Collecting money from clients is an acquired skill developed through practice and learning what works. By having an effective collection strategy your firm can focus on more important topics like providing your clients with exceptional service. Here are ten tips to help your firm develop a winning collections strategy:
- Motivate to Succeed. If your firm requires that all lawyers collect on their own billings, stimulate their self-motivation to succeed. Stress their vital role and the importance of their contribution to the firm’s financial well-being
- Have Written Policies and Procedures. When expectations are made clear with policies and procedures, billing and collecting are routine, with your firm operating in unison. Make sure to have a system to document your firm’s collection efforts easily.
- The Mentor System. Encourage seasoned professionals to mentor new lawyers and assist with questions and issues. As these attorneys become pros, they, in turn, can mentor others.
- Follow Up, Follow Up, Follow Up. Understandably, lawyers may be reluctant to pursue slow-paying clients aggressively. But for receivables to turn into cash, it is essential to follow up with late-paying clients persistently.
- Take the Money and Run. Compare the amount of time required for the pursuit of a client to the amount owed. Write off the ones not worth the effort.
- Make Sure Your Clients Understand Your Bills. Keep it simple to understand, in simple English, avoiding “legalese” terms whenever possible. An invoice easy to understand is more likely to be paid promptly.
- Ask for Cash Retainers Up Font. To avoid future collections, request a modest advance when taking on a client.
- Don’t Force the Issue. If possible, don’t force everyone to become a collector. For major accounts, select those who are comfortable and skilled at collection tasks.
- Use Financial Reports to Stimulate Billing and Collections. Friendly competition and a sense of pride will inspire lawyers to take action for prompt billing and collections. Consider a program where all partners and associates receive reports of the firm’s work in progress, including accounts receivable aging lists.
- Offer a Variety of Payment Options. While there is a cost to accepting debit and credit cards, having a merchant processing account is less of a cost than delayed payments and degraded efficiency from staff.
Many forward-thinking law firms are now accepting debit and credit cards as their payment method of choice due to several advantages:
- Immediate confirmation that a payment has been approved.
- Automatic recurring payments help to automate the payment process.
- Improved cash flow – transactions processed appear in your bank account within 48 hours.
- Billing, accounting, and collections are streamlined.
- Clients appreciate the convenience of being able to pay over the phone, online or in-person.
By accepting debit and credit cards, you also allow your staff to focus on servicing clients rather than worrying about billing and collections.
Keep in mind that some rules and regulations govern how the legal profession can accept debit and credit card payments. To ensure compliance, select a processing company explicitly designed to meet the regulations of the legal industry. LexActum is one such company that offers law firms the ability to:
- Quickly set up a new merchant account. Applications are processed immediately.
- Administer deposits to a trust account and/or bank account.
- Receive payments quickly as card payments are deposited within 48 hours of the transaction.
For a free statement audit, or to get started, Call LexActum at 321-972-9838.