Don’t Send Your Clients the Wrong Message by Not Having an Effective A/R Management Program in Place

 Put a little more harshly, the reason why law firms need a strong accounts receivable management program early in the ageing process is to prevent a domino effect of self-inflicted pain, which firms so often put themselves through by letting receivables age without having effective, results oriented procedures in place to collect receivables promptly.

Here’s why:

• When law firms send out their regular monthly bills, and do not follow up promptly when clients don’t pay after 30 days, the message they are sending to their clients is: “Pay when you can. Our bill is not a priority. We don’t need the money right away.” 
• Next, with poor one-on-one follow-up with clients early on, firms lose the opportunity to determine, as soon as possible, whether or not a client can or will pay – giving the client confidence that they are the ones who control when and if they will pay.
• Lastly, firms give their attorneys too much autonomy in collecting their bills. This leads to the question of whether your firm has a collection and accounts receivable management problem – or a lawyer problem – where your professionals are not taking responsibility for collecting their accounts. Yes, there are certain clients and types of transactions that do not or cannot follow prompt payment guidelines. However, these are the exception and not the rule. Law firms need to understand that these exceptions gain traction and soon become problem paying accounts as they age. On top of that, firms gain a false sense of security that they have a pot of revenue that just needs to be paid, when what they really have is an empty trove of promises that continue not to be paid (if they ever will be). 

Visit us at www.clientci.com to learn more.

In One Ear and Out the Other: When Managing Receivables, Sometimes You Hear Only What You Want to Hear

Many law firms are missing the message as it relates to managing and collecting their receivables timely. Such firms still rely – very much to their detriment – on a culture of collegiality and camaraderie among the attorneys to set the tone for meeting collection goals. Firms struggle with how they communicate to their attorneys what is required of them. At the same time, attorneys have a knack for hearing only what they want to hear on how they should pursue clients for payment. On top of this, there are other issues that hamper firms’ efforts to get paid. Different practices may experience different difficulties. For example, family law clients may be prone to cash flow problems, corporate start-ups may not have cash reserves and e-billing clients are selective about what they pay. 

So here are three things to keep in mind to help improve communication on collections:

• Firms that talk the talk but don’t walk the walk will have weaker collection results. Because many firms believe that open dialogue between management and the attorneys will ultimately result in effective collection efforts, they do not enforce guidelines to help achieve results. Individual attorney autonomy will win in the end – and collections will lose – if all the firm does is talk about, rather than act on, the message.
• Firms need to understand that it will take time to successfully implement policies and procedures before they actually spend time creating and revising collection rules. Save yourself some time by putting the cart before the horse. Too often policies are not effective because leadership of the firm gives attorneys too much professional courtesy, allowing them to make exceptions to the rules. It’s one thing to commit procedures to paper, but it’s another to ensure attorneys are following the new rules.
• Don’t think that an increase in revenue or meeting budget is an indication that collection efforts are working. Take a hard look at receivables you are not collecting and how you are dealing with issues that are preventing timely payment, particularly for those receivables of more than 90 days. Such receivables are more of a challenge to collect and take more time and are often left to the side. 

Want to learn more? Visit us at www.clientci.com.

Prepare for a Challenging End to a Year Unlike Any Other

 

Jake Krocheski President jakek@clientci.com October 19, 2020   Prepare for a Challenging End to a Year Unlike Any Other     Roll up your sleeves and get started 2020 has been a rough year, unlike anything we have ever experienced.  We would venture to say that no firm has planned adequately for such hard times.  Even more challenging, if your firm has not done a good job managing its A/R in good times, how can you expect to manage them when times are tough? But no matter how difficult times are, year end is coming, just like all other years.  So take the time to get your priorities straight and determine how your firm will make changes that are needed.  Effective receivables management starts from the top.  Firm leaders should lead by example.  They need to tell the attorneys to address their collections.  Just as important, they need to understand what resources and strategies are required to help achieve results -- sooner rather than later.  Look at everything, including how your firm historically has managed its receivables at year end, to determine where changes need to be made, based on today’s down economy and different client payment patterns.  More than ever, be aware that certain problems surrounding clients’ failure to pay your firm has dealt with in the past are becoming more prevalent.  For example, clients with cash flow problems will delay payments or not pay at all, and clients can have “sticker shock” when they expect to receive a bill of a certain size and are surprised when a much larger one arrives.  Focus on areas that make a difference and don’t make assumptions Change can be difficult, especially with so many priorities to attend to during such uncertainty.  But the bottom line is the bottom line.  This year, unlike others, it requires all hands on deck to ensure that bills are in line for payment.  Therefore, start determining:

