The AR Playbook: 10 Proven Tips to Collect What You’re Owed

As with any business, law firms rely on cash flow to keep their operations running smoothly. However, not all clients pay promptly, and any delay or failure in collecting accounts receivable (ARs) can impact your bottom line. With legal fees accumulating over time, it becomes crucial to ensure timely payments. 

While you’re going to run across some clients who won’t respond to anything short of a collection agency, most will settle their accounts faster if the process is simpler and more convenient.This article presents 10 tips for law firms to ensure their ARs get paid promptly.

1. Clear Communication from the Start 

Before you engage in any legal service, set clear expectations regarding payment terms. Discuss your fees, when you expect payments, and any potential extra costs. Clarity upfront prevents misunderstandings later.

2. Regular Invoicing

Ensure that you send out invoices regularly, preferably monthly. This keeps clients aware of their dues and reminds them to make timely payments. Delayed invoicing can lead to clients forgetting about their obligations or challenging the amounts due to time lags.

3. Detailed Descriptions

On your invoices, provide a clear breakdown of the services rendered. This includes hours worked, tasks completed, and any expenses incurred. When clients see where their money is going, they’re less likely to contest the charges.

4. Offer Multiple Payment Options

Make it convenient for clients to pay. This includes accepting credit cards, bank transfers, and online payment gateways. The easier you make it for them, the faster you’re likely to get paid.

5. Set Up Payment Plans

Not every client can pay their bill in one lump sum. Offering payment plans, especially for larger bills, can make it easier for clients to manage their finances while ensuring a steady cash flow for your firm.

6. Prompt Follow-ups 

Don’t wait for months to follow up on an unpaid invoice. If a payment deadline passes without any word from the client, send a reminder. Regular, friendly reminders can nudge a client to settle their dues.

7. Implement Late Fees

Consider implementing a late fee for overdue payments. It’s a common practice and can act as a deterrent for delayed payments. Ensure your clients are aware of these potential fees at the start of your engagement.

8. Stay Organized with Software

Use legal billing software to track hours, expenses, and invoice clients. Automated systems can send out reminders, manage payment plans, and give a clear view of outstanding ARs, making the entire process more efficient.

9. Maintain Professional Relationships

Building a strong, professional relationship with your clients goes a long way. Clients are more likely to prioritize payments to firms they have a good rapport with. Regular communication, updates about their case, and a show of genuine interest can foster this bond.

10. Regularly Review your AR Strategy

Set aside time every few months to review your AR strategy. Are there chronic late payers? Is a particular strategy not yielding results? By periodically assessing and tweaking your approach, you stay proactive in managing your ARs.

Conclusion

The timely collection of accounts receivable is vital for the financial health of any law firm. By implementing these strategies and remaining proactive, you can ensure a steady cash flow, allowing you to focus on what you do best: practicing law.

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