With only a few weeks left in 2013, now is the time to ensure all year-end client payment commitments are being firmed up – and everyone at the firm is ready to make those final detailed arrangements to confirm payments by December 31. However, it’s also the time not to assume clients have all the information they need to process, mail and deliver their payments.
Listed below are a few last-minute tips that you should communicate to attorneys and staff:
• Calling clients is the best way to determine payment status. E-mails and letters can be misplaced. They do not have the same sense of urgency as a call.
• Make sure that clients have all outstanding invoices. If the client does not have the invoices, verify who should receive copies and then confirm that they have been received.
• Ask clients what day or week they expect to send payment. This gives the attorney or staff member a date to put on their calendar for follow-up. This is probably the most important step for year-end payment.
• Determine if client offices are closed the last week of the year. This will help you ensure payment is sent before the client stops writing or processing payments.
• Give everyone access to routing instructions if payment is to be sent by wire. Be ready to provide your firm’s overnight account number to clients. Let them send payments by express delivery without having to incur costs. Offer to send a messenger to local clients to pick up a check.
We hope everyone has a successful and rewarding 2013. We look forward to sharing our monthly tips again starting in February, 2014.
Happy Holidays from everyone at Client Connection!
Visit our web-site at http://www.clientci.com/
Client Connection
www.clientci.com
Wednesday, December 4, 2013
Sunday, November 3, 2013
5 Mistakes to Avoid Going into Year-End
1. Expecting Attorneys Will Make the Time Needed to Collect Their Bills -- Let's face it. Attorneys are concerned about servicing their clients, not about when they are going to get paid. They have been trained to be lawyers and provide quality legal work. They only have so many hours in the day and they spend it practicing law. Although managing accounts receivable should be part of their practice management, don't make the mistake of giving them too much autonomy in dealing with them.
2. Believing that Clients Understand Payment Obligations -- Actually, communication problems typically arise very early in the engagement, often because the attorneys and their clients do not share mutual expectations. Lawyers do not take the time to review payment obligations with clients. The reality is that it is usually the client rather than the lawyer who dictates when -- and, sometimes, if -- payment can be expected.
3. Fear that Attorneys Will Damage Their Relationships by Asking Clients to Pay Their Bills -- Law firms lose clients by doing poor work or by failing to deliver client service, not by asking clients to pay their bills. Managing and asking for payment status will not hurt the relationship, as long as it is done in a professional manner.
4. Expecting that Clients Will Contact the Law Firm If They Have Problems with Their Bills -- Some clients will, in fact, be quick to call if they perceive a problem. Most, however, will not, for one of many reasons: they are uncomfortable talking about money, they are totally confused by the services described in the bill and don't know where to begin, they are unprepared for the total amount of the bill and find themselves unable to pay.
5. Looking at the Wrong Reports to Help Determine Year-End Payment Expectations -- Many firms still look only at aged accounts receivable reports. They need to go beyond this. Law firms need to know if an account is actively being pursued and what the payment status is. They need to categorize their accounts in order to know why clients are not paying. Most importantly, firms need to be honest with themselves that they have reports that can help them understand what collection efforts, if any, are being performed.
We invite you to learn more on our web-site at: http://www.clientci.com/
2. Believing that Clients Understand Payment Obligations -- Actually, communication problems typically arise very early in the engagement, often because the attorneys and their clients do not share mutual expectations. Lawyers do not take the time to review payment obligations with clients. The reality is that it is usually the client rather than the lawyer who dictates when -- and, sometimes, if -- payment can be expected.
3. Fear that Attorneys Will Damage Their Relationships by Asking Clients to Pay Their Bills -- Law firms lose clients by doing poor work or by failing to deliver client service, not by asking clients to pay their bills. Managing and asking for payment status will not hurt the relationship, as long as it is done in a professional manner.
4. Expecting that Clients Will Contact the Law Firm If They Have Problems with Their Bills -- Some clients will, in fact, be quick to call if they perceive a problem. Most, however, will not, for one of many reasons: they are uncomfortable talking about money, they are totally confused by the services described in the bill and don't know where to begin, they are unprepared for the total amount of the bill and find themselves unable to pay.
5. Looking at the Wrong Reports to Help Determine Year-End Payment Expectations -- Many firms still look only at aged accounts receivable reports. They need to go beyond this. Law firms need to know if an account is actively being pursued and what the payment status is. They need to categorize their accounts in order to know why clients are not paying. Most importantly, firms need to be honest with themselves that they have reports that can help them understand what collection efforts, if any, are being performed.
We invite you to learn more on our web-site at: http://www.clientci.com/
Tuesday, October 1, 2013
Heading Toward the Home Stretch...
You have certainly heard us at Client Connection point out to you the importance of managing your accounts receivables. We love it when we hear other, respected voices in the legal community make a similar point.
Recently, in a Wall Street Journal article entitled "D.C.'s Patton Boggs Tightens Its Belt," Edward Newberry, Managing Partner of Patton Boggs, the "venerable Washington, D.C. influence-broker," noted that his firm saw revenue drop 6.5% and profits fall 14% in 2012. Newberry attributed those declines "largely to problems collecting unpaid legal bills from 2011 and earlier."
Similarly, an article in The American Lawyer focused on a recent survey conducted by Wells Fargo Private Bank's Legal Specialty Group. The bank polled 120 firms, among the 200 largest firms in the country, to see how they performed from January to June 2013, as compared to the same period in 2012. Jeff Grossman, the Senior Director of Banking for the legal specialty group, said that even as billing rates increased, "collecting on bills has become more difficult over the years."
