We’ve previously discussed that, as a law firm offering professional services, you should expect clients to pay you in a timely manner. However, rather than simply demanding payment, you can take steps to make it easier and more convenient for them to pay on time than to pay late. Let’s discuss a few of these strategies.
Keep Grace Periods Short and Invoke Late Penalties
If you do give your clients a grace period, keep it brief—no more than a few days—with late fees that incur automatically. Put these terms in writing in your retainer agreement, and make sure the client understands your policies so there are no surprises if the client is late.
Ask your client to place a credit card on file with an approval to charge the card automatically on the same day each month. This process can greatly reduce the number of late pays because it puts you in control.
Invoice Regularly and More Frequently
If you invoice at the same time(s) each month, don’t be late with your invoicing as it can throw your client’s timing off. And consider invoicing more frequently—either when a client hits a certain balance or biweekly (as opposed to monthly). Smaller, more frequent invoices tend to be paid more consistently.
Send Gentle Reminders
Your clients are busy just like you are—so they appreciate being reminded when it’s time to pay you. Automate your messaging to send reminders as their payment due date approaches. One common model suggests a 10-day, 5-day and 3-day reminder notice.
All of these strategies center on one common premise: It’s easier to prevent late payments than to collect them. Implement one or more of these methods, and you may circumvent many late payments before they happen, preserving both your cash flow and your sanity.