Your Guide to an Ironclad Payment Agreement: No more IOU

In my last blog “8 Ways to Avoid Discounting” I explained 8 steps you need to review before you implement a payment plan system. Here I will explain how a successful system works, and it begins with a professionally constructed, ironclad payment agreement.

The system does not need to be complicated. In fact you should make it as easy as possible for your staff and clients. Remember, this will be a new way to grow your revenue and goes againsPayment Plan Contract Graphict how the industry has evolved. However, you need to start offering a payment plan system if you want to survive and grow in today’s economy.

Once you have decided on the terms, conditions and qualifications for offering your clients a payment plan as outlined “Your Accountant Does Know Everything” and ” Cash is Not King” you must have a professional, effective Payment Plan Agreement.

  1. The professional Payment Plan Agreement must contain four sections:
    a. The financial terms of the agreement. The total amount of the procedure, the down payment, number of payments to be made, the amount of each payment and will the payments be monthly or bi-weekly.
    b. Your client’s personal information. Their name, address, home, work and cell phone numbers, email address, SSN, date of birth and employer information. You can never ask for too much information. Take it seriously and your clients will take it seriously.
    c. Bank information and debit date. A primary and secondary means of payment should be obtained. Either two credit cards or one credit card and one checking account. This gives you added security. If a payment fails on the primary account you can debit the secondary account.
    d. The payment terms your client is agreeing to. Meaning their responsibility for all payments and/or fees associated to the Payment Plan Agreement. Authorization to use all information they supply on the form to enforce the collection of the payments and any fees. The authorization to contact them by all means of communication they have supplied regarding the enforcement of the agreement.
    e. The signature section for your client and your practice representative.
  2. Ask for your client’s driver license to confirm the accuracy of the personal information.
  3. Ask to see the credit card(s) and/or banking information to verify the information and to avoid transposing numbers. You should always verify your client’s name, address, phone numbers, etc. on every visit and update any changes into your practice management software.
  4. Conform to TCPA and FDCPA. The Telephone Consumer Protection Act and the Fair Debt Collections Practices Act enforces what you can and cannot do when trying to communicate and collect on money owed your practice. Though many of the rules and regulations apply to third party debt collectors and direct marketing to consumers, it is wise to make sure any of your agreements that are signed by your clients have the proper language to protect your interests.
  5. Clearly review the agreement and terms with your client to avoid any confusion. You should have some informational material about how the payment plan works that your clients can take home so they better understand your policies.
  6. Beginning with great communication will lead to higher payment compliance. This is a very serious phase of your business, make sure your staff understands this and communicates all aspects of the payment plan to your client. Always follow-up with your client after the procedure by phone calls, emails or mailings. The more you engage your client after the procedure the higher your payment compliance will be.

Related articles:

Your accountant does not know everything
Cash is not King in today’s economy
8 Ways to Avoid Discounting

Tony Ferraro is President of Total Financial Services, Inc. / Electronic Billing & Customer Support / His company has been in the payment processing industry for over 30 years. He is a leader and expert in the payment processing, recurring billing and collection industry.