Get Paid Up Front to Improve Your Bottom Line
One of the ways to improve the financial health of your practice is to make sure that you are getting paid up front. By that I mean to set the expectations with your clients that payment is due at the time of service. More specifically, payment is due prior to the start of the appointment. I am reminded of something my supervisor said to me when talking about how to address money issues with clients. He said, “Are you familiar with the prostitution principle?”. After giving this some thought and wondering if I should know what it meant I said, “No”. He explained, “The value of a service greatly diminishes after it has been received.” I apologize if this is a bit crude, however, I think it illustrates an important point – get paid before you start your session otherwise your payment will be judged in the context of how well the session went. The last thing you want to do is to be negotiating payment based upon how well you do each visit. Granted, I don’t think most clients would actually expect us to do so but there may be a few who do. Here are some other reasons why you should get paid up front.
The Emotional Client
An issue that comes up often in private practice is that it can be sometimes awkward to ask for money at the end of the session. For example, you have a very tearful client whose session has already gone a bit over. You are trying your best to wrap things up so you can see your next client, but then you realize you still haven’t gotten paid. Given that your client is highly emotionally charged you may feel that it is uncomfortable and/or inappropriate to ask for payment under these circumstances, so you tell yourself that you will get it next time. This may be fine if limited to rare circumstances, however, where do you draw the line? Given the nature of the work we do, there is always the potential to end the session with the client experiencing some level of discomfort. Asking for money during these times can be perceived as “I don’t really care about how you’re feeling right now, I just want to get paid”.
The Poor Planner
I have a client who always comes to appointments late. Not only does she come late, but she apparently doesn’t think to write out a check in advance, which is her preferred payment method. If she were a better planner she might say to herself, “since I’m always late, maybe I should write out my check ahead of time since I know how much my co-pay is”. Getting her out of my office is also a challenge, so talking about money at the end of the session is the last thing I want to do.
The Forgetful Therapist
Before I started expecting payment at the beginning of my sessions, I would ask for it at the end. As you can imagine, we as therapists often have a lot of our minds – the needs of our clients, and our own personal needs while at work (eating, using the restroom, calling home, catching up on phone calls or paperwork, etc.). Often at the end of the session I start thinking about what’s next – who is on my schedule, what do I need to do before my next appointment, etc. I have found that these needs would be more in my awareness than asking for payment. There have been several times after my client left that I realized that I forgot to ask for their payment.
The Forgetful Client
How often have you heard “I forgot to bring my checkbook” or “I forgot to stop at the ATM”. Obviously, this will happen from time to time, but as a business owner there needs to be solutions in place to deal with the forgetfulness of clients, which may be part of the clinical picture for some (e.g., ADHD, depression, cognitive disorders, etc.). One solution is to accept credit cards, which would enable you the opportunity to have a credit card authorization on file. Once secured, you can process the payment without worrying about your client remembering to pay you. Many people find this to be a very convenient payment option. To read more about this see my article on How to Improve Your Cash Flow.
The Angry Client
Some clients will withhold payment because they are not pleased with the outcome of the services that you provide. For example, we conducted an evaluation for giftedness of a child. The results showed that the child was of above average intelligence, but did not meet criteria for admission to the gifted program at her school. The parent in this case, was angry about this and cancelled the check he gave us because he had the mistaken belief that he was paying for results rather than the service provided. Our mistake in this was that we waited until the report was finalized before asking for payment. Had we required the payment at the beginning of the assessment, the check would have cleared prior to the report being delivered leaving the parent no recourse to retaliate for this perceived injustice. This account was eventually sent to collections, and to date we have yet to recover these funds.
Better “Front End” Collections Saves You Money
To keep you practice financially healthy, it is important to improve your “front end” collection process. Otherwise, you will be spending more time chasing down your money. Not only does this hurt your cash flow, but it can have a negative financial impact on your practice over the long-term. If you don’t have office support, then you will need to spend more time billing clients which, in turn, reduces your available billable hours. Furthermore, there are other costs such as printing, toner, paper, envelopes and postage for each bill that you send out (approximately .50 – .60 cents on each bill sent). This may not seem like a lot, however, consider the additional cost if you have to drive to the post office for stamps or to mail your statements. Also, when billing clients you typically can expect to wait a month or two (depending on your billing cycle) to actually receive the payment and have it deposited into your bank account. If you have office staff or a billing service, then you are paying them to do something that you don’t have to – track down money that you should have been paid at the time of service. Lastly, if clients don’t pay you and they also do not return to treatment, you may never get paid for your services. Of course, there is always the option of using a collection agency, however, they will take a percentage of whatever money recovered. Bottom line – get paid up front to improve the financial health of your practice.
Share Your Ideas
What other strategies do you use to ensure that you are getting paid in a timely manner for the work that you do?
Recommended ReadingFinancial Success in Mental Health Practice: Essential Tools and Strategies for Practitioners