So the time has come to write a collection letter to your client. Or take other action to get paid.  What should you do?

In a recent post, NW Sidebar suggests a 5-step process:

1. Call the client
2. If appropriate, establish a payment plan (and get it in writing)
3. If no payment is received, follow-up with a letter
4. If the account remains unpaid, call again and send a second letter
5. Consider further collection options

This is a good start.  Read the full post here.  It includes good tips on setting up a payment plan and a nice discussion on realization rates (how much you actually collect vs. what you bill).

More Steps to Improve Collections

In addition to the recommendations above, follow this 7-step “do” list:

• Use written fee agreements. Going without just isn’t an option.  A fee agreement offers another claim for relief if you decide to sue (breach of contract), and it’s practically impossible to prevail in fee arbitration without one.
• Be consistent – both in the terms of your fee agreement and in your billing practices. It is far easier to stay on top of who owes you what when you follow a consistent pattern. For example – all invoices are payable within 30 days and you reliably bill on the 25th of each month.  If you take billing seriously, clients will take billing seriously.  Sporadic invoices send a message, but it isn’t a good one, and clients don’t appreciate the sticker shock that comes with pushing March’s billing cycle into April.
• Communicate! The onus is on you to ensure that clients truly understand what, when, where, how, and why you bill. Devote time to discussing fees, costs, and billing procedures during the initial client interview.
• Carefully monitor accounts receivable (A/R).  Run reports each month so you know who is paying on time and who isn’t.
• Create a collection procedure you can automatically step into when an account becomes overdue.  Follow the list offered by NW Sidebar or create your own. For example, you may prefer to send a reminder billing as your first step. This would consist of rebilling your original invoice – now overdue – and including a reminder note.  If payment is not received within 10 days after the reminder is sent, then call the client.
• Get evergreen retainers up front.  Or collect last month’s rent.  Of course I’ve told you this a bazillion times, but I wouldn’t be doing my job if I didn’t repeat myself.
• Consider revamping your pricing and billing strategy – this could be the real root of your problems (more to come next week).

All Rights Reserved – Beverly Michaelis – 2017.