find the latest legal job
Corporate/Commercial Lawyers (2-5 years PAE)
Category: Corporate and Commercial Law | Location: Adelaide SA 5000
· Specialist commercial law firm · Long-term career progression
View details
Graduate Lawyer / Up to 1.5 yr PAE Lawyer
Category: Personal Injury Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Mentoring Opportunity in Regional QLD · Personal Injury Law
View details
Corporate and Commercial Partner
Category: Corporate and Commercial Law | Location: Adelaide SA 5000
· Full time · Join a leading Adelaide commercial law firm
View details
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Sydney NSW
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Melbourne VIC
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
The hidden cost of late fees

The hidden cost of late fees

Bruce Coombes

Legal practices around Australia are paying a high price for late-paying clients, write Bruce Coombes.

In fact, the Federal Government’s Department of Industry, Innovation and Science recently released a paper on Australia’s culture of late payments. The study found that small-to-medium businesses lose access to an incredible $19 billion each year because of overdue payments. This is because clients who go to ground when invoiced sometimes never resurface, despite repeated calls and emails. Recovery efforts can sometimes end up costing more than the invoice itself.

Apart from the fact that your team deserves to be compensated for hours billed, predictable income from on-time payment is integral to the running of any successful legal business.

Beyond just affecting cash flow, however, late payments can affect your practice in a number of other undesirable ways.

1) Decreased productivity

You hire your admin staff to take care of the many administrative facets of running your practice. However, chasing payments shouldn’t take up the bulk of their duties.

If too much time is spent following up with clients about their unpaid fees, it can prevent your team from providing the vital support that you need in other areas. This can affect the services of your entire firm, while increasing overall admin expenses, and reducing staff morale.

2) Lack of liquid capital

Having outstanding invoices means less money in the bank for your legal practice of course but it also means your growth ambitions can’t be realised. When you don’t have ready money in the bank, your potential for making investments is diminished, and the long-term certainty of your business is compromised.

3) Unplanned extra expenses

When bills take too long to get paid, you can find yourself outsourcing your overdue accounts receivable to a debt collector. This can also end up being costly, however, as they will help you recoup the money you are owed, but will take a portion of the amount for themselves. This kind of expense has the potential to significantly affect the bottom line of your annual earnings.

4) Impact on your reputation

You need clients who respect what you do. Business relationships can be damaged when you are constantly chasing invoices and having negative conversations around payment. To make matters worse, you may find yourself paying your own bills late because of a lack of consistent funding – another hit to your reputation. 

5) Insolvency

The Federal Government’s Prompt Payment Protocol Paper noted that 90 per cent of small business failures are caused by poor cash flow. Late bill payments from larger corporate firms as well as individuals are a contributing factor. 

Your competitiveness in the market is compromised when you don’t have access to the fees you are owed. Going out of business is a worst case scenario, but it happens around the country every day.

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

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

The hidden cost of late fees
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Jackie Rhodes
Dec 12 2017
Report sheds light on LGBTQI inclusion in law firms
A recent report has revealed the varying perceptions on LGBTQI diversity and inclusion in the Austra...
Women in business
Dec 12 2017
Annabel Crabb headlines Women in Business Forum
Political journalist Annabel Crabb has appeared at the Coleman Greig Lawyers Women in Business Forum...
Dec 11 2017
Warm welcome for new district court judges
Three practitioners who were appointed as district court judges in WA have been congratulated by ...
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...