This content originally appeared on LawPay Blog.
Every pragmatic legal professional expects that a certain percentage of his billed services will not be paid. But even small fluctuations in the law firm’s collection ratio can have a huge impact on its financial results. So how can you improve your recovery rate and minimize outstanding debts?
Here are some tips to help your business develop a strategy for dealing with your outdated receivables.
Be on time with invoicing
Clients usually appreciate what you just did for them – not what you did a month ago. What’s more, you want to catch them when they appreciate you and the work you do on their case.
First, try billing clients on the same day each month. Even better, your clients receive a monthly statement approximately three to four days after the first of the month. Sending invoices around this time increases the chances that the client has recently received a payout and therefore has funds available.
Clients commonly complain that all too often they receive bills 90 or more days after work is completed. Until then, the client does not remember what you did three months ago and will be less willing to pay you. If they have a fresh job, you will find a client more willing to pay the invoice.
Send descriptive and easy-to-understand invoices
Provide a clearly written and detailed invoice. You don’t have to outline your time per minute, but use separate line items for larger tasks and include a brief summary of your work.
If possible, avoid legal jargon. Your goal is to give the client an overview of what you are doing for him. If you use too much technical language, your client may end up with even more questions. Also, don’t let your client nickel out and give a dime by billing for things like office supplies. This type of billing only annoys clients, offends them, and is more likely to make timely payment.
Take advantage of scheduled payments
For clients who may have difficulty paying your account or for those who are usually late and / or forgetful, one option is to offer them a recurring monthly payment plan. It’s a great way to help them financially and save you time and effort, all while ensuring consistent and predictable cash flow in your practice.
To make it even easier for you and your business, have clients sign payment authorization forms during their entry paperwork and set up a payment plan for them as part of your first meetings and boarding. Your clients’ payments can be made automatically without you or them having to do anything.
Remember: the longer your bill is not paid, the less likely it is to be paid. Therefore, it is essential that you have a strategy to keep old receivables to a minimum, otherwise they will remain unpaid indefinitely.
To learn how LawPay can help you make payments easier, visit lawpay.com/texasbar.