Collecting cash and keeping clients

"Empty your pockets. You're going to make a payment to me now." Dr. Danah Nuest, owner of Greener Pastures Veterinary Clinic in Hebron, Ind., has said this to a client before. She says she much prefers a more professional approach, but she does what she must to collect money clients owe. "I can be pretty brazen when I really need to be," says Dr. Nuest. "And the line worked: The client handed over a $50 bill on the spot."

Collecting money can be touchy, but it doesn't have to unravel you. Through trial and error, your colleagues have discovered these strategies for getting what they're due—and keeping clients happy, too.

1. Prepare clients to pay on-site

"When you bill clients, instead of collecting payment at the time of service, you're letting someone else use your money until you're paid," says Dr. James Guenther, MBA, CVPM, a consultant in Asheville, N.C., with Dallas-based Brakke Consulting Inc. "I've heard that it costs a practice $3 to $5 for every bill it sends out."

That estimate sounds high, but when you factor in the cost of the stamp, paper and envelope, and, most of all, the labor to send the bill and make calls about it, it's easy to see how the cost adds up. And the longer you wait to collect, the less likely you are to see your money, Dr. Guenther says.

What not to do (unless you want cash-flow problems)

One solution: Tell clients in advance that you expect payment upfront. When a client calls for an appointment, have receptionists inform the client about your payment policy and verify that someone will be available to make a payment. After explaining your policy, put clients' credit card numbers on file to ensure payment, Dr. Guenther suggests. "Most clients are OK with this, especially when you explain how you'll safeguard their credit card information to ensure that you don't lose or misuse it."

Dr. Nuest, who's been in business for herself for four years, got burned a few times by nonpaying clients in the early days. "I learned my lessons," she says. "Now I make all new clients pay at the time of service. I tell them upfront that I'll give an estimate, and that I expect cash, check, or a money order when I finish my service. And most clients are really good about following through."

To take the sting out of this policy, Dr. Nuest explains to hesitant clients that she needs to pay for those vaccinations she just gave their horses. "When they understand that I, personally, need to pay the pharmaceutical company for the medicine until the client pays me, they understand my policy better," she says.

Dr. Nuest also uses her practice newsletter to remind clients to pay promptly. "In my last newsletter, I mentioned that some people were taking advantage of my good nature by not paying on time," she says. The result: "Some clients who seemed to just make payments when they thought about it started making more regular payments." Dr. Nuest says that the note made some good clients, who make regular payments, "a tad nervous." She had to reassure them that she wasn't talking about them.

2. Adopt a lovable pit bull

A benevolent pit bull is a person who gets a client to pay up—while smiling, and making the client smile, through the whole process. Dr. Guenther says every practice needs one. It could be your practice manager or a receptionist who makes billing calls. Whoever it is, this person needs to be able to explain your policies, and stick to them, all while empathizing with clients.

Hiring a technician to make calls with you also puts a buffer between you and the clients you're asking to pay and it increases the odds that you'll actually collect at the time of service. "For years, practitioners have used the excuse that they don't have time to bill on-site, saying they need to hurry off to the next call," says Dr. Guenther. "That's where a ride-along technician comes in handy."

While you're finishing up a service, chit-chatting with a client, or giving instructions, your technician can write up the bill and present it for payment. And if you're paperless, as many more equine practitioners are these days, your job is that much simpler. Just print the bill, present it for payment, and swipe the client's credit card right in your truck.

3. Make arrangements with barns to pay you

If you're dealing with absentee owners, consider asking the barn to pay you for services. The barn owner, in turn, can bill the horse owner. "At least the barn owner has the horse—some physical property—to hold against further payment," says Dr. Guenther. "You don't have as much leverage to get your money."

Dr. Nuest uses this tactic. "I have a lot of absentee owners who fill out a sign-up sheet for my services," she says. "Most leave a blank check or at least the amount that I estimated to cover the cost, and I'll bill them if the fee goes over. But sometimes a barn owner will ask me to do minor services when I haven't talked with the owner. For these items I bill the barn owner, who then bills the horse owner."

Some of the barn owners that Dr. Nuest visits think it's rude for clients to expect she'll perform services and leave without payment. They take it upon themselves to pay her on-site, which she appreciates.

4. Think twice about emergencies for nonclients

You're probably nodding your head in agreement here: Emergencies get you every time. "Emergencies are where I tend to get in the most trouble," says Dr. Nuest. "Clients say, 'I thought I had more checks,' or, 'My husband/wife must have taken all the money.' Then I don't get paid."

To help solve this sticky situation, she no longer takes emergencies from people who aren't already clients. This rule has made Dr. Nuest's accounts receivable balance much more bearable.

"I've had people who I've turned over to collection agencies call about an emergency, and they yell at me for not helping them," says Dr. Nuest. "Some of them get crabby and say, 'This is your calling, you should help my horse regardless of whether I can pay.' But that's not the way a business is run."

Even with current clients, Dr. Nuest gives an estimate of $300 for emergencies and makes sure they understand the final bill could be higher or lower. That way, she says, "I know they'll be covered for most of the charges if they have $300, and since we have a doctor-patient relationship, I'll have a much better chance of getting paid the rest in a timely manner." She has also been known to send clients to ATM machines to get cash when they've come unprepared.

5. If all else fails, write off the client

You give clients every chance to make good on their debt. You tell them upfront that they need to pay on-site. You ask for a credit card number, or a third-party payment plan. And the client still doesn't cough up the money. What do you do?

"It depends on the client," says Dr. Guenther. "If it's a good client who's just fallen on bad times, work with him or her. Develop a payment plan. Have a heart-to-heart and tell the client upfront that if there's one more bounced check or credit card rejection, you'll fire him or her as a client."

For good clients who've paid in the past, you can probably get by with billing during hard times, he says. But be firm, and say that you expect payment for past services by the time of the next service. And prepare to stand behind what you say, Dr. Guenther stresses.

However, clients who constantly stiff you aren't going to change, he says. "They've learned to play the system," he says. "You need to tell them you expect payment, or you just can't provide services anymore. Then be prepared to write off the outstanding amount and fire the client."

Scared to stand up to a client? Dr. Guenther has these words for you: "You might lose clients by being a stickler about paying, but you're losing money by allowing people to use you. You need to work with clients, but you don't need to take grief from them."

Sarah A. Moser is a freelance writer and editor in Olathe, Kan. Send questions or comments to ve@advanstar.com.