How to Prevent or Minimize Client Payment Issues for Your Law Firm

client payment

An ounce of prevention is worth a pound of cure.

—Benjamin Franklin


We previously discussed practical solutions to help you deal with late-paying or non-paying clients. Now, let’s discuss an even better approach: Keeping late payments from happening in the first place. By setting up a few proactive systems and processes, you can prevent as much as 90 percent of late payments from ever occurring, thereby keeping your cash flow intact. Of course, check with your local bar to see if there are any ethical issues or other requirements that might affect collections, but here are some general principles to start the ideas flowing.

Set Up Automatic Recurring Payments

For clients who pay you a monthly retainer or for installation payments, you can greatly reduce the risk of delinquency by taking their credit card or banking information, with scheduled payments to come at the same time each month. Many clients themselves prefer this arrangement, because they no longer have to remember whether they paid you, and the only time they become delinquent is if their card is declined.

Offer Incentives for Payment in Advance

If you charge a flat rate for certain services rather than billable hours, you can prevent late or nonpayment simply by collecting the money up front. Feel free to offer discounts or other value-added benefits as an incentive for clients who pay in advance.

Automate Reminder Notices and Collection Communications

Just as you might automate reminder calls or notices for upcoming appointments, you can automate reminders of upcoming invoices due. Use your best judgment as to whether this technique is appropriate for all your clients, but it can be especially useful for clients with a history of late payments.

In addition, you can automate a friendly collection call reminder from the first day payment is late, as well as successive collection activities as necessary.

Have a Pre-Established Policy in Place

As another proactive measure, consider writing out an established policy and timeline for how late payments are collected at your firm, and at what point collection activities might escalate—and make sure your clients understand and agree to the policy. It doesn’t have to be a particularly aggressive or intimidating policy to be effective; in fact, you don’t want to antagonize clients before they’ve even gotten the first invoice. Just communicate your expectations for payment and the consequences of lateness. Simply communicating these boundaries will deter many of your clients from ever crossing them.

While sometimes necessary, collection activities can be a drain on your time and energy. By implementing some proactive strategies, however, you can stop the need for most collections before they ever start. As always, our team is on hand to answer questions about collections, cash flow or other topics related to growing your law firm. Call our offices to learn more.

Richard James

As a result of his track record for achieving what most describe as “phenomenal” growth rates for his clients, Richard James, CEO of Automated Business Results, LLC, is quickly gaining a national reputation as “the Legal Systems Expert.” His secret to success is simple. Richard has devised a seven step system for designing and implementing automated marketing systems that grow your business FAST. If you’re looking to develop a practice that supports your lifestyle rather than completely undermining it, call Richard James today.

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