How should law firms approach clients about past due accounts?
When your clients have invoices that have gone unpaid, even after a couple of reminders, it’s important to set a consistent internal policy when it comes to how these past due accounts should be handled. Having consistent expectations makes this difficult job a little easier.
When resolving past due bills, remember that there may be a number of reasons behind the delinquent payment. While sometimes all that you need is a polite reminder and the client will promptly pay, there may be larger underlying issues such as cash flow problems or it could something as simple as
Phone calls can be a good, personal way to handle past due conversations. However, for accounts that are increasingly delayed, a letter or email is a trackable way to manage the conversation and provide the client with a way to address any questions they may have that are holding up the payment. If clients wish to pay but are facing financial struggles, this is a good way to broach that discussion as well.
Don’t wait too long. It’s better to send a reminder notice sooner rather than later. Remember, this is money owed to you. The longer you put off collecting it, the more strain it can put on your business.
If you’re not sure where to start, you can use this format to guide you. Your letter should:
- Greet your client
- Tell the reason for your letter in the first sentence
- Include options for immediate repayment
- Thank your client for their attention to the matter
It’s important to remember that relationship management is part of this. You’re not just trying to get them to send you money – you’re potentially hoping to keep them as a client and/or referral source. If you’re concerned about what tone to strike, stick to the following qualities:
- Factual: Don’t include any speculation or judgment on why they may be late
- Focused: Don’t bring any additional issues into the discussion. Stick to resolving payment, that’s all.
- Friendly: Friendly doesn’t mean you have to be casual, but don’t take an adversarial approach to the interaction. Assume that they want to pay and continue a productive business relationship.
If your client still doesn’t pay after these reminders, it may be time to consider a debt collection agency or attorney.