The InvoiceSherpa Blog

Invoice Grace Period for Law Firms: How Long Should You Wait Before Sending a Reminder?

There are few things as frustrating for lawyers as chasing down payments after pouring your heart and soul into a case. And yet, this is an unfortunate reality many legal professionals are more than familiar with.

You want to collect the payment you’re rightfully owed, but you don’t want to come off as pushy or unprofessional…so what is an acceptable invoice grace period law firms should abide by? The truth is, there’s not a single right answer. It all depends on your relationship with the client in question, the complexity of the case, and the agreed-upon payment terms from the start of your engagement. 

That being said, a grace period of 15 to 30 days after the due date is standard for many law firms, allowing enough time for clients to manage their finances while keeping the firm's cash flow in check. 

We’ll offer more context below to help you feel more confident in when you should send that overdue payment reminder email and how to word it in a friendly yet firm manner so you can capture funds fast.

Better yet, you’ll learn how to automate the entire process of sending invoices, reminders, and reconciling payments through the best lawyer invoice software - InvoiceSherpa. Streamline your billing process today to improve client relations and cash flow simultaneously!

The Importance of Timely Payments for Legal Professionals

There’s a fine line between sending a payment reminder in haste and putting your legal practice in financial turmoil by letting overdue payments pile up. So, why is cash flow management important important for a law firm?

The obvious answer is that you need to be able to meet your own debt obligations - payroll, office supplies, and other overheads. If you are having a hard time getting paid in a timely manner you might find yourself stressing about keeping the lights on. It doesn’t have to be this way.

This is also important for keeping a good relationship with your clients. You don’t want to have to deal with awkward conversations and potentially strain future interactions. Making it clear from the start what your law firm’s invoice grace period alongside your invoice late fee wording prevents these issues.

But, maintaining an efficient payment collection process also allows you to grow your law firm by bringing in additional help, investing in advertising, facilitating further education, or whatever it is you need to scale.

On the other hand, you don’t want to bug your clients and come off as tacky for pressuring them for payment when they maybe haven’t even seen their initial invoice yet. The last thing you want is to get a reputation for being pushy and unfair with clients in your community. 

All that being said, what’s an acceptable invoice grace period law firms can abide by?

What’s an Acceptable Invoice Grace Period for Law Firms?

As we mentioned earlier, there is no one-size-fits-all answer to the ideal law firm invoice grace period. You need to consider what matters more to you - the need for timely payments or maintaining good client relations. 

There is a sweet spot where you can enjoy both, though. This is generally somewhere between 15-30 days after the payment due date. Where you fall along that spectrum is entirely up to you.

This timeframe is often sufficient for clients to address any discrepancies or delays in payment processing without disrupting the law firm's cash flow significantly. For recurring clients with a history of timely payments, you might choose to extend this period as a sign of trust and appreciation.

However, in scenarios involving new clients or those with irregular payment histories, it might make sense to enforce a shorter grace period. At the very least you could require upfront payments or deposits. This will mitigate risk and prevent your firm's financial operations from being adversely impacted.

Whatever invoice grace period your law firm lands on, it’s important that you communicate it clearly from the start of your engagement with clients in the form of an initial contract or at least during the billing process. 

Transparency here will set the right expectations and prevent misunderstandings that may affect the client relationship. You can use our lawyer invoice template to make sure the payment terms are clear from day one.

Tips on Structuring a Firm Yet Friendly Invoice Reminder

Ideally, every client would pay their invoice the day you send it over. At the very least, you’d hope to receive payment within your law firm’s grace period so you don’t need to escalate the issue. Unfortunately, there will come times when you need to send a reminder.

Just as with the grace period itself, there’s a balance to be struck here between firmness and fairness. The last thing you want to do is react emotionally and come off rude or pushy. 

Instead, dtart by addressing the client by name and reference specific details relevant to the invoice, such as the invoice number, the date issued, and the services rendered. Personal touches show that the reminder is coming from a place of professional courtesy, not a generic demand for payment.

Clearly state the amount due, the due date, and any additional charges incurred due to the delay. Include a brief explanation of the grace period and its impending end to add urgency without aggression. Transparency in communication helps prevent any confusion and makes it easier for clients to act swiftly.