As we head into the all-important fourth quarter, recognize, as Patton Boggs has, that collecting unpaid receivables is, more than ever, crucial to your bottom line. And, as Wells Fargo noted, collecting is not getting any easier. However, the sooner you start devising a results-oriented accounts receivable management program, the sooner you will see an increase in revenue, cash flow and profitability. Learn more on our web-site at: http://www.clientci.com/
Recently, in a Wall Street Journal article entitled "D.C.'s Patton Boggs Tightens Its Belt," Edward Newberry, Managing Partner of Patton Boggs, the "venerable Washington, D.C. influence-broker," noted that his firm saw revenue drop 6.5% and profits fall 14% in 2012. Newberry attributed those declines "largely to problems collecting unpaid legal bills from 2011 and earlier."
Similarly, an article in The American Lawyer focused on a recent survey conducted by Wells Fargo Private Bank's Legal Specialty Group. The bank polled 120 firms, among the 200 largest firms in the country, to see how they performed from January to June 2013, as compared to the same period in 2012. Jeff Grossman, the Senior Director of Banking for the legal specialty group, said that even as billing rates increased, "collecting on bills has become more difficult over the years."
As we head into the all-important fourth quarter, recognize, as Patton Boggs has, that collecting unpaid receivables is, more than ever, crucial to your bottom line. And, as Wells Fargo noted, collecting is not getting any easier. However, the sooner you start devising a results-oriented accounts receivable management program, the sooner you will see an increase in revenue, cash flow and profitability. Learn more on our web-site at: http://www.clientci.com/
Tuesday, September 3, 2013
Putting A/R Policies and Procedures into Action
Over the years, many law firms have taken steps to develop policies and procedures to ensure accounts receivable get collected. Firms take great pride in the fact that they have developed such a well-written document.
But many of these firms often learn the hard way that these policies exist only in writing and are not doing the job of getting A/R collected, especially older, difficult accounts. Are policies and procedures the right way to hold attorneys accountable for getting accounts collected?
This is a difficult dilemma for many law firms. While the firm's financial managers want to have strong black-and-white procedures, which are common in most businesses, the challenge is that there are so many complicated transactions and relationships that do not lend themselves to black-and-white procedures. All law firms should have written procedures in place concerning accounts receivable management, and communicate their expectations on collections to the attorneys. However, the procedures need to be workable, and for those receivables that must have exceptions, these exceptions should be monitored closely and not be seen as a way to avoid firm collection policies and rules.
Giving too much autonomy to the attorneys is often the root of a firm's A/R problems. Firm leadership must step in to help attorneys understand what specific actions they must take to ensure payment, give them a clear time frame for getting accounts collected and provide the right professional support to help them.
Law firms must continue to state their position on collecting accounts receivable and take measures to ensure they are working. Although exceptions to policies will always exist, and are needed, they should be considered just that: exceptions, and not the rule. Learn more on our web-site at: http://www.clientci.com/
But many of these firms often learn the hard way that these policies exist only in writing and are not doing the job of getting A/R collected, especially older, difficult accounts. Are policies and procedures the right way to hold attorneys accountable for getting accounts collected?
This is a difficult dilemma for many law firms. While the firm's financial managers want to have strong black-and-white procedures, which are common in most businesses, the challenge is that there are so many complicated transactions and relationships that do not lend themselves to black-and-white procedures. All law firms should have written procedures in place concerning accounts receivable management, and communicate their expectations on collections to the attorneys. However, the procedures need to be workable, and for those receivables that must have exceptions, these exceptions should be monitored closely and not be seen as a way to avoid firm collection policies and rules.
Giving too much autonomy to the attorneys is often the root of a firm's A/R problems. Firm leadership must step in to help attorneys understand what specific actions they must take to ensure payment, give them a clear time frame for getting accounts collected and provide the right professional support to help them.
Law firms must continue to state their position on collecting accounts receivable and take measures to ensure they are working. Although exceptions to policies will always exist, and are needed, they should be considered just that: exceptions, and not the rule. Learn more on our web-site at: http://www.clientci.com/
Friday, August 2, 2013
The 10 Most Frequently Asked Questions About Accounts Receivable Management
Every law firm is different, but nearly all of them share common accounts receivable challenges. To help firms address their collection problems, we have compiled a list of the questions we hear most frequently from law firms, and offer our answers:
Question 1: How should we evaluate our firm’s accounts receivable management needs and strategy to ensure we are making progress?
Answer: Ask yourselves – are we doing the right job, or do our processes, policies and procedures exist only on paper or in theory? All firms should take the time and effort to evaluate if they have A/R management best practices in place. The key questions to ask are:
Question 2: What role should our firm leadership – i.e., managing partner, committees and administrator – play in A/R management and collection efforts?
Answer: Effective receivables management needs to start from the top. Leadership needs to have the ability to tell the attorneys to address their collections, but also understand the need to use other resources to help them achieve results. To begin, firm leadership needs to perform a self-evaluation to figure out what the firm is doing right and what you could be doing better. It needs to do a thorough self-assessment of the firm’s A/R management practices and procedures. Take stock of what you are doing – and why – and evaluate what is and is not working. Look at everything, including how your firm historically has managed its receivables, to determine where changes need to be made based on today’s legal profession and how clients pay. An important aspect of this is assessing whether you have the right people, with the right skills, in place to do the job. This involves two groups – attorneys and A/R staff. Understand that everyone managing receivables must be held to high standards of accountability to ensure progress is being made.
Question 3: We have policies and procedures for our attorneys to follow. Why are they not working?