 

Whether accounts are actively being pursued at certain ageing points or if follow-up efforts are stagnating What the payment status is on accounts, what can be done to speed up the process and what the chances are of not being paid The time commitment that is necessary, skill level of those pursuing unpaid bills, how much of a priority they are devoting to the efforts, and what success they are having, especially with older accounts Why clients are not paying and what steps are being taken to get them to pay

 

Be careful that assumptions are not being made at all levels:

 

Firms assume attorneys are vigilant in getting clients to pay; Leadership assumes receivables are being actively managed; Attorneys assume clients understand payment obligations; and Everyone assumes staff assigned to accounts receivable efforts understand their duties and are actively pursuing accounts.

 

Don’t get caught in a vicious cycle.  Get to the root of the problems and find solutions. Clients are expecting to hear from you this year Remind everyone involved with year-end collection efforts that many other business partners are contacting their clients to get paid, so it is entirely reasonable for you to do the same.  Institute regular, steady, professional communication concerning unpaid bills to secure dates for when payment can be expected, or to determine appropriate follow-up. Educate your attorneys about various payment scenarios, plans and options before they contact clients.  Because clients may not be able to pay as they have in the past, be prepared to recommend a few payment solutions that can be tailored to their cash flow issues. Learn more on our web-site at https://clientci.com/

When Managing Receivables, Beware of Paying Lip Service

Sometimes You Hear Only What You Want to Hear
There is no doubt that firms need and want to collect their receivables timely and prevent receivables ageing too far – considering the economic and cash flow challenges they face. Although firms should ramp up their collection efforts as soon as possible to help improve their revenue, how they handle the collection process – which can be long, sometimes tedious and requiring daily attention — can make or break how successful they will be with their A/R management efforts.

Many law firms have missed the message as it relates to managing and collecting their receivables timely. Such firms have relied – very much to their detriment – on a culture of collegiality and camaraderie among the attorneys to set the tone for how they approach getting paid. Firms struggle with how they communicate to their attorneys what is required of them. At the same time, attorneys have a knack for hearing only what they want to hear on how they should pursue clients for payment. On top of this, there are other issues that hamper firms’ efforts to get paid – different practices with different clients can experience different difficulties – requiring different A/R management strategies and techniques.

So, in today’s new normal, here are three things to keep in mind when making your best efforts to get paid:

• Firms that ‘talk the talk but don’t walk the walk’ will have weaker collection results. So stop discussing it endlessly with your attorneys and recognize that there are times when it is most effective to make your attorneys aware of the rules and procedures, and ask that they follow them. It will not get you far to just tell your attorneys: “Go collect your accounts.”
• Firms need to understand the difference between implementing A/R management policies, processes and procedures and spending time creating and revising collection rules. Too often policies are not effective because leadership of the firm gives attorneys too much professional courtesy, allowing them to make exceptions to the rules. It’s one thing to commit procedures to paper, but it’s another to ensure attorneys are following the rules.
• Don’t think a few quick successes are an indication that collection efforts are working. Take a hard look at receivables you are not collecting and how you are dealing with issues that are preventing timely payment, particularly for those receivables over 90 days. Such receivables are more of a challenge to collect and take more time, and are consequently left to the side

You can learn more on our web-site at: https://clientci.com/.

Jump In! The Water’s Fine!

