With the average lawyer waiting 83 days from invoicing a client to receiving payment, it can be a struggle for law firms to get paid on time. This issue isn’t a reflection of the lawyer, but of their current practices, and often results in the accumulation of bad debt.
Take control of your finances, debt management, and case-closing processes by establishing a simplified, customer-facing system for taking payments. Provide your customers with every chance possible to pay you, aided by the right technology, and streamline your billing and cash flow.
Motivate your clients
Provide discounts (within your financial leeway) for early payments. This will help you get paid on time (or early) and speed up case closure as you begin to take on a new case and onboard new clients. Make sure your discount is exciting to your clients; however, be careful that your discount doesn’t devalue your services.
Penalize late payers
Make sure your clients understand that receiving payment on time is part of the delivery of services. Be mindful that your penalty is reasonable enough that you do not lose a client, but it is still enough to encourage timely payment.
Make it convenient to get paid on time
The payment process should be as easy and convenient as possible for your clients. Practice management software like Clio provides a simplified solution to legal billing and payment processes. Email a client an invoice with a link directly to a payment page to make payment easy and efficient. The fewer steps the better, and the more likely you are to get paid on time.
Automate the billing process
Automation is becoming more and more important—both to benefit you and your client. Get paid on time by automating these three main billing features:
- Go paperless
- Set up payment reminders for clients
- Accept online payments from within your Clio account.
Develop strong relationships with your clients
Efficiency, automation, and tech tools are all highly advantageous, but by taking the time to get to know your clients and nurturing a strong relationship with them, you create a human relationship, not just an exchange of services, placing a genuine onus on clients to pay on time.
Talk about payment terms and expectations from the start
Transparency is best when it comes to any business transactions—including the provision of legal services. When onboarding a client, make sure to explain your payment terms in detail at the end of your first meeting so there is no confusion later on that could result in tension, mismanaged budgets and refusal of payment.
Get it in writing. Once you’ve reviewed and agreed on payment terms, get your clients to sign a written payment agreement, in everyone’s best interest.
Tip: Mind your P’s and Q’s. Just like your parents told you when you were younger, please and thank you go a long way. Quickbooks has found that businesses using polite language increases payments by 5%.
Draft a retainer
If you will be working on a long-term project for a client, suggest a retainer from the opening of a case. This places a structure on the time, work, and budget for both you and your client, plus a document guaranteeing payment.
Be willing to negotiate
You’re selling a service catered to the demands of every individual client and case, and everyone will be different. Be open to negotiation in your fees. Clients are more likely to pay when they are involved in the payment agreement process and feel that their needs are being accommodated.