gentle reminder that it’s overdue and give them a call to find out when it will be paid. Follow up every week until then. The client will expect this kind of follow-up since you explained your policies and procedures (and they signed off on them) during client intake.
You must be proactive because the longer an invoice is past due, the less likely it will be paid. Furthermore, as time wears on, its value decreases because of inflation and the effort that went into collecting the payment.
While you probably won’t collect it, it does show you’re serious about getting paid. And when you do get paid, forgiving it will make you look like a hero.
Chances are, you don’t have time to pore over spreadsheets and sort through invoices to see who’s paid and who hasn’t. Fortunately, you don’t have to. There are now law practice management systems that can help you know, with a glance at a financial dashboard, what’s overdue and for how long. Practice management systems also allow you to create easy-to-read reports to track your client receivables and unbilled time in the format you prefer – PDF, Word, PowerPoint, and others.
Don’t be hesitant to take these steps, because you deserve to get compensated for your services. Certainly, your client wouldn’t work without pay. Neither should you.
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