Use polite and respectful language throughout the reminder. Phrases like “We kindly remind you” or “We would appreciate your attention to this matter” set a cooperative tone. You know what they say - you catch more flies with honey than vinegar!

You should also provide details on how to pay the invoice with multiple payment options if possible. The goal is to make this as frictionless as possible for your client to speed up the process. 

If your system allows, include a direct link to the payment portal to streamline the payment process further. Our AR automation software not only offers this feature but also sends out reminder emails on your behalf automatically, completely removing you from the process. More on that later.

We also recommend encouraging your client to contact you if they have any questions or concerns regarding the invoice. You can discuss setting up a payment plan if necessary.

Offering to discuss the matter shows empathy and understanding, preserving the professional relationship during a somewhat uncomfortable experience.

But, what can a lawyer do to get his client to pay an invoice if the initial invoice reminder email doesn’t yield a response?

What if You Still Don’t Get Paid?

It can feel like a slap in the face when you give your client the best service you have to offer, allow them a fair grace period to settle payment, and even send out a kindly worded reminder email…only to be met with inactivity. 

Now what? Can lawyers charge interest on invoices? Is it time to learn how to send an invoice to collections? First, take a deep breath. Remember what we said earlier - you don’t want to be emotional in these situations. You have a reputation to uphold, after all.

Sometimes, a direct conversation can resolve payment issues more effectively than written reminders. A phone call allows for a real-time discussion about the unpaid invoice and any concerns the client may have. 

If this doesn’t lead to a resolution, the next step is writing a demand for payment letter. This letter should be more assertive than a reminder but still professional. 

Clearly state the outstanding amount, reference previous attempts to collect the payment, and mention that further action will be taken if the payment is not received by a specified date. And, yes - you are well within your rights to charge the maximum late fees by state.

Involving a collection agency can help recover debts, but this should be your last resort. Choose a reputable agency familiar with collecting in the legal industry to ensure that their methods align with your firm’s values and legal obligations. 

You should also be aware of the implications associated with sending a client to collections. It’s unlikely you’ll recoup the full amount owed and this process can stain your reputation.

We have a guide covering when an account becomes uncollectible and must be written off. But the good news is most of these situations can be avoided by investing in the best accounts receivable software - InvoiceSherpa.

Automate Legal Billing From Invoice Generation to Reminder and Reconciliation With InvoiceSherpa!

Lawyers don’t have time to chase down payments or manage their firm’s finances - you are far too valuable to narrow your focus outside of what you’re best at

But, accounts receivable management services can be both expensive and complicated, and you lose your finger on the pulse of your business’s financial health. 

That’s why rather than outsource accounts receivable, you can invest in our legal billing automation system. It’s like having a full-time AR employee for as little as $49 per month! Here are all the accounts receivable automation benefits you’ll enjoy through InvoiceSherpa:

There’s no question that this is the best automated invoice processing software for legal firms, but there’s only one way to find out exactly what it can do for you. Get started today risk-free with a 14-day trial! No credit card is necessary. Put cash flow problems in the past for good.

Closing Thoughts on the Acceptable Invoice Grace Period Law Firms Should Abide by

That concludes our guide to the optimal invoice grace period law firms should abide by. While patiently waiting for payments is never easy, it is important to give your clients time to handle their finances. 

That being said, there is a fine line between being respectful and being a push over. You shouldn’t wait more than 15-30 days before taking additional steps to get paid, such as sending a reminder or giving the client a call.

You can find more small business accounting tips on legal billing for dummies in our blog. Learn about alternative billing arrangements for lawyers, the optimal lawyer billing frequency, how to find accounts receivable, how to project accounts receivable, unbilled accounts receivable, or what does an increase in accounts receivable mean.

The best tip we have to offer, though, is to harness the power of automation to streamline your firm’s billing process. You can avoid stressing about grace periods and reminders by letting our system do the heavy lifting so you can focus on what you do best.

With a free trial awaiting you, what do you have to lose? Discover how our solution can transform your accounts receivable management today.

Posted on May 3, 2024

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