There Is No Better Time to Make a Splash in Getting Paid
Your firm needs to make it clear to attorneys and staff handling accounts receivable efforts what your A/R management expectations are; this includes details on how they are performing their work. We know everything is not black and white and there needs to be a fair amount of latitude for decisions based on individual circumstances. But to improve payment results, you should establish and communicate guidelines on how to manage day-to-day efforts when contacting clients about unpaid bills.

Timing is everything and there is no better time than now to make inroads. Why? Because law firms need to have positive cash flow. Yet firm clients are selecting how they pay to maintain their own cash flow needs. You are facing a double-edged sword. Do not think your firm can just go about trying to collect itself out of harm’s way by dealing with this as a one-time, all-hands-on-deck priority without ensuring proper techniques are being followed by those contacting clients about unpaid bills.
Start understanding how accounts are being worked daily by those handling collection efforts. Know if they are performing best practices, such as:

• Monitoring the number of calls made versus the number of e-mails sent,
• Reviewing the number of client contacts made daily compared to the number of messages left,
• Evaluating the number of days between contact attempts,
• Reviewing the quality of payment arrangements and timing of payment commitments.

The reality is there are many unsettling circumstances in today’s economy that will delay payments. But help your firm keep pace by ensuring it is performing the right follow-up efforts to increase the probability of getting paid.

You can learn more on our web-site at: https://clientci.com/.

Don’t Underestimate the Need for a Strong, Hands-on Accounts Receivable Management Approach

Just as law firms are now adjusting how they position themselves in the legal market, they also must ensure they are correctly managing receivables in today’s ever-changing economic environment.  Firms may need to embrace new strategies to ensure they get paid for their services. Therefore, start asking the questions that will help you determine if your firm is making the adjustments necessary to deal with the ever-changing economy:
What do we need to change, if anything, to ensure we are making progress? Most importantly:

• Determine if you have the right leadership and management team in place to move forward
• Understand how attorneys are managing their A/R remotely and if they are spending enough time on their collection efforts
• Evaluate your administrative staff, specifically whether they are doing the right work the right way
• Measure the results you are achieving as compared to the A/R management efforts you are performing

What role should leadership and management play? If you want to effectively manage receivables, you need to have the ability to tell the attorneys to address their collections, but also understand how to look to other resources to help them achieve results. Take stock of what you are doing — and why — and evaluate what is and what is not working. An important aspect of this is assessing whether you have the right people, with the right skills, in place to do the job. Also, understand that everyone should be held accountable to ensure progress is being made.

You can learn more on our web-site at: https://clientci.com/.

Learning to Get Paid While Living in a Time of Broken Promises

Too many law firms continue to think collections is an easy process. All you have to do is remind clients to pay and they will.

For firms that thought they had a good A/R management system in place, in a matter of weeks, so much has changed, and it has compelled them to re-think their strategy, presuming there was one.

NOW, more than ever, is the time to understand if, when and how much clients will pay. Cash is king for most clients of law firms these days, and it is difficult for them to let money go because they have so many financial obligations.

Therefore, manage your clients’ expectations so that they know that, if they have not paid, they will be contacted throughout the ageing process. Here are a few tips to help:

• Follow-up regularly and timely with your clients to determine when they will pay. Recognize that your firm is not the only one contacting them for payment status. Always thank them for taking the time to speak with you or respond to your e-mail. Having good dialogue and building a sincere communication exchange will go a long way in helping the firm get paid. Building sincere relationships with your clients, listening to their struggles and developing a path for payment are keys to success.
• Request dates or timing on when payment can be expected to help determine when your next follow-up contact should be made, if payment was not made. If clients cannot give you specific payment dates, at minimum agree when a follow-up call would be good.

Start small by educating your attorneys and staff on the day-to-day best practices for managing A/R in your firm. Then figure out how your firm can actually start getting its arms around its payment expectations – Your goal is to build consensus within your ranks on how timely payment information can be a large part of your firm’s revenue enhancement initiatives.

You can learn more on our web-site at: https://clientci.com/.