Top 10 Tips for Getting Paid
guest author: Caren Schwartz
You're running a business and if you don't get paid you can't pay your employees, your expenses or yourself. These tips will help you avoid collection hassles.
- Explain your Fee Agreement
When clients expectations are set appropriately they are less like to have issues with the bill. If they know that phone calls or emails will be charged, they won't question the bill and delay in paying.
- Set up an evergreen retainer
If you are paid in advance you won't have collection issues. Obtaining a retainer starts you off right. An evergreen retainer, where you automatically ask for more retainer when the funds go down helps to insure there is always money to pay the invoice. If you do value based billing you know up front what the cost will be and may be able to complete avoid the collection issue.
- Communicate with clients
When clients feel that the attorney is responsive and working for them they are less likely to have concerns about paying the bill. If the client calls and doesn't hear from your for 3 weeks they may be upset and more likely to raise questions.
- Send bills in a timely manner
When bills are sent in a timely manner they are more likely to be paid. The client knows the work was done and that the case is proceeding. Bills sent months after the work was done are more likely to be set aside or questioned.
- Make sure bills are clear
If the client has questions on the bill or doesn't understand some aspect of the bill they will call to ask before they pay the bill. The bill gets set aside until they have a chance to call, delaying payment further.
- Make it easy for clients to pay
If bills are emailed and clients can click on a link to pay by credit card or e-check they are more likely to pay quickly. Even if invoices are mailed, if the client can call with a credit card they may pay more quickly than if they have to write a check, which they might do only once or twice a month. Plus clients like the points they receive from the credit card company. Yes you give up some fees when you accept credit cards but the time saved on collections is usually worthwhile.
- Offer an incentive
This may work better for corporate clients than for individuals, but offering a discount for payment within 10 days may move your bill up to the top. Again you lose something, but if you set your fees expecting the discount, those that don't take the discount are paying extra. Hospitals are often known for being slow at paying. A consultant who worked with hospitals had a 98% rate of collecting within 5 days. Invoices were sent by fax and fedex (this was before everyone used email extensively). The hospital got a 5% discount if the payment was postmarked within 5 days of the invoice date. Most hospitals took the discount.
- Add a stick
Charge interest on past due balances. If you have two bills to pay and one charges interest and one doesn't, which would you pay first? Of course you need to check your Bar Association rules and include it in your fee agreement. If clients pay the bill but don't pay the interest you can easily write-off the interest, giving the client a good feeling.
- Give something away
There's almost always something you do for the client during the course of the engagement that you do not charge for. Show it on the bill as No Charge or a small courtesy discount. This makes the client feel good and makes them more inclined to pay.
- Don't let invoices get stale
The older an invoice gets the harder it is to collect. Making collection calls is never fun but, when an invoice is more than 30 or 60 days you should call the client to see what the problem is. Maybe the invoice went amiss and you can quickly fix the problem. Maybe an agreement is needed to pay the invoice over time. In this case, if you take credit cards, perhaps you can charge the whole amount and let the credit card company worry about collections.
Caren Schwartz is the founder of Time & Cents Consultants, LLC, a Fairfield, Connecticut firm, that helps legal and other service professionals select, install and get the most out of their practice management, billing and accounting technologies. She works to allow companies to better manage their time, money and information through the practical and efficient use of their software. Caren focuses on making practice management software into real world turn-key solutions. Caren is certified on a number of software solutions including Centerbase®, Tabs3 Tabs3 and PracticeMaster, Kurent, Timeslips® by Sage, QuickBooks®, QuickBooks Online, Time Matters®, Billing Matters™, PCLaw®, Cosmolex, Timesolv, Clio, TSheets, Hubdoc, Amicus Attorney® and Amicus Premium Billing. Ms. Schwartz is a member of the Intuit Accounting Professionals Trainer and Writers Network and has taught classes for Solo Practice University, SCORE, Scaling New Heights and The Sleeter Group. She writes reviews and articles for Technolawyer®, a respected online newsletter for attorneys and the Intuitive Accountant. She is the author of the book QuickBooks for Law Firms. Prior to establishing Time & Cents Consultants, her career path included over 14 years as an executive with IBM where she was accountable for marketing support, quality development and training, and multi-million dollar revenue planning. Ms. Schwartz earned her Bachelor's degree from Colby College and her MBA degree from Cornell University Johnson Graduate School of Management.
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