Collection for Unpaid Balance Template Plus 10 Tips to Collect Client Payments

If you’re looking for a “Collection for Unpaid Balance” template and tips on how to deal with late payments, you’ve come to the right place.

Getting paid on time is a critical part of running any business, and that includes private wellness practices. Therefore, it's important to promptly inform clients if they have an outstanding collection balance. 

This article provides an overview of how to handle outstanding client payments. Our free, customizable “Collection for Unpaid Balance” template can be used with clients to directly communicate the sum they owe and provides instructions on resolving their debt.

‌

What to do if clients don't pay on time

While owning a private practice can be financially fruitful, there are potential set-backs you’ll want to prepare for. These include the administrative time spent on bookkeeping and billing, as well as the often uncomfortable task of collecting unpaid balances.

Falling behind on billing and having to chase down late payments can have a negative impact on your cash flow, and may even affect your ability to cover your operational costs. 

Business matters aside, navigating a collection balance with a client has the potential to impact the relationship between you and your client—and may bring up some unresolved issues relating to money and boundaries. However, as a service provider, you deserve to be fairly compensated for your services. 

While the conversation may be uncomfortable, here are five helpful tips you can use if your clients don’t pay on time:  

1. Discuss with your client at their next appointment 

Perhaps the most seamless approach is to directly address the issue of payment during your next appointment, before the session begins. 

You can explain how sometimes these things happen and ask if they need to update their payment method or need extra time to make the payment. 

Alternatively, if you don’t feel comfortable addressing payment issues in session, you could send your client a secure email through your electronic health record (EHR) system. The email should explain that the client’s payment is overdue and request that they make the payment before your next session—if the payment method on file is declined, also instruct the client to update their payment method.

‌

2. Suspend sessions, but keep communication lines open

If your client doesn’t respond, you may want to notify them of your payment policy—which may state sessions cannot resume until a balance is paid off, or with more than one unpaid appointment in the client’s billing history—and tell them that you’d like to resolve this before the next therapy appointment. 

3. Use a “Collection for Unpaid Balance” template  

To save time, you can use a sample collection letter for outstanding balance. We have provided a sample “Collection for Unpaid Balance” template that you can download. 

Feel free to edit the template for the particular client or to customize the “Collection for Unpaid Balance” template to match your tone of voice and your practice’s authentic brand. Ensure that it is warm and friendly, but also sets a boundary regarding settling the balance. 

4. Take preventative measures 

Implement several systems and policies to avoid having to collect unpaid invoices, such as reminders to clients about when payment is due, explicitly stating and restating your cancellation policy, and ensuring all clients sign a payment policy. You can also set up autopay through your EHR to prevent delayed payments.

5. Provide resources

If your client cannot pay, or even if they do not respond, you may want to ensure continuity of care and provide a list of free mental health services and financial resources that they may find helpful.

What to include in a debt collection letter

If, after notifying your client, you still find that they’re unresponsive, you can send a formal demand for payment, in the form of a debt collection letter. 

Strike a compassionate yet direct tone. 

Ensure the letter addresses the following points:

• Your payment policy. (See section below for key information to include in your payment policy.)
• An understanding that sometimes this happens, payment methods change, and sometimes we have unexpected expenses. 
• Offer the opportunity to answer questions about their bill, insurance, or payment methods.
• Address financial difficulties and offer resolutions (for example, you may want to offer a discount, sliding scale payment, or payment plan).
• Attach the bill to the letter indicating the outstanding balance.
• Thank the client for their time and prompt attention, and tell them they can ignore your letter if they have already rectified the problem.

‌

Ways to prevent clients from missing payments

To successfully manage the financial aspect of your business, it’s important to create safeguards to thwart clients from missing payments.

Here are five helpful tips to prevent outstanding payments.

1. Have a payment policy

Ensure your policy is clearly stated on your website and on intake paperwork. 

The policy should mention: 

• Payment terms. Include when you expect to be paid and when the client will be charged for the session.
• How to pay. Offer different payment options such as health savings accounts, credit cards, in-office payments, and out-of-pocket payments.
• How your practice handles unpaid balances. For example, how the client will be notified of a collection balance, if there is a grace period, and your policy on interest or late fees on unpaid balances.

2. Consider offering a sliding scale payment

Indicate who qualifies for sliding scale, how many sliding scale spots you will offer, and how to offer sliding scale rates. Also ensure your sliding scale policies and procedures follow the ethical standards set by your licensing board and your clients’ insurance, if applicable. 

3. Charge a deposit 

If you don’t have a payment system in place, you may want to consider charging a deposit prior to starting sessions.

4. Use your EHR to set up automatic payments 

By using a practice management software, you can automate the payment process to charge the client as soon as you end the client session.

5. Consider hiring a collection agency 

This should always be a last resort after exhausting all other avenues of collecting the unpaid balance. However, if you have written to the client numerous times over several months and they have not responded to your communication, you may want to consider using a collection agency—depending on the amount owed.

How SimplePractice streamlines running your practice

SimplePractice is HIPAA-compliant practice management software with everything you need to run your practice built into the platform—from booking and scheduling to insurance and client billing.

If you’ve been considering switching to an EHR system, SimplePractice empowers you to streamline appointment bookings, reminders, and rescheduling and simplify the billing and coding process—so you get more time for the things that matter most to you.

Try SimplePractice free for 30 days. No credit card required.

‌