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Monday, December 8, 2014

Steady The Ship Going into Year-End - A Few Last Words Regarding A/R

Happy Holidays! As we all prepare to begin the somewhat frantic job of getting things done by the end of December, we all have our to-do list and only have a certain number of days to accomplish what's on that list. Fortunately, one thing that many of us have learned over the years is how to prioritize. At the top of the to-do list for many law firms is collecting accounts receivable to meet or exceed budget by December 31. With limited time to complete this task, it's important that we focus on certain items over which we have control.

Here are a few tips to help your firm achieve its year-end collection goals:

• Take the time to meet with those attorneys who may need assistance to determine what help they need getting their accounts collected (I'm sure you know who they are). Don't just drop in -- schedule a meeting in advance (not to last longer than 30 minutes) to go over their A/R and find out how you can give them some hands-on help.
• Put together a list of clients that are expected to pay by year-end and the exact date of when payments are anticipated. Ensure each attorney receives a regular progress report and alert them if the commitment date has passed without receiving payment so they can make appropriate follow-up contact as December 31 approaches.
• Provide the attorneys a checklist of items that will help ensure payments are made, such as: verifying clients have copies of all outstanding invoices, determining if client offices will be closed the last week of December (to ensure payments have been processed before closing), providing the attorneys routing instructions if payment is to be sent by wire, or an overnight express mail account number for quick delivery, etc.
• Just as important, regularly take the time to walk the halls and check in with the attorneys on their progress during the last few weeks. Your visits will remind them of what they have to do.

Best wishes to you and your firm from everyone at Client Connection for an enjoyable holiday season and a prosperous 2015. We look forward to sharing our monthly tips with you again starting in February 2015. Please visit our web-site at http://www.clientci.com.

Friday, November 7, 2014

"Bringing Home the Bacon" - Now is the Time to Rally Collection Efforts

Successful entrepreneur Mary Kay Ash once said, “If you think you can, you can. If you think you can’t, you're right.” 

When approaching year-end collection efforts, we know what needs to get done. However, getting there is often another issue. While we all have 52 things on our plates to accomplish by December 31, year-end collection efforts still remain a priority for law firms. It takes time and effort to walk the halls and open the lines of communication to determine when and if receivables will be paid by year-end, yet it must be done. This is the time of the year when firms must engage in consistent and continuous communication to ensure clients are being contacted and payment commitments are being recorded.

Here are a few things to remember:

• Start knocking on doors and schedule time to talk with attorneys – No, I’m not saying send an e-mail and wait for attorneys to respond (or, more likely, not respond at all). Having face-to-face and one-on-one meetings can get attorneys to start dealing with collections and delegate collection responsibilities over the next two months. In a matter of 15 to 30 minutes per attorney, you can put together a game plan for the receivables that need to be collected by year-end.
• Help attorneys examine trends and patterns that will identify clients with payment problems – When meeting with attorneys, take time to review clients’ billing and payment histories, including the dates and amounts of last payments. Some clients may be dictating to the firm their payment terms simply because the attorneys have not properly taken control of the collection efforts. 
• Give the attorneys a few tips and ask that they provide you feedback when talking to clients  - If the attorneys offer to write letters to their clients, beg them not to. Inform them that collection efforts this time of year require direct and diligent contact. Ask your attorneys to provide realistic projections of how much they expect to collect by year’s end. Offer to provide any assistance they need, but also let them know that the firm’s leadership will not turn a blind eye on collections mismanagement.
The countdown to year-end begins!
Learn more on our web-site at http://www.clientci.com/

Tuesday, October 14, 2014

It's October. Do You Know Where Your Receivables Are?

Where has the year gone? Yes, no matter how you look at it, year-end has snuck up on us again. The last quarter of the year is front and center, and we are again faced with year-end collection efforts. How did we get here? It doesn't matter! Let's just get moving.

