Accounts receivable, if ignored or not dealt with efficiently, can represent significant losses to any business—let alone your law practice. Too many lawyers who bill for their time miss out on a great portion of revenue that could have been enjoyed, reinvested, or saved—if only they had received it in the first place.
That's dangerously subtle, in my opinion.
So with that said, here are three easy ways to take control of this problem and prevent it from happening from the start as well as deal with accounts receivable efficiently and effectively when they occur:
1. "Screen" Prospective New Clients.
The services of a lawyer in virtually any practice area will always be in demand in larger centers. You'll have no shortage of clients available at any given time if you live in even a moderately sized community and especially if you live in a larger city.
Therefore, you need to realize that you won't be missing any opportunities to bill some hours if you say "no" to the odd potential client now and then. In fact, your work will become more enjoyable, and you'll have far fewer issues with accounts receivable in the first place by screening potential clients before working for them.
And this process could be as simple as being honest with yourself when you ask the question "Do I really want to deal with this person?"
2. Accept Credit Card Payments from Your Clients.
This can be a smart move if you've been having problems with too many accounts receivable—or trying to manage complicated/cumbersome financing arrangements with clients who can't afford to pay their balances in full. Credit payments are instant, they don't bounce, and they provide the client with his or her own self-directed financing plan, so to speak.
Additionally, if you place deposits into an operating account or trust account to comply with state regulations, it may be more convenient for clients to deposit the funds using their credit cards for numerous reasons.
This way, you'll eliminate any looming concerns you might have regarding whether or not you'll get paid right from the start.
For a practical example of how this can simplify and streamline your client-management operations, read the article by law practice management consultant RJon Robins at www.lawyerbillingtips.com/law_firm_accept_credit_cards.html.
3. Follow up Promptly, Courteously, and, if Need Be, Often!
Regardless of how obvious this may appear, many lawyers feel very uncomfortable discussing unpaid balances with clients—for equally obvious reasons. But uncomfortable or not, neglecting to bring up the issue will cost the lawyer substantially. And in reality, the client is aware of the problem already; bringing up the issue certainly won't come as a surprise.
Time is the key element when it comes to collecting on past-due balances from clients. Each passing day will only decrease the urgency—as well as the importance—of the matter in the eyes of your client. For this reason, you need to establish a system for following up with non-paying clients and follow it rigidly.
Be courteous, but don't be a pushover. Your services are valuable, and they are well aware of that fact.
However, regardless of how much "dust" your accounts receivable have been collecting, it's never too late to reclaim what previous clients owe you. In fact, if you take action on the previous step (getting a merchant account to accept credit payments), you can even let your clients know that you now accept credit payments, which might make it more plausible (and realistic) for them to settle up with you on the spot.
The bottom line is that if you don't take control of your accounts receivable with past, present, and future clients, then you'll have to be prepared to lose a lot of money—especially if you're a solo practitioner who has to spend money on marketing to get these clients in the first place.
Even if you don't follow these three steps exactly, get some sort of system in place that will work for you and follow it rigidly.
Otherwise, you'll end up being a volunteer instead of a highly paid professional.
About the Author:
Chris Rempel is the marketing director for Accept by Phone, Inc., which provides credit card processing services that have been specifically optimized for attorneys who bill their clients by the hour or on a project basis. Because the service can be remotely accessed from any touch-tone phone, the majority of expenses associated with traditional credit card processing have been bypassed. Attorneys only pay a $5 monthly fee and a discount of 3.95% per sale. More details are available at