Answer: This is a difficult dilemma for many law firms. While the financial management sector of a law firm wants to have strong black-and-white procedures that are common in most businesses, they are often challenged because there are so many complicated transactions and relationships that do not lend themselves to black-and-white procedures. All law firms should have written procedures in place concerning accounts receivable management, and communicate their expectations on collections to the attorneys. However, the procedures need to be workable, and for those receivables that must have exceptions, these exceptions should be monitored closely and not be seen as a way to avoid firm collection policies and rules. Giving too much individual autonomy to the attorneys is often the root of a firm’s A/R problems.
Also, firm leadership must step in to help attorneys understand what specific actions they must take to ensure payment, give them a time frame for getting accounts collected, and provide the right professional support to help them.
Question 4: How can we best overcome the backlog of our older, difficult A/R?
Answer: These receivables must be actively pursued until they are paid or determined to be uncollectable. But lawyers should not delude themselves into thinking that they are going to be paid without effort on the part of the firm. There must be dedicated, consistent efforts, with status reports going to the leadership of the firm to ensure progress is being made. Typically, firms focus their efforts on those clients that pay timely and avoid working with older accounts because they take time and are often not pleasant to deal with. Consistent follow-up efforts are the key to making progress with these types of accounts. Law firms are making a big mistake if they think these types of receivables will be paid without working closely with clients and letting clients know their account is being monitored.
Question 5: We have a variety of information regarding our accounts receivable, but the information doesn’t help us determine what we should do and what problems we should address. What kind of A/R management information should we be looking at?
Answer: A/R reports have to give firm leadership real, actionable information; they need to show that collection activity is moving forward and progress is being made on each account. Detailed reports should provide information on whether accounts are actively being pursued, what the payment status is, who is pursuing collections and what success they are having, why clients are not paying, and what steps are being taken to get them to pay.
Question 6: How should we evaluate administrative staff dedicated to managing and collecting our A/R?
Answer: The staff should not be evaluated on how well they keep the attorneys happy by getting them copies of bills and reports; anybody can do these types of administrative work. Rather, determine what age group of receivables are they working: Is their success with good-paying clients that just need reminding, or are they making collecting older, difficult accounts the focus of their efforts? Also, determine how many direct contacts they make daily with clients and how many accounts they are handling. Most importantly, determine how many actual dollars they are collecting, especially the older, difficult accounts that continue to age. If your staff is handling e-bills, identify how many of these accounts they are handling and how long it is taking to resolve these issues.
Question 7: We are reluctant to put an A/R management program in place at our firm because our attorneys don’t want to hurt their client relationships. How can we respect their concerns yet put one in place?
Answer: You need to educate your lawyers on various techniques and strategies for contacting clients that will keep their relationships strong. The best place to start is pursuing those older, difficult accounts. Law firms lose clients by doing poor work or by failing to deliver client service, not by asking clients to pay their bills. Managing receivables will not hurt the relationship as long as it is handled professionally. In today’s economy – and in the face of changing law firm economics – it has become a best practice to contact clients about unpaid bills. Also, to help ensure success, firms should not be reluctant to hire professional staff with experience in accounts receivable management for the legal profession.
Question 8: How can we help clients understand payment expectations and train them to pay timely?
Answer: The business environment has evolved – mindsets have changed and so have business practices of all types. Because law firms are doing business in a different world and making adjustments accordingly, it also requires that they routinely communicate with their clients about unpaid bills to ensure timely payment or resolve problem issues. While past collections experiences should not be ignored, in these changing times it may not be entirely useful as a guide. Although some clients have set rules of when payments will be made, firms must institute regular, steady, professional follow-up of unpaid bills to secure dates of when payment can be expected to help guide future follow-up. By showing clients that the firm is regularly contacting them and monitoring their payment status, they will learn that you are well-aware of their bills and that you expect payment. However, sometimes it becomes the attorney’s problem because he or she is uncomfortable about asking for payment and grants too much leeway about timely payment.
Question 9: What are the main problems law firms are experiencing with the slowdown in payments?
Answer: Cash flow problems and clients hoarding cash (both institutional and non-institutional clients) are the main reasons why clients do not pay or pay slowly. They understand that they can ease their cash flow problems by delaying payment or not paying at all. They may claim that they are not satisfied with the services provided or are unhappy with the results. Further exacerbating the problem, clients may experience “sticker shock” when they expect to receive a bill of a certain size and are surprised when a much larger one arrives. Also, the growth of e-billing and the greater length of time needed to resolve e-bill issues with clients has caused many firms to re-evaluate their collection issues by sorting out e-bill collections from non-e-bill collections. E-billing is a factor delaying payment, resulting in an increase in ageing A/R. E-billing collection processes require much more collection time because of the time-consuming details of each situation.
Question 10: How do we make our collection efforts a priority throughout the year instead of waiting until the last couple of months?
Answer: 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 pay. But more and more, clients are more savvy and smarter about their payments, and many take considerable time before they pay. Throughout the year, firms must stop tolerating “good clients” who just don’t pay their bills. Although waiting until year-end may work for some institutional clients that typically pay at year-end, many clients require much more effort throughout the year. Measure monthly revenue projections, but more importantly, be realistic about whether the firm is underachieving in its collections goals and if the firm has developed bad collection habits. Help your lawyers understand that when they see problems with older and difficult A/R later in the year, many of these problems actually started early in the year – but there was nothing done about them.
Want to know more? Learn more on our web-site at http://www.clientci.com/
Question 1: How should we evaluate our firm’s accounts receivable management needs and strategy to ensure we are making progress?
Answer: Ask yourselves – are we doing the right job, or do our processes, policies and procedures exist only on paper or in theory? All firms should take the time and effort to evaluate if they have A/R management best practices in place. The key questions to ask are:
- Do you have the appropriate governance and leadership structure in place?
