2 Tactics for Accelerating Your Invoice Payments

Wouldn’t it be nice?

Imagine if clients were falling all over themselves to pay early. Imagine clients rushing to turn their invoices in on time. That would be incredible wouldn’t it?

Sounds like a pipe dream.

I mean come on. If there was a strategy that actually worked, you would have already heard about it by now, am I right?

Actually, no.

These strategies and tactics exist, but they’re hidden away

They’re hoarded, used in secret by successful firms. They’re used by businesses in other industries. And they’re used in different stages of the client relationship.

These tactics work if they’re used properly.

Here’s the thing though. It takes a bit of work. The good news is that this work is front-loaded. Set each incentive up once and simply maintain things on an as-needed basis.

First things first.

You’re going to need to do some research. You’ll need to spend some time listening to your clients. You’ll want to ask them about a specific set of questions. These questions should be customized for your specific circumstances.

One size does not fit all.

You’re going to be doing a fact-finding mission. What are you going to ask your clients? You’re looking for information in the following areas.

1. What business challenges keep them up at night? What are they struggling with?
2. Data they want. This could be secrets on a competitor, introductions to a key influencer or the reason behind a sale or acquisition.
3. You’ll need to brainstorm for this one. You’ll want to create an incentive clients find irresistible. Here’s the catch the incentive should (a.) cost very little (b.) require very little of your time aside from frontloaded work and routine maintenance and (c.) be something clients want very, very much.

Here’s the caveat with this strategy.

It works best when you specialize. This doesn’t mean your firm has to specialize, with regards to practice areas. If you’re an attorney who focuses on bankruptcy, family and corporate law you don’t need to rearrange your practice to make this work.

But it will work better if you focus on a single practice area or facet of your practice at a time.

Focus facilitates faster invoice payments

Let’s choose corporate law as a practice area.

Let’s also imagine that you’re focused on serving small businesses in a medium-to-large metropolitan area. You have plenty of potential prospects.

Tactic #1: Pre-sell marketing

Marketing is something your firm needs to grow. Believe it or not, clients love marketing – if it’s something they value. You can extend an amazing offer to clients.

The catch?

It’s only available to clients who pay early, by X date.

Here’s how it works.

1. Create valuable content. It could be an interview with a respected thought leader or celebrity. A meet and greet with a kingmaker in your client’s industry. Doesn’t really matter. What matters is it’s something clients want.
2. Allow engagement. Give clients the opportunity to interact with you via your content. Could be comments if it’s an exclusive blog post. Viewer comments if it’s an interview. A one-on-one conversation if it’s a webinar or phone conference.
3. Provide a surprise incentive. Give clients on this call a surprise incentive for being part of the conversation. It could be a recording of the call, an autographed copy of the speaker’s book, the sky is the limit.

Value out of thin air.

Just like that. With a simple email pitch and phone call via a free uberconference account you’ve created  an incredible incentive to buy. Do a series of calls over the course of a year, then sell them to clients along with a companion guide.

This content is then used to market your firm.

This brings in new traffic, fresh leads and more revenue based on events that have already happened. You’re using pre-sell marketing to (a.) keep/train the clients you already have, then you’re (b.) using the same exact content to attract more clients!

It’s a win all around.

Tactic #2: The vanishing bonus

This tactic is as simple as it sounds. When clients sign up you ask them to choose between two options.

• Your services
• Your services + an irresistible free bonus

If your offer is truly irresistible 80 to 90 percent of your clients will choose the service + bonus option. Here’s what you need to make this incentive work.

1. An ongoing offer. If your bonus or incentive is a one and done, this isn’t as effective. If you’re willing to create a new bonus every time this works well, but I suspect many attorneys aren’t willing to do that. It’s much easier to provide ongoing access to something clients value which you can revoke.
2. Strong desire. This could be a free software platform clients use to track their competitors. It could be free data reports on topics of interest, or a list of the moves competitors are making in their space. If bankruptcy is your practice area the incentive could be a free credit repair course. The point is there has to be strong demand for this offer or it isn’t going to work. This is why you interview clients.
3. Continued value. Your offer needs to provide continued value to your clients. Clients lose interest once the value begins to decline, decreasing their incentive to pay early or on time.

Clients who pay early are praised and rewarded with your bonus. Clients who don’t pay on time are encouraged to maintain their access to this irresistible bonus. Those who comply continue to receive your bonuses.

Why do these tactics work?

These tactics rely on a psychological bias

It’s loss aversion.

Most articles share generic ideas like offer a discount, or change the due dates – something trite and original. These tactics miss the point altogether.

Cash flow is king.

There needs to be a compelling reason for your clients to part with their hard earned cash. People prefer avoiding losses to acquiring equivalent gains: it’s better to not lose $5 than to find $5.

