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Why don’t my clients pay on time?

Why don’t my clients pay on time?

Bruce Coombes

Understanding why your clients aren’t paying on time is the first step to fixing the problem, Bruce Coombes writes.

When entering the legal profession, many of us bring aspirations to make a lasting difference. For some, the profession may have represented an opportunity to defend the rights of the proverbial “oppressed and downtrodden”. For others, it could have been an opportunity to deeply examine, and then clarify and reinforce, the intricacies and nuances of the legislation that upholds order in society.

However, in realising such aspirations, a number of functional realities associated with running a law firm must be managed. One such reality that can prove particularly challenging is the process of ensuring timely payment from clients.

Why it matters

Aside from obvious cash flow concerns, a key issue here for lawyers is that chasing payment is distracting. It prevents us from focusing on delivering our core expertise, and can chip away at client relations – a disaster for any service-centric firm.

As is the case with most problem solving, coming to a resolution requires getting to the bottom of why the issue might be occurring in the first place.
Below are six key reasons that may explain why your clients are not paying on time.

1) A genuine dispute

Sometimes a client may genuinely believe that your invoice amount is incorrect. In these cases, you will have a better chance of resolving the dispute and getting paid if you open up lines of communication and address the issue as early as possible. These situations also allow you to review and improve your own processes around payment, to avoid the issue arising in the future.

2) Not enough hours in the day

Sometimes clients are simply time-poor or under-resourced, and may not see your payment as a priority. In this case, a slight nudge in the form of a reminder letter may be enough to prompt action – while opening up an opportunity to sell in some advisory support also.

3) Disorganization

Often we assume our client’s internal processes are perpetually efficient and in order. However, every organisation has its operational challenges, and sometimes the accounts can get put to one side.

In the case of hardcopy mail, invoices placed between the cover letter and the accounts may not be seen. To overcome this, simply place the invoice on top so it’s visible when the envelope is opened. When delivering an invoice via email, sending a copy to the accounts manager may also improve your chances of it being noticed – and being paid.

4) A lack of funds

This can be a sensitive situation for all involved parties. However, the earlier you can identify that this is the reason for late payment and put a payment arrangement in place, the better.

For larger jobs where you suspect pre-emptively that this might end up being the case, you may wish to break down the invoice into smaller amounts from the outset, and bill progressively as you go. This acts as an effective payment arrangement without having to wait until 'crisis' point – saving your client potential embarrassment and stress, and achieving earlier payment for your firm.

5) A lack of concern

Taking an apathetic approach to paying your invoices may leave you frustrated and silently resenting your client. However, this situation represents an opportunity for inward reflection and self-improvement as a firm.

As an example – is your client unconcerned about paying you on time because you took so long to do the work in the first place? If their unconcerned attitude is a reflection of the attitude they believe to have received from you, it may help to reassess your own approach. Doing so could assist in better positioning your firm to command timely payment from your clients.

6) Good old-fashioned dishonesty

Interviews, scoping, budgets, formal engagements and interim billing may alert you to this kind of client. However, it’s often when the account hits 120 days that you may suspect a client had no intention of paying.

In this case, beginning early with the follow-up process is crucial. A good follow-up system followed diligently should result in only the most distressed or difficult clients going beyond 90 days. However, when you've exhausted your standard process or the client is frustrating the collection, it may simply be time to call in the experts – and consider how you might identify this type of client earlier next time.

Bruce Coombes is the founder and managing director of QuickFee, a provider of professional fee funding to lawyers and accountants across Australia.

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Why don’t my clients pay on time?
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