past due.jpeg

"The sale isn't complete until the last dollar is collected." This wisdom is imparted to all new salespeople on Day One of their selling career. If you struggle to collect what you bill, you have a sales problem. The collection problem is merely a symptom, and a consequence, of the underlying sales problem.

When you don't get paid, you've donated your service. If you can't collect the full amount, your client has taken a discount that you didn't agree to.

Only two reasons for non-payment

Why doesn't a client pay your bill, in full, on time? There are only two reasons:

  • They can't
  • They won't

If they're in serious financial distress, there may not be a lot you can do about it. This post isn't about "can't."


The "won't" condition is what collections are about. Why does a client with sufficient means decide not to pay your bill? There are countless explanations, but they all derive from the same root cause:

The client doesn't perceive that he received sufficient value for the amount he's being charged.

Many lawyers react to that statement defensively, dragging out detailed time sheets proving that they worked the number of hours billed. They're missing the point entirely. The client rarely thinks that you're inflating your hours. How much time you spent isn't the issue. It's what they got--or didn't get--out of the time you spent.

Establish value up front

Arguing value after the fact is extremely difficult and rarely successful. You have to establish value up front. The important value isn't your time; it's the imputed economic value of the business outcome and impact you enable or deliver. 

A practical example

Your daughter is trying to get into an Ivy League school. She has the grades, but so do lots of other applicants. You learn that the difference between getting in and not is how extracurricular activities are presented. (I don't know this to be an actual criterion; it's just an illustration.) A consultant with a track record of getting a much higher acceptance rate for his Ivy League applicants will help you raise your daughter's odds of getting in, for which he'll charge $5000. 

Right now, you're thinking, "$5000 is a lot of money. Is it worth it?"

Is it worth $5000? Well, compared to what? Compared to something fuzzy and abstract, i.e., "raising the odds of acceptance," maybe not. That's hard to evaluate.

What if that same consultant were to elicit from you your reasons why it's important to your daughter and you that she gain Ivy League admission. You might mention:

  • studies suggesting a 39% earnings differential (Ivy over others);
  • the name recognition that you believe moves Ivy resumes to the top of the hiring interview stack;
  • networking and other connections that you believe will open doors and pave the way for access denied non-Ivies;
  • the realization of a goal your daughter has worked toward since Middle School, etc.

Selling yourself on the value

This conversation gets you selling yourself on the many specific forms of value of Ivy admission and, therefore, the value of the consultant's service. (We're assuming for this example that you've satisfied yourself that the consultant can deliver.) This is known as defining the Cost of Doing Nothing. In this case, the cost of not retaining the consultant.

Remember, the cost of doing something has already been established at $5000. What's the cost of doing nothing?

If it's low, that's what you'll do--nothing. Many sales are lost for this reason. You don't lose to a competitor; you lose to do-nothing.

All this elicitation of impact factors is necessary, but not sufficient. For the value comparison to work, both cost and benefit must be expressed in the same form--dollars.

The adept consultant will walk you through a simple conversational process that makes it easy for you to express the value of the desired outcome--Ivy League admission--in dollar terms. It's rare for such expressions not to be many multiples of the cost of obtaining them, which results in the consultant's fee representing a return on investment rather than a cost.

At that moment, the burden of justification shifts from the seller to the buyer. 

Instead of the seller having to justify you buying, you've put yourself in the position of having to justify not buying in the face of all the value declarations you made.

I realize this is a facile example. However, the point is that unless you explore with the client the specific, practical ramifications of the problem you're solving, and get the client to express that in dollars, you're vulnerable to "buyer's remorse."

"At the time we began this lawsuit, it seemed worth it. I just couldn't allow Company X to copy our product so closely. Now, we've stopped them. But how could it possibly have cost $90,000? There's no way legal fees should have cost $90,000."

After the fact, nobody remembers saying, "I don't care if it costs me everything I own, I'm not letting them get away with this." If the $90,000 cost remains the only hard number in the equation, you'll definitely have a problem making the sale, and probably have a problem collecting your fee.

Make the sale in a disciplined way, achieve a benefit/cost equation with hard numbers on both sides, and collection problems based on "won't" will disappear.

Mike O'Horo

Would you like to learn the Cost of Doing Nothing process? RainmakerVT offers an interactive simulation that not only teaches you the process, but lets you experience it and practice it.

Learn why "no decision" is your biggest competitor, and how it impacts your decisions about how and where you spend your marketing time. Download our free eBook, The One Mistake the Prevents Lawyers from Doubling Their Income.

RainmakerVT is the most innovative, effective, convenient and affordable business development training you can get. And you don’t have to commit to a long, drawn-out training program. RainmakerVT is just-in-time training. That means that In 15-30-minute chunks, available from any computer or tablet 24/7, each course teaches you a concrete, practical skill you can apply right now, to the immediate challenge in front of you. Buy only what you need, only when you need it.

Take a look at our course list, and then read what lawyers like you said about RainmakerVT in user-feedback interviews.