- Do you have meaningful reports and information?
- Do you have a good understanding of how the attorneys are managing their A/R and if they are spending enough time on their collection efforts?
- Do you have the right administrative staff in place, and are they doing the right work the right way?
- Are you measuring their performance by results they are achieving?
- Is the firm regularly collecting its older, difficult A/R?
Answer: Effective receivables management needs to start from the top. Leadership needs to have the ability to tell the attorneys to address their collections, but also understand the need to use other resources to help them achieve results. To begin, firm leadership needs to perform a self-evaluation to figure out what the firm is doing right and what you could be doing better. It needs to do a thorough self-assessment of the firm’s A/R management practices and procedures. Take stock of what you are doing – and why – and evaluate what is and is not working. Look at everything, including how your firm historically has managed its receivables, to determine where changes need to be made based on today’s legal profession and how clients pay. An important aspect of this is assessing whether you have the right people, with the right skills, in place to do the job. This involves two groups – attorneys and A/R staff. Understand that everyone managing receivables must be held to high standards of accountability to ensure progress is being made.
Question 3: We have policies and procedures for our attorneys to follow. Why are they not working?
Answer: This is a difficult dilemma for many law firms. While the financial management sector of a law firm wants to have strong black-and-white procedures that are common in most businesses, they are often challenged because there are so many complicated transactions and relationships that do not lend themselves to black-and-white procedures. All law firms should have written procedures in place concerning accounts receivable management, and communicate their expectations on collections to the attorneys. However, the procedures need to be workable, and for those receivables that must have exceptions, these exceptions should be monitored closely and not be seen as a way to avoid firm collection policies and rules. Giving too much individual autonomy to the attorneys is often the root of a firm’s A/R problems.
Also, firm leadership must step in to help attorneys understand what specific actions they must take to ensure payment, give them a time frame for getting accounts collected, and provide the right professional support to help them.
Question 4: How can we best overcome the backlog of our older, difficult A/R?
Answer: These receivables must be actively pursued until they are paid or determined to be uncollectable. But lawyers should not delude themselves into thinking that they are going to be paid without effort on the part of the firm. There must be dedicated, consistent efforts, with status reports going to the leadership of the firm to ensure progress is being made. Typically, firms focus their efforts on those clients that pay timely and avoid working with older accounts because they take time and are often not pleasant to deal with. Consistent follow-up efforts are the key to making progress with these types of accounts. Law firms are making a big mistake if they think these types of receivables will be paid without working closely with clients and letting clients know their account is being monitored.
Question 5: We have a variety of information regarding our accounts receivable, but the information doesn’t help us determine what we should do and what problems we should address. What kind of A/R management information should we be looking at?
Answer: A/R reports have to give firm leadership real, actionable information; they need to show that collection activity is moving forward and progress is being made on each account. Detailed reports should provide information on whether accounts are actively being pursued, what the payment status is, who is pursuing collections and what success they are having, why clients are not paying, and what steps are being taken to get them to pay.
Question 6: How should we evaluate administrative staff dedicated to managing and collecting our A/R?
Answer: The staff should not be evaluated on how well they keep the attorneys happy by getting them copies of bills and reports; anybody can do these types of administrative work. Rather, determine what age group of receivables are they working: Is their success with good-paying clients that just need reminding, or are they making collecting older, difficult accounts the focus of their efforts? Also, determine how many direct contacts they make daily with clients and how many accounts they are handling. Most importantly, determine how many actual dollars they are collecting, especially the older, difficult accounts that continue to age. If your staff is handling e-bills, identify how many of these accounts they are handling and how long it is taking to resolve these issues.
Question 7: We are reluctant to put an A/R management program in place at our firm because our attorneys don’t want to hurt their client relationships. How can we respect their concerns yet put one in place?
Answer: You need to educate your lawyers on various techniques and strategies for contacting clients that will keep their relationships strong. The best place to start is pursuing those older, difficult accounts. Law firms lose clients by doing poor work or by failing to deliver client service, not by asking clients to pay their bills. Managing receivables will not hurt the relationship as long as it is handled professionally. In today’s economy – and in the face of changing law firm economics – it has become a best practice to contact clients about unpaid bills. Also, to help ensure success, firms should not be reluctant to hire professional staff with experience in accounts receivable management for the legal profession.
Question 8: How can we help clients understand payment expectations and train them to pay timely?
Answer: The business environment has evolved – mindsets have changed and so have business practices of all types. Because law firms are doing business in a different world and making adjustments accordingly, it also requires that they routinely communicate with their clients about unpaid bills to ensure timely payment or resolve problem issues. While past collections experiences should not be ignored, in these changing times it may not be entirely useful as a guide. Although some clients have set rules of when payments will be made, firms must institute regular, steady, professional follow-up of unpaid bills to secure dates of when payment can be expected to help guide future follow-up. By showing clients that the firm is regularly contacting them and monitoring their payment status, they will learn that you are well-aware of their bills and that you expect payment. However, sometimes it becomes the attorney’s problem because he or she is uncomfortable about asking for payment and grants too much leeway about timely payment.
Question 9: What are the main problems law firms are experiencing with the slowdown in payments?
Answer: Cash flow problems and clients hoarding cash (both institutional and non-institutional clients) are the main reasons why clients do not pay or pay slowly. They understand that they can ease their cash flow problems by delaying payment or not paying at all. They may claim that they are not satisfied with the services provided or are unhappy with the results. Further exacerbating the problem, clients may experience “sticker shock” when they expect to receive a bill of a certain size and are surprised when a much larger one arrives. Also, the growth of e-billing and the greater length of time needed to resolve e-bill issues with clients has caused many firms to re-evaluate their collection issues by sorting out e-bill collections from non-e-bill collections. E-billing is a factor delaying payment, resulting in an increase in ageing A/R. E-billing collection processes require much more collection time because of the time-consuming details of each situation.
