Billing

How Can I Encourage Clients to Pay Their Outstanding Invoices Before the End of the Year?

July 11, 2025 LeanLaw

Key Takeaways:

• Law firms typically have 27 days of revenue locked up in unpaid invoices, with 9% never collected – but strategic year-end collection efforts can reduce this by 50% or more

• Combining early payment discounts (2-3%) with automated reminder sequences and flexible payment options increases collection rates by up to 71% during the crucial December push

• Firms that implement comprehensive year-end collection strategies see average collection rates jump from 82% to 95%, improving cash flow and reducing write-offs

December rolls around, and you’re staring at an accounts receivable report that makes your stomach drop. Six figures in outstanding invoices. Some dating back to July. Your managing partner wants a year-end financial review next week, and you know exactly what question is coming: “What are we doing about these unpaid bills?”

You’re not alone in this year-end scramble. According to industry data, the median collection lockup for law firms is about 27 days, meaning at any given time, firms have nearly a month’s worth of revenue sitting unpaid. Worse yet, 9% of invoices never get paid by clients.

But here’s the good news: December presents a unique opportunity. Clients are closing their own books, maximizing tax deductions, and generally more motivated to settle outstanding debts. With the right approach, you can transform your accounts receivable from a year-end headache into a cash flow victory.

Let’s explore proven strategies that help law firms collect outstanding invoices before the calendar flips – strategies that go beyond the typical “friendly reminder” email.

Understanding the Year-End Collection Opportunity

The end of the year creates a perfect storm of motivation for both law firms and clients. Understanding these dynamics helps you craft more effective collection strategies.

Why Clients Pay in December

Several factors make December prime time for collections:

Tax Deductions: Business clients want to maximize deductible expenses before year-end. Legal fees are typically fully deductible, making December payments particularly attractive.

Budget Clearing: Many businesses operate on “use it or lose it” budgets. Unspent funds disappear on January 1, creating urgency to pay outstanding bills.

Clean Slate Mentality: Just as you want clean books for year-end, so do your clients. Nobody wants to carry old debts into the new year.

Relationship Preservation: The holiday season often brings a spirit of goodwill and relationship-building. Clients may be more receptive to settling accounts.

The Cost of Waiting

Every day you delay collecting outstanding invoices costs real money:

Time Value: Money collected today is worth more than money collected next quarter
Increased Risk: The longer an invoice ages, the less likely it will be collected
Administrative Burden: Carrying receivables into the new year means more time spent on collections instead of billable work
Cash Flow Impact: High accounts receivable can impact a firm’s finances over time, making it harder to make payroll and keep the lights on

Setting the Stage: Pre-Collection Preparation

Before launching your year-end collection push, proper preparation ensures maximum effectiveness.

Analyze Your Accounts Receivable

Start with a comprehensive AR audit:

Age Your Invoices: Group outstanding bills by age (0-30, 31-60, 61-90, 90+ days)
Prioritize by Value: Focus first on your largest outstanding balances
Identify Patterns: Look for clients with habitual late payment issues
Check Contact Information: Ensure you have current email addresses and phone numbers

Your law firm’s collection rate is the percentage of invoiced amounts that clients have paid. Calculate yours by dividing total payments by total billings. If it’s below 90%, you have significant room for improvement.

Clean Up Your Billing

Before asking for payment, ensure your house is in order:

Review Disputed Bills: Resolve any billing disputes before year-end
Send Missing Invoices: 15% of clients report never receiving bills from their lawyers
Update Time Entries: Ensure all November work is billed by early December
Clarify Descriptions: Vague invoice line items create payment delays

Prepare Your Team

Successful collections require coordinated effort:

Assign Ownership: Designate specific team members to handle collections
Set Clear Goals: Establish collection targets for December
Create Scripts: Develop talking points for phone calls and email templates
Schedule Time: Block calendar time specifically for collection activities

Strategic Communication: The Multi-Channel Approach

One of the most effective ways to ask your clients to pay you isn’t the only option. Modern collection efforts require multiple touchpoints across various channels.

Email: Your First Line of Defense

Email remains the workhorse of collection efforts, but timing and tone are critical.

Pre-Due Date Reminder (7-10 days before):

Subject: “Year-End Reminder: Invoice #[Number] Due [Date]”
Friendly, helpful tone
Include invoice copy
Highlight payment options

Due Date Reminder:

Subject: “Invoice #[Number] Due Today – Year-End Payment”
Professional, direct tone
Emphasize tax benefits of current-year payment
Provide immediate payment link

Post-Due Date Follow-Up (Weekly):

Subject: “Action Required: Invoice #[Number] Now [X] Days Overdue”
Firm but professional tone
Mention late fees if applicable
Reference impact on year-end closing

The ideal email copy is between 50 and 125 words has a response rate of 50%. Keep messages concise and action-oriented.

