One of the hardest things to deal with in private/independent practice is late payment (or failure to pay at all). I’m not recording this episode because I think I am an expert on it. I am recording this episode because I think it is something that gives us all lots of anxiety, makes us doubt ourselves a lot and generally feel gross. 

When I started out I had a fantasy that all the other psychologists and therapists in independent practice out there were managing to be 100% ethical, 100% compassionate and 100% successful in business all at the same time. In my head you were all literally 300% people. It is only from experience, and forcing people to have uncomfortable conversations with me over wine and coffee that I have realised that the reality is we all feel like we are failing on one of these metrics when certain thorny business issues come up.

I hope sharing my experience and thoughts in this episode will help some of you to come up with a procedure that you are happy with for dealing with late payments. Having a system that you simply repeat, even when emotions are running high, has made a big difference to me and, much to my suprise, I think it is actually better for clients too. 

In the first 12 months of my practice I got “ghosted” all the time. Someone would sign up for therapy, turn up to a couple of appointments and then disappear off the face of the earth, usually leaving an invoice outstanding. It was painful, made me feel like an awful therapist, made me worry for their welfare and meant that even when I was “fully booked” I could actually lose money. I’ve talked in a previous podcast about how financial insecurity can impact on the quality of your work and I noticed that whenever this happened the emotional and financial worry would have a huge impact on my ability to offer good therapy. 

So I decided to do something about this and consulted with a mastermind group that I was part of at the time. This was a very useful group which included people from a range of professions from retail, social media managers, website designers to accountants and writers. 

Have a clear DNA policy

Write a clear DNA policy including who you are going to contact and when (for more on this check out my episode on key policies for your practice) 

Ask for upfront payment 

Get payment at the time of booking as often as you can – WriteUpp is practice management software that allows you to add on a booking system that gets people to pay upfront for therapy sessions, Calendly can also do this. Organisations are also used to paying for consultancy in advance and will negotiate with you if they need to change their terms so don’t be afraid to ask for upfront payment. 

Outsource late payment/financial follow up

Create a seperate email account (or hire a VA) called admin@yourdomainname.co.uk and make sure all emails relating to invoicing come from someone else (even if they don’t really). This helps preserve the therapeutic relationship and helps take some of the emotional heat out of the situation for both of you. Anecdotally I have also found insurance companies are more responsive to my assistant than to me. 

Set up automated late payment reminders

If you use accounting software like Xero, FreeAgent or QuickBooks, set up automated reminders to go out when invoices are overdue. If you don’t then make sure you set aside time every week to chase any overdue invoices. It should be as important as a client in your diary.

Consider payment plans for late paying therapy clients and companies

Consider payment plans. It is helpful to have a compassionately worded policy to draw upon for when people hit hard times. We all know that sometimes clients fall upon difficult circumstances and they may struggle to pay an outstanding invoice for this reason. Firstly, it is important to realise that even if this is the case, you still deserve to be paid. No good comes from you putting yourself under financial pressure. But you may be able to offer an installment based payment plan that eases the pressure. I have personally done this several times over the past year and it has worked well. Most people actually really want to pay you and may be very anxious or even shameful that they can’t pay the full amount. Giving them a way to pay that is as easy as possible for them seems like a compassionate response to me.

Check and negotiate payment terms with insurance companies

A note about insurance companies. Some insurance companies are notoriously bad for paying us late. Some are just unscrupulous. I have actually come across one company where late paying was part of their business model. They claim they will pay within 14 days but know full well they won’t pay for 50. However, much of the time I have found it is very important to check the small print. For example, one company I used to do some work for had “30 day payment terms” and was always late paying. However, when I checked their small print it was actually 30 working days, which is much longer! So my advice is to check carefully what their terms are before you agree to do work for a company and make sure that when you create your invoices you record the date that they will become overdue accurately. That way you will feel confident to phone, email and write to them to chase up your invoices. 

Also, if a company has very long payment terms and you are just starting out, work out if you can actually afford to work in that way. One company in particular has 60 day payment terms and only pays at all after therapy is complete. You could effectively be working for free for a year, not possible when you are a solo practitioner with bills to pay so it might be better to refuse the work altogether if the terms are that bad. 

Create templates and policies for late payments

Create templates for everything – every email I send regarding money comes from a template. Often I add things into the template but it means that I can never let “writer’s block”/imposter syndrome/self hatred stop me from sending reminders. It is also worth creating a policy about when and how you will chase up a late payment so you can, at your weekly check in, make a quick decision about who gets another email reminder.

Find out your debt recovery options

Know your debt recovery options and set a hard deadline for when you will resort to this. I can’t advise you about what services to use as I have never thankfully had to resort to using them but knowing that there are options for this out there and setting your own deadline for when you would use them will empower you to send people final reminders that mean something. 

Be honest with yourself about write-offs

Be honest with yourself about write-offs. I am not recommending that you write off a debt often. I have actually only done it once. But there are times when you may need to for extreme reasons. Perhaps the person has gone to prison or lost capacity (not always be a reason to write off just some extreme cases where you could consider it). If that happens it is better to just admit it to yourself and formally write it off in your accounting software or with your accountant so you don’t see the promise of it, taunting you, each month. 

Now take action! Create your late payment policy for your independent practice

I hope that helps you to start thinking about your steps for dealing with late payments. Now would be a good time to take some action and bullet point out the steps you want to include in your late payment policy. Include the templates you are going to create and when you are going to send them. That way, if you do outsource it, someone else can pick it up easily and if you don’t it will help you deal with the emotional side of it a bit easier.

Help me plan our summer workshops 

Before you go I need your help with something. Over the summer I am planning to run some free workshops for you guys so that anyone thinking of starting or growing their practice in September can get a jump start on it. At the moment I am thinking of running two sessions. A repeat of our “find your specialism” training and a session called “the 50 minute business plan” where I take you through the key components of a useful business plan and help you start to create/update yours in 50 minutes. I’ve put a poll on the “Do More Than Therapy” page on Facebook, if you could hop over there and just tap which option would suit you best that would be really helpful (or add another option that you would prefer, its not set in stone yet!) Thank you so much in advance!

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Where are you at in your practice?

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