Question 10: How do we make our collection efforts a priority throughout the year instead of waiting until the last couple of months?
Answer: 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 pay. But more and more, clients are more savvy and smarter about their payments, and many take considerable time before they pay. Throughout the year, firms must stop tolerating “good clients” who just don’t pay their bills. Although waiting until year-end may work for some institutional clients that typically pay at year-end, many clients require much more effort throughout the year. Measure monthly revenue projections, but more importantly, be realistic about whether the firm is underachieving in its collections goals and if the firm has developed bad collection habits. Help your lawyers understand that when they see problems with older and difficult A/R later in the year, many of these problems actually started early in the year – but there was nothing done about them.
Want to know more? Learn more on our web-site at http://www.clientci.com/
Thursday, July 11, 2013
Mid-Year: Taking a Hard Look and Setting Things Straight
As the saying goes -- if it ain't broke, don't fix it. But how do you know your firm's A/R management is not broke -- or doesn't at least need some adjustments?
Now that we are halfway through 2013, law firms can take a hard look at where they stand with collections after the first six months and determine what they have to do over the next six months to achieve their goals. While past collections experiences should not be ignored, in these changing times, those experiences may not be entirely useful as a guide for the rest of the year (and beyond) -- especially if your firm has clear financial goals, and strong collection efforts are required to achieve these goals.
Law firms should not fool themselves into thinking that their A/R management and collection practices can succeed without understanding which moving parts are working and which need closer attention and evaluation. To do so, firms must take concrete steps to ensure that bills are in line for payment.They should review whether accounts are actively being pursued, what the payment status is, who is pursuing collection efforts and what success they are having, why clients are not paying, and what steps are being taken to get them to pay.
There is often a perception that a backlog of ageing receivables will translate into timely payments and the money will simply roll in by year-end. However, firms need to be more realistic about whether they are underachieving their collections goals and, if so, whether it is due to bad collection habits. Everyone needs to understand that when they see problems with older A/R later in the year, these ageing receivables actually started early in the year -- but nothing was done to resolve the payment problems early on. Learn more at our web-site: http://www.clientci.com/
Now that we are halfway through 2013, law firms can take a hard look at where they stand with collections after the first six months and determine what they have to do over the next six months to achieve their goals. While past collections experiences should not be ignored, in these changing times, those experiences may not be entirely useful as a guide for the rest of the year (and beyond) -- especially if your firm has clear financial goals, and strong collection efforts are required to achieve these goals.
Law firms should not fool themselves into thinking that their A/R management and collection practices can succeed without understanding which moving parts are working and which need closer attention and evaluation. To do so, firms must take concrete steps to ensure that bills are in line for payment.They should review whether accounts are actively being pursued, what the payment status is, who is pursuing collection efforts and what success they are having, why clients are not paying, and what steps are being taken to get them to pay.
There is often a perception that a backlog of ageing receivables will translate into timely payments and the money will simply roll in by year-end. However, firms need to be more realistic about whether they are underachieving their collections goals and, if so, whether it is due to bad collection habits. Everyone needs to understand that when they see problems with older A/R later in the year, these ageing receivables actually started early in the year -- but nothing was done to resolve the payment problems early on. Learn more at our web-site: http://www.clientci.com/
Tuesday, June 11, 2013
A Call to Duty: A/R Management Committees Must Be Willing and Able
If ever there was a committee that could offer the firm real value in the form of increased revenues, it is the one that deals with receivables and collections. Law firms should know that collections for legal services do not follow clear-cut payment rules. They require a process that must be followed diligently.
Clients are changing the way they evaluate their legal bills; many no longer simply approve bills and send payments. Therefore, an effective A/R management committee should play a real leadership role and be given legitimate clout to make necessary changes as it sees fit in order to improve collection results. This includes implementing best practices for law firm A/R management, such as the following: Its meeting agenda should focus on reviewing accounts and discussing collection efforts to determine if progress is being made.
If your firm is too small for a committee, ensure that firm leadership understands its role in collections oversight and the need to stay proactive in working and monitoring the collection efforts of both attorneys and administrative personnel. Learn more at our web-site: http://www.clientci.com/
Clients are changing the way they evaluate their legal bills; many no longer simply approve bills and send payments. Therefore, an effective A/R management committee should play a real leadership role and be given legitimate clout to make necessary changes as it sees fit in order to improve collection results. This includes implementing best practices for law firm A/R management, such as the following: Its meeting agenda should focus on reviewing accounts and discussing collection efforts to determine if progress is being made.
- The committee must meet monthly, have a clear agenda for its meetings and be prepared to take as long as necessary at the meeting to perform its duties.
- The right people must be on the committee – people who will devote the necessary time and perform the requisite follow-through when working with the various attorneys.
- It must have reports that detail the status of collection efforts and be able to monitor the collection progress (i.e., ensure the “ball is moving forward”).
- The committee must take a 'roll up your sleeves' approach and spend time reviewing collection efforts for certain accounts at certain balance levels.
- If the firm has collection policies in place, the committee should help ensure these policies are being implemented. If no policies are in place, the committee should make recommendations to help ensure collection efforts are consistent and timely.
Friday, April 5, 2013
Don’t Underestimate the Need for a Strong Law Firm Accounts Receivable Management Program in 2013
Is your firm facing the never-ending challenge of a backlog of ageing accounts receivable? Can that backlog be reduced and managed to prevent this problem from continuously recurring? The answer is yes. But it is equally important for your firm to understand why this continues to happen and what it must do to efficiently manage and collect receivables over the course of the year to help enhance revenue growth.