Phone Calls: The Personal Touch

While email is efficient, phone calls remain highly effective for significant balances:

Timing Matters: Call between 10 AM and 2 PM for best results
Lead with Empathy: “I know year-end is busy for everyone…”
Focus on Solutions: “What can we do to help you close this out before year-end?”
Document Everything: Note call details in your practice management system

Text Messaging: The Modern Advantage

85% of smartphone users prefer mobile messages to emails or phone calls. For appropriate clients, text reminders can be highly effective:

Keep it Brief: “Hi [Name], friendly reminder that Invoice #123 ($X,XXX) is due. Pay online: [link]”
Time it Right: Send during business hours
Include Clear CTAs: Always provide a payment link
Maintain Professionalism: Texts should be business-appropriate

Physical Mail: When Digital Isn’t Enough

For significantly overdue accounts or high-value invoices, certified mail adds gravity:

Professional Letterhead: Reinforces firm credibility
Clear Deadline: “Payment must be received by December 31”
Consequences: Outline next steps if payment isn’t received
Return Receipt: Provides proof of delivery

Incentivizing Payment: Carrots That Work

Sometimes clients need extra motivation beyond reminders. Strategic incentives can tip the scales.

Early Payment Discounts

Offering early payment discounts can speed up invoice collection, particularly effective for year-end:

Standard Approach (2/10 Net 30):

2% discount if paid within 10 days
Full amount due in 30 days
Clear terms on every invoice

Year-End Special: “Pay any outstanding invoice by December 20th and receive a 3% discount”

Graduated Discounts:

3% if paid by December 10
2% if paid by December 20
1% if paid by December 31

Law firms that implemented early payment discounts saw some clients who had been 60-90 days late consistently start paying within 15 days.

Payment Plans: Removing Barriers

Firms that use payment plans collect 49% more monthly revenue per lawyer. December is ideal for establishing plans:

Split Payment Option: Half now, half in January
Quarterly Plans: Divide large balances over Q1
Credit Card Recurring: Automatic monthly charges
Flexible Terms: Work with client cash flow

Value-Added Incentives

Beyond financial discounts, consider creative incentives:

Free Consultation: “Pay by year-end, receive a free hour consultation in January”
Priority Scheduling: Guaranteed appointment slots for prompt payers
Resource Access: Exclusive webinars or guides for clients current on billing
Public Recognition: Year-end “client appreciation” for those who pay promptly

Making Payment Effortless

The simpler and more straightforward your invoices are to comprehend, the more likely your clients will pay their legal bills promptly. Remove every possible friction point.

Multiple Payment Options

Offer every conceivable payment method:

Online Portals: One-click payment from invoice emails
Credit Cards: Despite processing fees, the speed is worth it
ACH Transfers: Lower fees than cards, still convenient
Payment Plans: Built into your payment processor
Mobile Payments: Apple Pay, Google Pay integration
Traditional Methods: Some clients still prefer checks

Clear Payment Instructions

Every invoice and reminder should include:

Payment Portal Link: Prominently displayed
Phone Payment Option: For less tech-savvy clients
Mailing Address: For check payments
Wire Instructions: For large balances
Contact Information: For payment questions

Simplified Billing Statements

December isn’t the time for complex invoices:

Summary First: Total due at the top
Clear Descriptions: Avoid legal jargon
Itemized Details: Available but not overwhelming
Payment History: Show past payments and current balance
Due Date: Prominently displayed with year-end deadline

Leveraging Technology for Year-End Collections

Modern technology transforms time-consuming collection tasks into automated workflows.

Automated Reminder Sequences

Law firm billing software can enforce a specific invoicing cadence, minimize billing mistakes, and send automatic payment reminders. Set up sequences like:

30 Days Before Year-End:

Email: Comprehensive AR statement
Text: Brief reminder with balance
Portal: Notification on client login

15 Days Before Year-End:

Email: Discount offer reminder
Phone: Personal outreach for large balances
Letter: Formal notice for 90+ day accounts

7 Days Before Year-End:

Email: Final discount opportunity
Text: Urgent payment reminder
Portal: Pop-up notification

This automation becomes even more powerful when combined with deep QuickBooks integration, ensuring all payment data flows seamlessly into your accounting system.

Real-Time Payment Processing

Speed matters in December:

Instant Processing: Payments clear immediately
Automated Receipts: Sent within seconds
Trust Account Compliance: Automatic segregation
Reconciliation: Real-time updates to accounting

When paired with cloud-based legal practice management software, you can manage collections from anywhere, even during holiday travel.

Reporting and Analytics

Track your collection efforts:

Daily Collection Reports: Monitor progress
Client Payment History: Identify patterns
Team Performance: Track individual collector success
ROI Analysis: Measure incentive effectiveness

Firms using automated billing systems see a 30% reduction in billing errors and collect payments 50% faster.

The Human Touch: Relationship-Based Collections

While technology and incentives help, maintaining client relationships remains paramount.

Empathetic Outreach

December collections should acknowledge client realities:

“Hi [Client Name], I know December is hectic with year-end responsibilities. We’re also closing our books and noticed your invoice from [date] remains outstanding. Could we schedule a brief call to discuss how we can resolve this before year-end? Many clients appreciate the tax deduction opportunity.”