Both of these tactics give clients a reason.

You’re asking them to part with the money they already owe you. The longer they hold onto their money, the stronger their position.

Loss aversion triggers a fear of loss.

It’s a powerful motivator you can use to turbocharge your cash flow.  But, it only works if your offer is truly irresistible. You can get your clients to pay early or on time.

It isn’t a pipedream.

You just need the right strategy and tactics. With a solid plan and a bit of work, clients will be begging for the chance to pay on time.

It feels like everybody uses Excel for time tracking.

Okay, maybe not everyone, but definitely the majority. Most legal professionals use Excel to track their time. It’s an industry standard. There are Excel templates everywhere.

Why use anything else?

This rationale makes sense. Most legal professionals are already using it. It’s cheap, free and widely available. Why go out of your way to work with something different?

Time tracking with Excel makes it easy to lose

But that’s not what you do.

You’re paid to win. Your clients, your firm and peers – they all expect you to win. Your firm expects revenue in the form of billables. Your clients expect you to perform, to produce results.

Excel makes that difficult.

In my previous post, I showed how Excel costs firms an estimated $86,294 to $106,294 per person, per year. This figure doesn’t even include the financial fallout from leakage/overbilling.

Remember those figures?

• You lose 10% of billable time if you record time the day of, once a day
• You lose 25% if you wait 24 hours to record your time
• You lose 50% if you wait one week

Here’s the horrifying part about all of this. These are conservative estimates.

That’s right.

As a system, Excel is dysfunctional. It’s not just our bias talking here. It’s a simple fact that extends to all Excel users, regardless of industry or experience.

What does this mean for you?

If you’re looking to optimize and grow your firm Excel makes it harder. Does this mean you should use something else instead?

Absolutely.

In fact, I’m suggesting that you rely on specialized software.

Here’s why.

Reason #1: Inconsistent skill sets

Excel has a steep learning curve.

If you know what you’re doing Excel can be simple, straightforward and powerful. If you don’t know what you’re doing it’s incredibly easy to make a mess.

Here’s the subtle problem.

Google Sheets, Microsoft Excel, OpenOffice, Zoho Sheets and Numbers – they all do things a bit differently. Sometimes these differences are minor sometimes they’re major.

Sometimes they’re incompatible.

The impact on your record keeping could be subtle or significant. It all depends on the spreadsheet you’re using. You’re essentially rolling the dice.

But it doesn’t feel that way…

Right?

What if associates upload/convert your Excel spreadsheet to Google Sheets and something breaks? What if they download and share their broken spreadsheet – as the original copy?

This sounds bizarre.

And it is until you realize these subtle (and frankly ridiculous) problems have cost you money. When that happens, it’s no longer a laughing matter.

Good software compensates for this. Your software should:

• Be approachable. Novice, intermediate and advanced users should be able to perform simple and routine tasks quickly. With a bit of training, users should be able to perform their day-to-day tasks efficiently.
• Come with support. Users should have direct access to additional help via email or phone. They should have access to a searchable knowledgebase that gives them instant answers to routine or common questions.
• Encourage feedback. Your time tracking and billing software should grow with your firm. Ideally, your software should evolve over time, adapting to legal and industry changes.
• Facilitate compliance. Are you LEDES compliant? Maybe your clients require that you use ABA codes? Good software makes it easy to maintain compliance. If you’re relying on spreadsheets this requires additional work. Additional non-billable work = less billable time.

This is easy to ignore.

These problems are so subtle, so common they feel downright ridiculous. Which is why they’re ignored.

So most firms lose money.

They lose a significant amount of money unnecessarily due to simple, yet correctable mistakes like these. 

Reason #2: Meddling, customization and updates

Let’s say your paralegal is an Excel power user.

She decides to make some upgrades to the Excel templates your office uses. This is the absolute worst thing she can do. It seems helpful on the surface, but it’s actually a productivity killer.

Here’s why.

Let’s say she adds advanced Excel formulas, pivot tables, macros and VBA scripts. Instantly, she’s able to make this Excel spreadsheet sing.

Does anyone else know how to use it?

What if a different user gets something wrong, triggers a macro accidentally or loses data? What if they remove or change something important?

Here’s an even bigger problem.

Your paralegal has just added advanced features to the shared template everyone uses. Best case scenario, she shows everyone in the firm how to use it. They’ll have to remember how to use it. And most importantly, they’ll have to follow her instructions explicitly.

What about future changes?

What if someone else decides the spreadsheet needs to be “updated?” What happens to the firm’s productivity then? How do you know you haven’t lost billables?