Here are a few essential questions and answers to help you get accounts collected before December 31:

• What role should firm leadership play at year-end?  Firm leaders need to be able to tell the attorneys to address their collections, but also understand the need to provide them with other resources to help them achieve results during the last quarter.  Assess whether you have in place the right people, with the right skills, to do the right job.
• How can firms overcome the backlog of older, difficult A/R to be collected by December?  Because the older receivables require more time and effort, you had better start now.  Do not allow your lawyers to delude themselves into thinking that they are going to be paid unless the firm clearly makes the effort to pursue the older accounts.
• What information should we be paying particular attention to at year-end?  Detailed reports should answer key questions: whether accounts are actively being pursued, what the payment status is, who is pursuing collection and what success they are having, why clients are not paying, and what steps are being taken to get them to pay.
• How do we proactively pursue receivables at year-end while respecting attorneys' concerns about hurting client relationships?  Remind your attorneys that many other business partners are contacting their clients for this reason, so it is entirely reasonable for your firm to do the same.  Law firms lose clients by doing poor work or by failing to deliver client service, not by asking clients to pay their bills. 
• What problems do law firms experience at year-end concerning the slowdown in payments?  Cash flow problems and clients hoarding cash are the main reason why clients do not pay or pay slowly.  They understand that they can ease their cash flow problems by delaying payment or by not paying at all.
There’s a chill in the air – but don’t make the mistake of waiting to get your collection plan in place until it is freezing cold in December.  Get going! You may be surprised what you can accomplish – if you start doing it NOW!

Learn more on our web-site at: http://www.clientci.com/

Monday, September 8, 2014

Talking the Talk, Walking the Walk

If you can "talk the talk" about accounts receivable, that will help you "walk the walk" to ensure payment.

The famous management consultant, Peter Drucker, once said: “The most important thing in communication is hearing what isn’t said.”  In A/R management for law firms, many collection problems are a result of not knowing why receivables have not been paid, only to try too late to resolve payment problems that could have been avoided. Firm leadership has ultimate responsibility for collections, but to do their job, they need to know all pertinent and meaningful information; armed with that information, they can take the necessary action to ensure the firm is enhancing its revenue as much as possible.

As we all know, “managing” accounts receivable is critical to cash flow management. However, just as important to the success of a firm's A/R program is devising appropriate methods to understand why clients have not paid, determining if and when payment will be made and discussing the right protocol to stay on top of collection efforts to ensure progress is being made. 

Consistently discussing collection efforts and A/R issues may not lead to all accounts being collected timely. After all, law firm receivables are filled with complicated transactions, relationships and client engagements that do not lend themselves to a black-and-white collection time frame. But information is a valuable commodity when it prompts questions about what has to be done to move the ball forward. The lack of information can be a detriment when firms want to know why payments have not been made. Too often, firms wait too long to follow up with accounts and discover either that there is nothing they can do to collect those accounts or that they must make a drastic discount just to salvage something.

Even if you think your firm is doing a good job communicating about collections efforts, select some older accounts to learn what progress is being made. It may make you speak up!

Learn more on our web-site at http://www.clientci.com/.

Tuesday, August 12, 2014

Ending the Summer With Your Eyes on the Fourth Quarter

It’s August, and the dog days of summer are upon us. No matter how we look at the weather – it’s hot! With this in mind, it’s often a time of the year when you are trying to take those last few days of vacation, while knowing that there are those ongoing projects on your desk waiting for your attention. One of those is addressing the question:  how do we improve our collections efforts going into the last few months of the year?

Although it may be too soon to gear up for the year-end “push,” it is a good time to start thinking about how you can help your firm achieve its 2014 collections goals. Because of the changing economic landscape within the legal profession over the past few years and the enhanced billing and payment requirements by clients, it would be beneficial to ensure your firm is up to the year-end task now instead of waiting for December surprises. Here are a few things to think about:

1.    Start reviewing now those older, difficult receivables over 120 days and determine how much will be paid by year-end – These receivables will require more time and a much more concerted effort to work through, process and set payment expectations by December 31. Determine who -- if anyone -- is working these accounts, and ensure they are giving them the priority necessary so that they are paid by year end. Help your firm “find money” from these older accounts.

