Preventing Payment Headaches Before They Start

Summer is here and the heat of looking at those payment problems can only make you thirsty for solutions. The great American author Mark Twain once said, "The secret of getting ahead is getting started." In the world of receivables, taking the time to pre-qualify new clients gives firms a leg up on the payment challenges that lie ahead. Firms must evaluate prospective clients to determine if they can and will pay their bills. Some potential clients can handle the initial costs, but don't have enough cash flow to pay later, when fees and expenses grow larger than anticipated. Other potential clients simply do not have the resources to pay even relatively small legal bills. Then there are those that have the means to pay, but are unwilling to do so in a timely way.

 

• Here are three essential tips to minimize payment problems:   
• Make sure lawyers share with their clients expectations about the amount and kind of work that will be done, including the anticipated costs.
• Learn how to use a retainer to help stay in front of potential payment problems.
• Establish financial payment thresholds and set parameters around what clients can realistically incur. Be honest with yourself and your clients about payment expectations.

Taking decisive action to help prevent payment problems requires discipline and the right mindset, but it can be done. Resolving accounts receivable management problems may require fundamental long-term changes to your processes and procedures. Otherwise, lawyers may quickly return to bad habits, and the firm will find itself in the same bind down the road.

 

Although an unsettled economy still causes uncertainty for many law firms, it will especially hurt those firms that are without proper client intake processes and efficient accounts receivable management efforts. Don't fool yourself into thinking your firm has a results-oriented system in place when it doesn't.

 

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