Great software avoids this nightmare. Software eliminates meddling by:

• Protecting the firm’s productivity, guarding against saboteurs and helpful users with “great ideas.” This keeps your firm on the same page. Everyone uses the same software, follows the same system and is subject to the same rules.
• Managing user rights. Owners, partners, associates and support teams shouldn’t have the same user rights. They should have user rights that are appropriate to their role in the firm. It’s doable in Excel but it requires confusing options that are pricey and completely unnecessary.
• Focusing user attention. Users are focused on tracking their time and sending out invoices. They’re not wasting time on features or upgrades. Firm leadership spends more time replicating the success of top performers.

If you’re looking to hit billable targets this is key.

With the right software, partners, associates and support teams are focused on producing results. They’re not focused on unnecessary minutia.

Reason #3: No/poor version control

Here’s a common scenario.

It’s the end of the day. You’ve just added your billable hours to the shared Excel spreadsheet. You share an updated copy with the rest of your team. They add their time as well.

The next day you spot a major mistake.

You have three options:

1. You take the time to manually update your spreadsheet, reducing your billable hours for today.
2. You can revert to a previous version but doing that means your peers lose their work. They’ll have to resubmit their work from memory which, as we’ve seen, is less accurate.
3. Save both the current and previous versions of your spreadsheet. This adds complexity and creates confusion as associates and support teams add their time to both spreadsheets.

See the problem?

These are all terrible options. They decrease your billable hours (and revenue). They increase billable leakage and increase the likelihood of overbilling.

Software circumvents these problems.

Ideally, the right software accomplishes several distinct objectives. It’s simple, clear and concise. With the right software, time tracking/billing should be:

• Associates, partners and support teams are able to track their time automatically with the push of a button. This removes manual entry as a requirement, dramatically decreasing errors. The firm’s billable income skyrockets. Associates have less busy work and more time to meet firm targets.
• Let’s say you schedule a client meeting for the 25th. Your time tracking/billing software should sync with your calendar. It should create an automatic time entry based on the appointments you’ve set. You should also have the ability to manually edit, update or adjust each time entry.

Good software manages these headaches automatically.

It gives leadership the access and control they need to manage billable and non-billable hours. That’s important even if, and especially when, relying on alternative fee arrangements.

Keep Time Tracking with Excel and you lose       

Excel costs firms an estimated $86,294 to $106,294 per person, per year. It’s a conservative estimate that doesn’t include:

• Overbilling
• Transitional pain
• Inconsistent skill sets and
• no/poor version control

As we’ve seen, the loss is significant. Most legal professionals rely on spreadsheets to track their time. It’s cheap, free and widely available. Who goes to the trouble of paying for software?

Winning firms do.

These firms fight to keep what’s rightfully theirs. Their revenue.

Great software does that.

If you’re looking to optimize and grow your firm Excel makes it harder. Great software makes growth and profitability easy, efficient and automatic.

The proof is in the data.

If it’s easy everyone will do it. Good software makes time tracking and billing easy. With the right software and outstanding support, your firm has everything it needs to boost revenue dramatically.

Skeptical?

See for yourself. Try our automatic time tracking and billing software free.

Your client has an inconvenient request.

They want you to send invoices to multiple contacts. It’s inconvenient, messy and confusing. Does this mean you’ll need to accept payment from each of these contacts?

What about payments?

Are you expected to chase each contact for payment as each contact tells you to “speak with someone else?” It’s a hassle you’d rather not deal with. Why do you need to deal with these issues?

Your client expects you to, that’s why

Isn’t that the real reason?

Clients expect you to accommodate their every need. If you can’t do it you may not get paid. Or, they may decide to find someone else.

Which is frustrating.

It’s the old adage, whoever has the gold makes the rules. And your clients seem to be making all of the rules at the moment. Clients aren’t really all that focused on what you need at the moment, right?

Wait a minute.

What if we’re wrong about our client’s motives? What if there are other legitimate reasons for your client’s outlandish requests?

Why is that important?

Asking why gives you intel about the “what” and “how“

You need the why.

The why gives you a clear indication of your standing with clients and how to best approach the relationship. Let’s look at a few scenarios to show you what I mean.

Scenario #1: Budgeting

You’ve just landed a new corporate client. You’re working with a specific division. You’re doing great work, your client is pleased. They’ve requested your help on more complex matters. Your retainer has grown three times.

Then you’re hit with the usual request.

Please send a copy of the invoice to Jan the CEO, Marshall in accounting, or Howard in legal (who you’re working with).

Is this cause for alarm?

What happens if I can’t get Mitch to pay the invoice? Do I reach out to Jan? Or do I go to see Harrison? Is this simply because Jan wants to be in the loop? Or is this a control issue?