2.    Talk with the firm’s leadership to help plan and clarify how the firm wants to approach collections going into the last quarter and the last month. Assess how the firm has done things and consider whether changes need to be made this year to address the backlog of A/R. As you know, planning is so much easier and productive when your firm is not holding everyone's feet to the fire at the eleventh hour. Help the firm stay on course with its collection efforts by having someone who is forward-thinking keep his “eye on the ball” -- with the "ball" being the firm's financial goals -- in the last quarter.  And….

3.    As a part of these discussions with the firm leadership, highlight where receivable problems stand now and what must be achieved to correct these issues and stay on course over the next few months.

At many law firms, everyone shares the responsibility for accounts receivable management. Which, of course means that no one ultimately has complete responsibility. Help your firm take ownership now to ease the burden over the next few months.

Keep the air conditioner on high! Learn more on our web-site at http://www.clientci.com/

Tuesday, July 15, 2014

Actions Speak Louder Than Words: Confronting Common Mistakes in Managing A/R

Walt Disney once said: "the way to get started is to quit talking and begin doing." I'm not sure if he was thinking about lawyers not facing up to unpaid bills and trying to get them paid, but his advice is certainly relevant to addressing ageing accounts receivable. Yes, there are various issues and stories behind A/R numbers that can delay payment, and there may not be anything that can be done about them. But let's not make these exceptions the norm.

Frequently, firms are not doing a good job at collecting their A/R, but they cannot admit it, or they are unsure of how to move forward or where the problems lie, or they believe -- in error -- that they are doing a good job and the money will just begin rolling in. Take time to recognize some common misconceptions and the reality behind them:
  • Most attorneys collect their bills timely and efficiently -- Actually, attorneys are concerned about servicing their clients and are not giving a lot of thought to when they are going to get paid. On top of this, they are not held accountable for not collecting receivables and they are given too much autonomy.
  • Clients understand payment obligations -- Clients are smart.  Because they realize that lawyers and law firms are poor A/R managers, it is they, rather than the lawyers, who dictate when -- and, sometimes, if -- they will pay.
  • Collection problems begin when receivable problems age past 90 days -- Yes, many clients have their own policy dictating when they pay their bills.  But if you have not been paid within 30 days, you've gotten the first sign that you may have a collections problem.
  • Clients will call if they have a problem with your bills -- Some clients will, in fact, be quick to call if they perceive a problem. Most, however, will not because they are uncomfortable talking about money, they are confused about the bill and services, they are unprepared for the amount they owe or find themselves unable to pay.

Managing A/R need be neither painful nor unpleasant. Understanding and addressing some basic misconceptions won't solve all your aging A/R problems, but it will help you and your firm move forward.
Learn more on our web-site at: http://www.clientci.com/

Tuesday, June 24, 2014

At Halfway Through the Year, Is Your A/R Glass Half-Empty or Half-Full?

We are now halfway between the relief of getting through last year's end-of-year collections frenzy and the start of this year's!  It does not have to be that way.

Evaluating your firm's accounts receivable management collection efforts six months into the year gives you the opportunity to see what is and is not working, so you can make improvements. Developing strong, effective techniques to deal with ageing accounts can be a major factor in helping your firm meet its 2014 financial goals. Don't make the mistake of assuming receivables will be paid without having the right components in place and ensuring those components are getting the job done.

As a start, make sure you are addressing the real issues. Take a step back to assess your A/R objectives and policies, procedures and personnel you are using to achieve your objectives. Be realistic about whether the job is getting done and look to make changes as needed. Accounts receivable age rapidly unless you keep your eye on the ball and put in processes that get the job done in collecting your receivables timely.