Flexible Solutions

Be prepared to negotiate:

Partial Payments: Something is better than nothing
Extended Terms: Into Q1 with a payment plan
Service Credits: Apply to future work
Alternative Arrangements: Barter, trade, or other creative solutions

Maintaining Professionalism

Even with difficult clients:

Stay Calm: Never let frustration show
Document Everything: Every interaction and promise
Follow Through: Do what you say you’ll do
Preserve Relationships: Today’s slow payer might be tomorrow’s best client

Internal Motivation: Rallying Your Team

Your collection success depends on team engagement. Consider internal incentives:

Collection Contests

Firms must make it a priority to educate employees and motivate collection efforts:

Percentage Goals: Bonus for reaching 95% collection rate
Dollar Targets: Rewards for specific collection amounts
Team Competitions: Foster collaborative collection efforts
Daily Progress: Visible tracking boards

Recognition Programs

Beyond financial incentives:

Public Acknowledgment: Celebrate collection wins
Extra Time Off: December 26-31 for top collectors
Prime Assignments: First choice of new matters
Professional Development: Conference attendance or training

Clear Communication

Keep your team informed:

Daily Huddles: Quick collection status updates
Weekly Reports: Progress toward firm goals
Success Stories: Share what’s working
Challenge Areas: Collaborative problem-solving

Avoiding Common Year-End Collection Mistakes

Learn from others’ failures to ensure your success.

Don’t Wait Too Long

The sooner you start the process of collecting an invoice, the better your chances of success. Begin your December push by November 15.

Don’t Ignore Small Balances

Multiple small invoices add up. A client with three $500 invoices might pay all three to clean their slate.

Don’t Make Threats You Won’t Follow Through On

If you say you’ll send accounts to collections on January 1, be prepared to do it.

Don’t Forget About Retainers

December is perfect for replenishing depleted retainers before starting new year work.

Don’t Violate Ethics Rules

Maintain client confidentiality and follow your jurisdiction’s rules on collection practices.

Post-Collection: Setting Up for Success

After your December push, set the stage for better collections next year.

Analyze Results

What Worked: Which incentives drove payments?
What Didn’t: Which clients remain problematic?
Team Performance: Who excelled at collections?
Process Improvements: Where can you streamline?

Update Policies

Based on your experience:

Payment Terms: Consider shortening from Net 30 to Net 15
Retainer Requirements: Increase for slow-paying clients
Collection Procedures: Start earlier in the aging cycle
Technology Adoption: Invest in better legal billing software

Consider how alternative legal billing software can transform your collections process from reactive to proactive.

Client Communications

Start the new year right:

Thank You Notes: Acknowledge clients who paid promptly
New Policies: Communicate any billing changes
Payment Plans: Follow up on January obligations
Clean Slate: Focus on future relationship building

The Bottom Line

Year-end collections don’t have to be a desperate scramble. With strategic planning, multiple communication channels, smart incentives, and the right technology, you can significantly improve your collection rate while maintaining client relationships.

Remember: TimeSolv’s industry-leading suite of legal time tracking and billing tools consistently yields 97+% collection rates compared to the average law firm collection rate of 88%. The difference? A systematic approach to collections that starts with clear communication and ends with making payment as easy as possible.

As you implement these strategies, remember that December collections are about more than just cash flow. They’re about starting the new year with clean books, strong client relationships, and the financial foundation for growth. Every dollar collected before year-end is a dollar you don’t have to chase in January – when you’d rather be focusing on new matters and new opportunities.

Take action now. Review your accounts receivable, implement at least three strategies from this guide, and watch your December collections soar. Your future self (and your managing partner) will thank you when those year-end financial reports show a healthy bottom line instead of a bloated AR balance.

The firms that thrive will be those that leverage technology to work smarter, not harder. Make this December the month you master the art of year-end collections.

FAQ

Q: When should we start our year-end collection push? A: Begin no later than November 15. This gives you six weeks to implement multiple contact attempts and payment incentives before December 31. Starting earlier allows time for negotiation and payment plan setup.

Q: What’s a reasonable early payment discount to offer? A: Most firms offer 2-3% for payment within 10 days. For year-end collections, consider increasing to 3-5% for payment by December 20. The cost is typically offset by improved cash flow and reduced collection expenses.

Q: Should we threaten to send accounts to collections? A: Only if you’re prepared to follow through. Empty threats damage credibility. Instead, clearly communicate that accounts over 90 days will be reviewed for collection action in January. Be specific about dates and consequences.

Q: How many times should we contact clients about overdue invoices? A: Follow the “rule of 7” – most clients need 7 touches before taking action. Mix channels: 3-4 emails, 2 phone calls, 1 text, and 1 formal letter for accounts over 60 days. Space contacts every 5-7 days in December.

Q: Can we refuse to do more work for clients with outstanding balances? A: Generally yes, unless you’re in the middle of litigation or have other ethical obligations. Include this policy in your engagement letter. Communicate professionally: “We’ll be happy to begin your new matter once your account is current.”

Q: What if a client promises to pay in January? A: Get it in writing. Create a formal payment agreement with specific dates and amounts. Consider requiring a partial payment in December as good faith. Set up automatic payment processing for January to ensure follow-through.

Sources

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