Just as firms are finding that they need to change how they deliver their services, communicate their strengths to their clients and position themselves in the legal market, they also need to change the way they manage receivables in today’s evolving legal environment. Managing receivables needs to be about taking a proactive approach to collections, but many firms have not embraced the strategies necessary to ensure they get paid timely – or at all – for their services. Firms must see managing receivables as a true part of their revenue enhancement growth and ensure that their collection efforts are actually working.
Start actually managing your receivables rather than simply expecting payments to be made. Law firms are accustomed to looking at receivables information only on a superficial level, instead of spending time looking beneath and beyond the numbers to determine when and if payment can be made. Now is a good time to take a new approach.
Perform a self-evaluation to figure out what you are doing right – and what you could be doing better. Do a thorough self-assessment of your A/R management practices and procedures. Take stock of what you are doing – and why – and evaluate what is and is not working.
Many firms that have prided themselves on having the right infrastructure in place discover that what they have is flawed; some discover they really don’t have much of an infrastructure at all. Look at everything, including how your firm historically has managed its receivables, to determine where changes need to be made.
An important aspect of this is assessing whether you have the right people, with the right skills, in place to do the job. This is two groups – the attorneys and the A/R staff. Even firms that have procedures in place will not understand the progress they are making unless there is an evaluation system so they can review the progress of these two groups. Also, determine if actual payments are being made from their efforts, including payments from the old, difficult accounts that you have allowed to age too long. Understand that everyone managing receivables must be held to high standards of accountability to ensure progress is being made.
Understand why clients are not paying their bills in a timely way. Clients have changed their views and expectations of legal services. They are also changing the way they evaluate their legal bills, and many are no longer simply approving bills and sending payments. There has been a growing tendency toward ageing receivables in the legal profession because of the various transactions and relationships that do not lend themselves to strict payment terms. However, firms must now also address all the reasons why clients are not paying that underlie the A/R numbers, and continually work with clients to get their bills paid.
Why aren’t clients paying? It all comes down to problems with cash flow. However, such problems are often masked, intentionally or not, by other issues, such as poor service, bills that are higher than expected, even bills that were never received. From the start of the relationship, firms and their lawyers must understand their clients so that, when problems do arise, they can get to the source of the problems and resolve them. Although aged receivables are part of the financial report, it is all the stories underneath those numbers that firms need to get a handle on, so they understand why clients are not paying.
Make sure you are looking at the right information. Most firms understand the payment pattern of clients and expect certain delays, which they can accept. But too often they let these exceptions magnify to begin a growth trend of ageing A/R. Law firms tend to lose sight of the numerous reasons clients have for not paying timely. This is often coupled with a reliance on sophisticated A/R management software, but a failure to build the right reports, ones that measure progress and evaluate the efforts being performed by the lawyers and staff. Remember – software is a good tool to have, but it won’t collect your receivables and should not be viewed as the solution to your collection problems.
Most firms have gotten used to looking at an abundance of financial information and ageing reports to evaluate their progress in managing receivables. Although some of this information is good, many reports do not show when payment can be expected. At minimum, you need to know if an account is actively being pursued, what the payment status is, who is pursuing the collection efforts and whether they are getting results, why clients are not paying, and what needs to be done to get them to pay. Categorize receivables to determine who is handling the collection efforts, when can you expect payment, whether it is problematic, how good the chances are that you will get paid and whether particular receivables are simply not collectible.
Don’t let receivables age too long. Although many clients are taking longer to pay their legal bills, ageing receivables are a moving target, one that must be monitored and managed closely to prevent ageing from going too far. So often firms see receivables build up over 90 days and decide that they have a collection problem. More often than not, the truth is they had a problem much sooner but never addressed it. The problem of receivables not being managed adequately is magnified because this applies to many accounts, not just a handful. Ensure that clients are contacted early in the ageing process, and that follow-up is consistent and professional. This keeps open the channels of communication and will help your firm determine early if there is going to be a problem getting a bill paid.
Don’t underestimate the payment power of small balances. All balances are fair game to be pursued. In the past, many firms have had a tendency to focus collection efforts on larger balanced accounts. However, the beauty of pursuing small balances is that there are many to pursue and often clients will have the cash flow to pay off those lower amounts without feeling they are straining their budget. Depending on the size of your firm and the nature of its practice, small balances can range accordingly.
Institute a workable program to manage accounts receivable now – long before year-end approaches and the pressure starts growing to show that progress is being made. Accounts receivable management should be a large part of your firm’s revenue enhancement plans, and the firm’s leaders must be proactive in evaluating current efforts and making necessary changes. Stop managing your accounts receivable as you have in the past and move forward to implementing solutions that are required in today’s legal profession.
Client Connection assists law firms of all sizes throughout the United States by furnishing accounts receivable management services, developing practical receivable programs, training law firm staff in effective collection methods and executive placement of professional collections managers. Learn more on our web-site at: http://www.clientci.com/
Just as firms are finding that they need to change how they deliver their services, communicate their strengths to their clients and position themselves in the legal market, they also need to change the way they manage receivables in today’s evolving legal environment. Managing receivables needs to be about taking a proactive approach to collections, but many firms have not embraced the strategies necessary to ensure they get paid timely – or at all – for their services. Firms must see managing receivables as a true part of their revenue enhancement growth and ensure that their collection efforts are actually working.
Start actually managing your receivables rather than simply expecting payments to be made. Law firms are accustomed to looking at receivables information only on a superficial level, instead of spending time looking beneath and beyond the numbers to determine when and if payment can be made. Now is a good time to take a new approach.