How to handle it:

This situation is straightforward yet delicate. Handle it wrong and you may burn bridges with people looking for a reason to replace you. How do you handle this situation properly? You ask each contact specifically about what they’re looking for.

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Hi [client],

I noticed that you requested a copy of the invoices. Did you want a copy of just this invoice or all invoices moving forward? If you’re looking to stay in the loop I can also forward you the statement at the end of each month?

Let me know,

[your name]

Attorney

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You can send a similar email to each of the contacts who’ve requested a copy of the invoice including Harrison in legal (your original point of contact).

Here’s why this works.

This is a direct approach. It’s not manipulative or dishonest. You’re upfront about what you’re looking for but you’re also providing each recipient an incentive to share. If specific recipients just want to be in the loop they’ll clarify their needs.

What if they don’t?

They’ll ignore you or give you a less than adequate answer, at which point you know. There’s a problem and it’s time to do some digging.

Scenario #2: Policy

You’re working with a corporate client that has a specific policy mandate. You’re working with multiple divisions in the company and you’re expected to keep multiple contacts in the loop as a matter of policy. Your client wants you to exclude each division from being listed directly and just wants the company name on the invoice.

How to handle it:

This situation is fairly straight forward. You keep each contact in the loop and you treat them as a single client on paper. You verify the person that’s actually responsible for paying the invoice. Then you treat each division as a separate client in practice.

What do I mean by that?

You cultivate a relationship with each of the people in your division. You provide them with the information they need. You go above and beyond, working to serve the team in each division. Then you work to expand the value you provide to each division.

Scenario #3: Flexibility

Your boutique firm has just been hired by a larger law firm. There are eight partners in the firm, and they all want copies of your invoice. You’re expected to go to accounting for payment, but every once in a while one of the partners pays the invoice.

Then the inevitable happens.

You send a payment reminder to accounting and you get the runaround. “Go see Gerald” So you go to Gerald. “Alison should be able to take care of that for you.”  Your clients, the partners, they all love your work. But they seem to be completely disinterested in handling the minutia of paying for your services.

It’s a difficult position to be in.

This has to be handled gently and with care. When clients don’t pay, anger and frustration is a natural response to the problem.

But it’s an unproductive one.

You’ll need to determine the kind of client you’re dealing with. Are you dealing with a client who is actually a deadbeat or are they simply a delinquent? Is it possible you’re dealing with an avoider?

Remember our terms?

1. These are the clients who, for whatever reason, decide they don’t want to talk about money. They may decide against “the talk” ahead of time or when it’s time to pay. They may be embarrassed to discuss a financial problem, ashamed of something in particular or desperate to save face.
2. These clients may be confused about the payment terms. Or, they may stop paying when they run into trouble. These clients often demand favorable billing terms (e.g. net 30, net 60) if they’re in dire straits, further complicating your cash flow dilemma. If they’re mistaken for deadbeats the client/firm relationship may sour.
3. These clients have decided they’ll accept your hard work but they won’t pay your invoices. It could be an immediate problem but it’s more likely to become a gradual one. These clients respond to consequences, not empathy. They’re not interested in negotiating, they’re focused on evasion.

You’ll need to ask questions to identify the answer.

Here’s a simple strategy you can use to flush out an answer from your cagey clients. You ask group questions to everyone on your contacts list, like this:

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Hi everyone,

I wanted to thank each of you for your help with getting me the necessary items I need for the deposition in March. I’m confident we’re set on that front.

I need help with a particular issue.

We reached out to accounting last week re: the outstanding invoice but we were told to check with the partners. I reached out each of you last week but I wasn’t able to get a conclusive answer on payment. Who should we contact about this invoice and all other invoices moving forward?

I’m looking for a single point of contact on this.

Best,

[your name]

Attorney

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If you’re dealing with a group of avoiders, you’ll need to press firmly for a commitment. If you’re dealing with a delinquent, you may need to reach out to their support staff for more details. If you’re dealing with a deadbeat you may need to establish penalties for non-payment.

These aren’t the only reasons for multiple contacts

But it’s all about the why.

Multiple contacts exist for a reason. You’ll need to flush out the why to get to the what and how. If you want to know how to handle these issues, you’ll need an answer to the why question.

Clients aren’t always forthcoming.

They aren’t always eager to share this important information. It’s up to you to find the answer. Your client has an inconvenient request.

They want you to send invoices to multiple contacts.

Your clients expect you to accommodate their every need. They expect you to provide more value for less. The implicit statement is clear. If you can’t do things the way they need you to, you may not be paid on time. Your clients may decide to find someone else.

Start with why.

With the right approach and a bit of digging, you’ll uncover the why. Ask why and you’ll have the intel you need to handle the what and how.