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How are your billing and collecting processes?

6 best practices that fit the bill

Training some select clients to pay their bills on time might seem about as possible as herding cats. But if you start the training early, you might actually achieve the impossible. Here are a few tips shared by Ronald L. Seigneur, CPA/ABV/CFF, ASA, CVA, CGMA, of Seigneur Gustafson LLP.

1. Be selective

According to Seigneur, your first step is to select the right client. You want to implement steps to verify that the client is actually able and willing to pay and that the file matter is worthy of your time. Before accepting a retainer, investigate both the client and the matter. Find out if there are legal fees owing elsewhere. If this is an existing client, check that they’ve paid their past bills and that there is no unbilled work-in-progress. You’ll also want to determine whether or not this is a subject matter that is sufficiently profitable and that your firm has requisite expertise to handle it. (This is where a client/matter intake form comes in handy. Download the intake form, and customize it for your firm.)

Related reading: Model Tool: New matter intake form

Related reading: Model Tool: New client intake form

2. Be upfront

Seigneur warns that for some clients, the arrival of their first legal bill might be a shock. Sure, they were expecting the fees, but sometimes the amount of the fees or the added disbursements can be unexpected. You can mitigate the shock by educating your clients on what to expect and when to expect it. Whether you are billing hourly or have an alternative type of fee arrangement, clearly explain the fees, how time is recorded, and which disbursements will be passed on to the client, such as Internet time or court filing charges. Use your engagement letter to outline these charges, processes, and your expectations for payment. Be reasonable and conservative in providing estimated fee quotes. If the client balks at the front end to a reasonable fee, you can mitigate your losses at that point, as opposed to after the work having been done and you struggle to get your bill paid.

3. Be thorough

Seigneur’s next tip is to create proper systems and procedures to ensure that any time expended on behalf of clients, including staff time, is captured accurately and timely, and that bills are rendered quickly. Recruit and coach timekeepers, and use automated cost collection devices.

Every firm has a “black sheep” who just cannot seem to get his or her time in on the mandated timetable. Make it a priority to get everyone to comply with contemporaneous timekeeping and you will find that you capture more billable time overall.

4. Be clear, concise, and quick

The best time to provide a bill for services rendered is dependent on the circumstances and the arrangement reached with the client; however, interim billings and bills submitted immediately upon completion of a matter will generally be paid quicker.

But don’t just submit a vague bill for legal services. The value of legal services is elusive and intangible in nature. Rather than simply listing actions, Seigneur recommends that use your invoices to tell the story and the progress being made on the project your firm was hired to do. Fill your billing statements with details of results and tasks, including “no charge” activities, where time has been expended on behalf of the client. Identify these activities on the invoice, with a “no charge” indication where the amount of fees for the entry would normally appear.

5. Be easy to pay

These three small features on your invoice can help ensure prompt payment:

  1. All available payment options, such as PayPal, wire, credit cards, etc.,
  2. The payment due date (state “payment due upon receipt” at the bottom of all invoices), and
  3. The charges that will be applied to late payments.

It will also help if you send your invoice to the right person. Seigneur suggests that, in your intake form, you ask the client to supply the name of the primary accounting contact and send a copy of all bills to this person. That way, if you need to follow up on an invoice, the client’s accounting clerk will know what you’re talking about.

6. Be prepared to collect

The window of opportunity for collecting outstanding invoices is between 45 and 60 days after the invoice date. Keep this time-frame in mind and try to settle delinquent accounts before they become uncollectable.

Consistent follow-up practices on outstanding accounts receivable can yield significant results. Establish procedures for follow-up actions, including sending regular reminder statements and when the client is to be contacted on past due balances. Do not wait for the balance to become 90 or 120 days old before making a basic inquiry to attempt resolution and payment of the outstanding balance. Seigneur also recommends that firms involve staff other than the relationship attorney in the collection process. This will allow you to enact a good cop/bad cop approach, if necessary.

Editor’s picks:

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