Perform a self-evaluation to figure out what you are doing right – and what you could be doing better. Do a thorough self-assessment of your A/R management practices and procedures. Take stock of what you are doing – and why – and evaluate what is and is not working.
Many firms that have prided themselves on having the right infrastructure in place discover that what they have is flawed; some discover they really don’t have much of an infrastructure at all. Look at everything, including how your firm historically has managed its receivables, to determine where changes need to be made.
An important aspect of this is assessing whether you have the right people, with the right skills, in place to do the job. This is two groups – the attorneys and the A/R staff. Even firms that have procedures in place will not understand the progress they are making unless there is an evaluation system so they can review the progress of these two groups. Also, determine if actual payments are being made from their efforts, including payments from the old, difficult accounts that you have allowed to age too long. Understand that everyone managing receivables must be held to high standards of accountability to ensure progress is being made.
Understand why clients are not paying their bills in a timely way. Clients have changed their views and expectations of legal services. They are also changing the way they evaluate their legal bills, and many are no longer simply approving bills and sending payments. There has been a growing tendency toward ageing receivables in the legal profession because of the various transactions and relationships that do not lend themselves to strict payment terms. However, firms must now also address all the reasons why clients are not paying that underlie the A/R numbers, and continually work with clients to get their bills paid.
Why aren’t clients paying? It all comes down to problems with cash flow. However, such problems are often masked, intentionally or not, by other issues, such as poor service, bills that are higher than expected, even bills that were never received. From the start of the relationship, firms and their lawyers must understand their clients so that, when problems do arise, they can get to the source of the problems and resolve them. Although aged receivables are part of the financial report, it is all the stories underneath those numbers that firms need to get a handle on, so they understand why clients are not paying.
Make sure you are looking at the right information. Most firms understand the payment pattern of clients and expect certain delays, which they can accept. But too often they let these exceptions magnify to begin a growth trend of ageing A/R. Law firms tend to lose sight of the numerous reasons clients have for not paying timely. This is often coupled with a reliance on sophisticated A/R management software, but a failure to build the right reports, ones that measure progress and evaluate the efforts being performed by the lawyers and staff. Remember – software is a good tool to have, but it won’t collect your receivables and should not be viewed as the solution to your collection problems.
Most firms have gotten used to looking at an abundance of financial information and ageing reports to evaluate their progress in managing receivables. Although some of this information is good, many reports do not show when payment can be expected. At minimum, you need to know if an account is actively being pursued, what the payment status is, who is pursuing the collection efforts and whether they are getting results, why clients are not paying, and what needs to be done to get them to pay. Categorize receivables to determine who is handling the collection efforts, when can you expect payment, whether it is problematic, how good the chances are that you will get paid and whether particular receivables are simply not collectible.
Don’t let receivables age too long. Although many clients are taking longer to pay their legal bills, ageing receivables are a moving target, one that must be monitored and managed closely to prevent ageing from going too far. So often firms see receivables build up over 90 days and decide that they have a collection problem. More often than not, the truth is they had a problem much sooner but never addressed it. The problem of receivables not being managed adequately is magnified because this applies to many accounts, not just a handful. Ensure that clients are contacted early in the ageing process, and that follow-up is consistent and professional. This keeps open the channels of communication and will help your firm determine early if there is going to be a problem getting a bill paid.
Don’t underestimate the payment power of small balances. All balances are fair game to be pursued. In the past, many firms have had a tendency to focus collection efforts on larger balanced accounts. However, the beauty of pursuing small balances is that there are many to pursue and often clients will have the cash flow to pay off those lower amounts without feeling they are straining their budget. Depending on the size of your firm and the nature of its practice, small balances can range accordingly.
Institute a workable program to manage accounts receivable now – long before year-end approaches and the pressure starts growing to show that progress is being made. Accounts receivable management should be a large part of your firm’s revenue enhancement plans, and the firm’s leaders must be proactive in evaluating current efforts and making necessary changes. Stop managing your accounts receivable as you have in the past and move forward to implementing solutions that are required in today’s legal profession.
Client Connection assists law firms of all sizes throughout the United States by furnishing accounts receivable management services, developing practical receivable programs, training law firm staff in effective collection methods and executive placement of professional collections managers. Learn more on our web-site at: http://www.clientci.com/
Wednesday, March 13, 2013
The Ides of March Receivables Are Upon Us
Spring is around the corner and now is a good time to address those older accounts that have been hanging around since last year going nowhere.
There are many reasons why ageing receivables continue to occur that firms need to address. Behind most receivables over 90 days past due is a story about why the account has not paid – including cash flow problems, complicated relationships that have stagnated and many more. Make the time early in the year to help take some of the pressure off collections efforts for the rest of the year. It is never too early to help ensure your firm’s financial success!
Here are a few tips for addressing your receivables early in the year, so that you see better results sooner rather than later:
Urge firm leadership to be decisive and step in to take action – Management must work through receivable issues and not just accept attorney statements like: “I’m working on it” or “I’m in contact with my client about this.” It’s time to change these old habits. You need to make it clear about the goal of the firm to collect its receivables timely, as well as the firm’s expectations of its attorneys. Although there needs to be a fair amount of latitude with certain client relationships, firms must be careful not to give an inch and see it turned into a mile.
Give the leadership in your firm something to work with – Whether it is a senior lawyer who oversees all A/R efforts or a committee, provide them with useful information about collections efforts, including who is responsible for specific collections and what progress is being made. Information about A/R must look behind and underneath the numbers to find out the true story of payment probability.
