How to Stop Losing Money in Your Private Practice

Because if I did the math right, she was losing hundreds – maybe thousands – of dollars every month.

Every. Month.

As a psychotherapist, her practice was filled with people who suffered from major depression and other serious mental health issues. She cared deeply for her clients, and the last thing she ever wanted to do was add to their suffering in any way.

So if they were having a tough day and just didn’t feel like coming in for their appointment, she understood.

“Oh, I’m sorry to hear that! Take care of yourself, and I’ll see you next time then”, she’d say, when they called at the last minute to say they weren’t coming.

She did have a cancellation policy in place. According to the agreement her clients signed, they would pay full fee for any appointments not cancelled 24 hours in advance.

But she felt sorry for them on the tough days, and couldn’t bring herself to enforce her own rules.

By the time she got to me, over half of her appointments in any given month were last minute cancels – or no-shows.  

It had nothing to do with her competency. It wasn’t even about whether or not her clients liked her or appreciated her help.

It was her simple reluctance to hold people accountable that made it so easy for them to miss their sessions. And it was literally costing her thousands each month.

It wasn’t doing her clients any favors either.

(How could they ever get better if they didn’t show up for the work?)

One of your duties as a business owner is to establish clear financial policies so that people know what to expect when working with you.

But if you fail to enforce those policies you have, they mean nothing.

And I’m not just talking about no-shows. There are all kinds of ways some of you sabotage yourselves when it comes to getting paid.

• Discounting services in random ways without a strategy – especially when feeling desperate (for cash) or guilty (for charging what you’re worth).

• Providing a service that is far beyond what you agreed to do, and not charging for it.

• Providing a service as promised, but never getting around to sending the bill. Or having such sloppy accounting that you don’t even know what they owe. (Can’t tell you how much money I used to lose that way…)

• Letting people take months – or years – to pay even the smallest of accounts.

• Becoming your clients’  “bank”, by allowing them to build up extensive debts with you that they may never be able to pay, rather than requiring them to arrange credit elsewhere, and pay you.

• Continuing to serve someone who already has a poor history of paying their account, sometimes allowing them to dig an even deeper financial hole.
  

• Chasing people for monthly payments instead of setting up clear, manageable, recurring payments when possible.

• Not charging stated late fees, if that’s your policy, for late payments.

I’ve made every single one of these mistakes – and more.

Giving someone a break every now and then when they’re going through a tough time is fine. It’s compassionate, and can even be a smart business strategy – at times.

But to repeatedly let someone get away with not meeting their obligations is another matter entirely.

It’s enabling your clients.

It lessens your credibility, and it sets a terrible example. It teaches others not to respect your time, or your value. It teaches them not to respect their own well being and work towards healing.

And it will keep you broke.

I’ve seen heart-centered entrepreneurs lose so much money – money they’ve earned but don’t collect –  that they had to get a part time job just to make ends meet, even when they’ve got a full time private practice.

So if you want to empower your clients, and protect your business, make sure your written, understood, and enforced policies clearly answer the following questions.

1. WHO is responsible for what?

Who is actually responsible for the bill? Your client? Another family member? Their employer? A different department? Has the right authority approved the purchase?

2. WHAT do they actually have to pay?

Are they required to pay in full or can they make payments? Do you require a deposit? Can they get a refund if they change their mind? What if they need to cancel? Do you ever make exceptions? And if so, under what circumstances?

3. WHEN must payments be made?

Do they have to pay up front? At completion? By a certain date? Within 10 days? If making payments, does it matter how often or how much they pay each time?

4. HOW must payments be made?

Can they pay by cash? Check? Credit or Debit Card? Do they have to pay in person, or can they pay on line? How about by mail?

5. WHY do they have to pay?

Can you explain their account to them?

More importantly – are you clear about why you charge what you do? Can you articulate your value to your clients?

My clients make a serious investment in themselves and their business when deciding to work with me, which is both a huge honor, and an awesome responsibility. But because I know how much they get in return, I am at peace with that.

Look over the items above. Are each of these clear in the way you run your business?

And if they are, are you following your own rules?

Or are you throwing thousands of dollars away, too?

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