How can our law firm implement a payment plan for clients?
Setting up a payment plan can expand your law firm’s pool of prospective clients, especially during a pandemic economy. And if done correctly, it can also help reduce the bills you have to send to collections by giving clients an option to pay in manageable chunks, rather than tackling a large sum at once.
But it’s important to think through any such policy thoroughly—and have safeguards in place.
Develop a firm policy
An important step in creating payment plans that reduce overdue bills and don’t land you in a precarious situation of accounts aging is to have an internal policy in place.
Especially if payment plans are new to your firm, you don’t want to offer one to every client. A few things to consider before starting include:
- Who you will offer payment plans to. This decision should always involve a clear and straightforward conversation with the prospective client about what they can afford to pay.
- Where you want to cap amounts for payment plans or if there are specific situations within your practice area where it wouldn’t be a good idea.
- What percentage of your firm’s income could come from payment plans without jeopardizing the firm’s finances and cash on hand.
Understand the logistics of how payment plans will work at your firm
Once you have a policy in place to guide team members in determining when to offer a payment plan, you’ll want to work through how to implement one.
Decide the following factors before moving forward with a plan:
- How will the client receive their bills? And how often?
- What happens if the client is late with a payment? How long before services stop, late fees are implemented, or a bill goes to collections?
- Will you accept credit card payments? Especially during the pandemic, people have gotten used to paying with credit cards. But if you do want to accept credit cards, using a legal-specific merchant can go a long way toward keeping law firms compliant.
Once you’ve decided how a payment plan will work with a client, you’ll want to put the agreement in writing. Having a template can help save time at this stage.
Reassess as you go
The goal in accepting payment plans should be to grow your firm’s revenue by increasing the field of prospective clients, reducing the number of bills going to collections, and earning more referrals by expanding your services.
If you find that implementing payment plans isn’t leading to intended outcomes, it’s time to take back and assess what might be causing the issue.
Automation and synced billing and accounting may make accepting payment plans more feasible. For instance, if you can send out bills in batches or have your practice management system generate an automatic reminder when a payment is late, these strategies will cut down on the time spent tending to payment plan logistics.