Project realistic timeframes for collecting receivables – If it appears that a given receivable will not be collected by the deadline, let management know. Most importantly, let the attorney know that you are letting management know. Throughout the year, firms should be tracking payments, so they know as early as possible if payments are not going to be made, and they can determine why and what can be done.
We all know the old saying: money never sleeps. Now is the time of the year for a wake-up call. Learn more on our web-site at http://www.clientci.com/
There are many reasons why ageing receivables continue to occur that firms need to address. Behind most receivables over 90 days past due is a story about why the account has not paid – including cash flow problems, complicated relationships that have stagnated and many more. Make the time early in the year to help take some of the pressure off collections efforts for the rest of the year. It is never too early to help ensure your firm’s financial success!
Here are a few tips for addressing your receivables early in the year, so that you see better results sooner rather than later:
Urge firm leadership to be decisive and step in to take action – Management must work through receivable issues and not just accept attorney statements like: “I’m working on it” or “I’m in contact with my client about this.” It’s time to change these old habits. You need to make it clear about the goal of the firm to collect its receivables timely, as well as the firm’s expectations of its attorneys. Although there needs to be a fair amount of latitude with certain client relationships, firms must be careful not to give an inch and see it turned into a mile.
Give the leadership in your firm something to work with – Whether it is a senior lawyer who oversees all A/R efforts or a committee, provide them with useful information about collections efforts, including who is responsible for specific collections and what progress is being made. Information about A/R must look behind and underneath the numbers to find out the true story of payment probability.
Project realistic timeframes for collecting receivables – If it appears that a given receivable will not be collected by the deadline, let management know. Most importantly, let the attorney know that you are letting management know. Throughout the year, firms should be tracking payments, so they know as early as possible if payments are not going to be made, and they can determine why and what can be done.
We all know the old saying: money never sleeps. Now is the time of the year for a wake-up call. Learn more on our web-site at http://www.clientci.com/
Monday, February 11, 2013
The New Year Is No Longer So New.
The New Year Is No Longer So New. Time to Face Up to the
Accounts Receivable Challenges of 2013
Now that we are well into February, it is time for you and your firm to figure out where you are -- and where you need to be heading in the months remaining this year. Planning seems to be difficult for most firms, especially when it comes to accounts receivable management, but it is vital if you want to increase collections and reduce receivables.
Ask yourselves the following questions:
• What are our accounts receivable goals for 2013?
• What information do we need to have a firmer grasp of the status of our accounts?
• How do we know if our current collection efforts are effective? Or are we just assuming that, since we have initiatives, they are working?
Now, early in the year, is a good time to assess your efforts, figure out who has which responsibilities and evaluate how well they are doing them. The bottom line question: what steps can we take to reduce the duration of receviables? Learn more on our web-site at http://www.clientci.com/.
Accounts Receivable Challenges of 2013
Now that we are well into February, it is time for you and your firm to figure out where you are -- and where you need to be heading in the months remaining this year. Planning seems to be difficult for most firms, especially when it comes to accounts receivable management, but it is vital if you want to increase collections and reduce receivables.
Ask yourselves the following questions:
• What are our accounts receivable goals for 2013?
• What information do we need to have a firmer grasp of the status of our accounts?
• How do we know if our current collection efforts are effective? Or are we just assuming that, since we have initiatives, they are working?
Now, early in the year, is a good time to assess your efforts, figure out who has which responsibilities and evaluate how well they are doing them. The bottom line question: what steps can we take to reduce the duration of receviables? Learn more on our web-site at http://www.clientci.com/.
Wednesday, January 2, 2013
Yes, Virginia, There are Older Receivables that Can Be Collected in December
With only a few weeks left in the year, your firm should now be in a position to implement its year-end collection efforts. The newer (and, therefore, easier) receivables are the accounts that we tend to gravitate to in December to ensure those accounts are paid. But firms should not forget about the older, more difficult accounts that have not paid during the course of the year.
Often law firms will acknowledge problems that are slowing down or preventing payment on certain accounts, without taking the time and action to re-visit these accounts to ensure collection efforts are succeeding. The truth is, however, that working on these types of accounts can not only result in found money for the firm, but also will free the firm from carrying these accounts into the next year. Have the stronger, more experienced members of your collection team focus on the older, tougher accounts. Also don't let the number of over-90-day accounts grow by neglecting to work the smaller delinquent balances. You may be surprised how significant a portion of the firm's accounts portfolio is comprised of accounts with smaller balances.
Managing accounts receivable and collection efforts is a step-by-step process, requiring the right processes and the right people in order to see results.
Happy Holidays to everyone from all of us at Client Connection. We wish you a happy and successful 2013, and we look forward to continuing to offer you helpful tips and ideas in our e-mails and newsletters. Learn more on our web-site... http://www.clientci.com
Often law firms will acknowledge problems that are slowing down or preventing payment on certain accounts, without taking the time and action to re-visit these accounts to ensure collection efforts are succeeding. The truth is, however, that working on these types of accounts can not only result in found money for the firm, but also will free the firm from carrying these accounts into the next year. Have the stronger, more experienced members of your collection team focus on the older, tougher accounts. Also don't let the number of over-90-day accounts grow by neglecting to work the smaller delinquent balances. You may be surprised how significant a portion of the firm's accounts portfolio is comprised of accounts with smaller balances.
Managing accounts receivable and collection efforts is a step-by-step process, requiring the right processes and the right people in order to see results.
Happy Holidays to everyone from all of us at Client Connection. We wish you a happy and successful 2013, and we look forward to continuing to offer you helpful tips and ideas in our e-mails and newsletters. Learn more on our web-site... http://www.clientci.com
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