Past Due Bills

Where’s the money?

[frame]Past Due Bills[/frame]

I have been working with law firms for over 15 years.  Although I no longer sell accounting software, I continue to see the same bad habits when it comes to collections. 

Here are my top 7, best practices, for maintaining an effective collection process.

1.  Personal Guarantees – if you can – get them

2.  Invoice Correctly

Change your terms to Due Upon Receipt

  • Most firms don’t get their bills out until the 15th or later; add another week for your client to enter your invoice into their payable program and you have already given them a delayed payment plan
  • And it encourages the accounts payable department to pay your invoice in the next check run

Include the past due balance on every invoice

  • People don’t always look at statements; they assume the bill has been paid
  • Or they assume it is for the bill they just paid

Handwrite a note on their invoice asking for payment

  • This shows the client you are watching and you are aware they are past due
  • It allows the client to save face and get you paid without being called
  • Use this only once – don’t use this technique to avoid making a call

3. Stop Working For Free

  • If you continue to work on a file that you are not being paid for, think about the message you are sending your client, regarding the value of your time?
  • Seriously, wouldn’t you rather spend that time doing something else?

4. Call

  • Start calling immediately – 35 to 40 days past due
  • It shows the client you are serious about being paid
  • If they aren’t going to pay, you want to know early so you can cut your losses
  • The longer the bill goes unpaid, the chances of getting paid in full decrease dramatically

5. Don’t Wait

  • October and November are not National collection months
  • The likelihood that you will discount the outstanding balance at the end of the year goes up and your clients know it

6. Take Credit Cards

  • You don’t have to advertise it on your invoices
  • Use it as part of your collection plan
  • Let your clients make a payment plan with the credit card company

7. The Evergreen Retainer

  • The best solution
  • If they won’t pay you a retainer now, what makes you think they will pay you in 30 days?

What is an evergreen retainer?
An evergreen retainer is a retainer balance that stays green.  You establish a retainer balance amount the client must maintain in their account.  You apply the retainer to your invoice and bill the difference between the balance and the agreed upon retainer whenever the retainer falls below the agreed amount.