How to manage cash flow when client fees come in after the work is done
The cash flow problem in a solicitor's or conveyancing practice is rarely about not billing enough. It is about the gap between when the work gets done and when the fees actually arrive. A residential transaction that runs for three months, a commercial matter with a fee at completion, a retainer that does not quite cover the billing period: each one leaves the practice funding its own work out of cash reserves while the client's payment is still outstanding.
Closing that gap does not require a new accounts system. It requires that every matter file has the right financial information from the moment it is opened.
The billing cycle and the cash cycle are not the same thing
A practice can have every matter billed correctly and still face a cash squeeze at the end of the month. The billing record says what is owed. The bank account says what is available. Between the two sits the collection gap.
Deferred fees — those taken at completion, at exchange, or tied to a specific outcome — create a structural mismatch: outgoings are continuous, income is lumpy and delayed. The longer the matter, the wider the gap.
Knowing the gap exists is not enough. What you need is to know, for each open matter, when that gap is going to close.
What to record in every matter file from day one
Each matter file should carry at minimum three pieces of financial information from the outset.
The agreed fee. Not an estimate of hours, but the figure the client has confirmed — whether that is a fixed fee set out in the engagement letter, a capped amount, or a clear formula for how the final figure will be calculated.
The payment terms. When you get paid: upfront, by stage, at completion, or some combination. If there is a retainer, what it covers and when it is to be replenished. If payment is deferred to completion, when completion is currently expected.
The anticipated receipt date. Not the date you will raise the invoice, but the date you expect the funds to clear into the office account or client account. Those are different dates, and treating them as the same is what creates end-of-month surprises.
With those three data points recorded in every open matter file, you can produce a rolling forecast of expected receipts for the next 30 or 60 days at any point during the month.
Tracking outstanding fees without relying on memory
The most common reason a fee goes uncollected for longer than it should is not that the client refuses to pay. It is that the practice has no consistent system for following up, so the responsibility ends up sitting in the memory of the fee earner rather than in the matter file itself.
Fee tracking works best when it is embedded in the file rather than left to individual initiative. When an invoice is raised or a payment date is agreed, the matter file should record:
- The date the invoice or fee note was issued or communicated to the client.
- The agreed payment deadline.
- The date on which a follow-up should be made if payment has not been received by then.
That follow-up date is not a personal reminder. It is a matter file entry, the same as a deadline for a signed contract or a date for a registry application.
Following up before the situation becomes uncomfortable
An early, matter-of-fact follow-up — made when the payment deadline has just passed and the matter is still fresh — is more effective than a formal demand sent weeks later when the amount has started to feel awkward on both sides.
It also gives you early information if something has changed: a client who mentions that completion has slipped, or that funds are not yet in place, is telling you something that changes your cash position for the coming weeks. Knowing that now is better than knowing it when the matter is already overdue.
What the matter file should reflect after any follow-up:
- If the client confirms a revised payment date, that date goes into the file.
- If the fee has been received, the record is closed.
- If the billing schedule needs to change because the matter has extended or stalled, the revised terms go in alongside the original ones.
A matter file that reflects what has actually happened is more useful for managing the practice than one that only shows the original plan.
Building a 30- and 60-day cash forecast from your open matters
When every open matter carries an expected receipt date, you can consolidate that information into a practice-level cash forecast. This does not require specialist software. It requires that the financial section of each matter file is kept current — by whoever is running the matter — as payment terms are agreed and circumstances change.
A useful forecast distinguishes between three kinds of expected income:
Confirmed receipts: invoices raised, payment date acknowledged by the client, funds expected on a specific date.
Expected but unconfirmed receipts: fees tied to a completion or exchange that is anticipated but not yet locked in. The date could move.
Contingent receipts: fees that depend on an outcome that is still uncertain — a successful result, a condition that has not yet been met.
That distinction allows you to identify periods of likely low liquidity with enough lead time to respond: by requesting an interim payment on a long-running matter, by adjusting how many new instructions you take on in a given period, or simply by knowing in advance which month is going to be tighter than usual.
The aim is not to eliminate uncertainty. Completion dates move, clients request extensions, and some matters run longer than anyone expected. The aim is to reduce the number of times a cash shortfall arrives as a surprise.
At VerifyAct we build tools to help practices stay organised and error-free. Get in touch if that sounds useful.