Motivate your clients to pay you on time
Do you have clients that don’t pay on time? Do you also not charge interest on your outstanding accounts? If you don’t enforce penalties for late payments or charge interest on your outstanding accounts, you should start. These practices encourage clients to pay their bills on time.
I’ve worked with many lawyers over the years that had the slow paying client problem when I began working with them.
By enforcing the payment of interest on late payments you motivate your clients to pay you sooner rather than later thereby improving your cash flow.
It’s also a best business practice to charge interest on outstanding accounts.
When you don’t charge interest, you become your clients’ no-interest lender. Naturally, they will choose to pay those accounts that have interest owing before they pay your account.
What does it mean to be a no-interest lender? If your client doesn’t pay you after receiving their bill, you have just become a lender.
Give your clients an incentive to pay by making them aware of and enforcing your late payment policies.
First, specify with sufficient detail your late-payment policies including interest in your engagement letter. You should personally review all the payment terms with every new client. Your invoice should also state your payment penalties.
Enforce Payment Penalty Policies
Next, enforce those policies when necessary. Some of my attorney clients have what I call “limiting beliefs” when it comes to enforcing the payment of interest on their invoices. Such limiting beliefs include thinking it’s too much trouble to charge interest. It’s not, if you have systems and procedures in place and you follow through on using them.
Once you start charging interest, it becomes easy—especially when clients start paying you sooner. You’ll end up with clients that pay promptly or be earning money on the outstanding accounts at an amount that makes it worth your while to wait for your client to pay you.
If you would like coaching on how to overcome your limiting beliefs when it comes to charging your clients interest, please contact me , Irene Leonard, Business Lawyer Coach to see how I can assist you.