As we head into true summer, we hope you do allow yourself a little time to stop and smell the roses -- or whatever you like to do to enjoy the warm months. Get to know us better on our web-site at http://www.clientci.com/

Saturday, May 17, 2014

How Do You Respond When Someone Pops the Big Question?

Five months into 2014, you may be getting asked -- "How are we doing with collections?" When faced with this question, you may feel compelled to provide a detailed, numbers-driven answer, with benchmarks, percentages, etc. This kind of financial response may be useful, but there may be more important indicators that require you to look behind the numbers to give you and your leadership a clearer picture of how well the firm's A/R management processes and procedures are working.

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 valuable, many reports do not show when payment can be expected. Law firms tends to lose sight of the numerous reasons clients have not paid. This is often coupled with a failure to create the right reports, ones that measure the progress and evaluate the efforts of the lawyers and staff. 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 the receivables to determine who is handling the collection efforts, when you can expect payment, whether they are problematic and how good the chances are that you will get paid (and whether particular receivables are simply not collectible).

The person asking the question about collections is most likely the managing partner or another senior attorney who oversees the firm's progress. It is important you direct their attention to situations where efforts are falling short, so they can help get collections back on track. We invite you to learn more on our web-site http://www.clientci.com

If you are going to the ALA conference in Toronto, May 17-May 21, stop by to see us at Booth #713. I would enjoy saying hello.

Best Regards,

Jake

Wednesday, April 23, 2014

Get Back on Course: Manage Your Firm's Receivables and Stop Running in Different Directions

We do know why we have A/R management system and collection efforts -- to get results.  Why would we think otherwise?  We manage A/R to get paid.


Winston Churchill once said, "However beautiful the strategy, you should occasionally look at the results." Yet while many law firms, in theory, want and try to have a results-oriented A/R management structure, they are often working with a system that is moving in all different directions.  It is like trying to herd a bunch of cats. Between attorneys doing what they want to do, clients paying at their leisure (if at all) and collection staff not being proactive with their efforts, many law firms are left with a growing backlog of receivables and no idea how to deal with them. More troubling, though, is that they have a false sense of security; they believe that their collection efforts are working just fine.

To help get your A/R management efforts back on track, here are a few tips to remember:

1. Start by understanding why your receivables have aged -- Yes, you do have a collections problem with your older A/R, but you had it very early -- perhaps as soon as you sent out the first bill. The firm was just not proactive with its collection efforts early in the ageing process.


2. Stop making the exception the norm -- Many A/R systems for law firms break down because policies and procedures are created for attorneys to follow. But policies exist only on paper. Too many exceptions are given, so rules are broken and there is little enforcement.


3. Make your collection efforts proactive instead of reactive -- Many firms will wait for clients to contact them about questions regarding a bill before they inquire about the payment status. If clients don't contact the firm, the firm believes -- mistakenly -- that there is no problem and the client will pay. Firms give way too much professional courtesy.


Learn more by visiting our web-site at http://www.clientci.com.

Wednesday, April 2, 2014

Come On In. The Water's Fine!

When it comes to managing accounts receivables, if your firm is like many that we know, it has one foot in and one foot out of the water. It has not wholly committed to jumping in. You may be cutting corners, without fully embracing all the accounts receivable management efforts that you need to.


Too often, firms get to December 31 and breathe a sigh of relief that they made it to year-end safely. Yes, firms may have met budget, but too often they left too many unpaid receivables, which will continue to age and become increasingly difficult to collect. They choose to ignore the amount that they have failed to collect by turning a blind eye during the year to how they could perform better.


The first part of the year is critical for evaluating how your firm can do better to diligently manage and collect its receivables.


While the year is still relatively young, take five steps that ensure a full commitment to managing your receivables – and will start showing results quickly on your bottom line.

1. Limit the autonomy you give individual attorneys
2. Build an accounts receivable management program, from the time WIP is billed through when invoices are paid in full
3. Recognize that the effort is year-round
4. Make sure your clients know that it is you who are in control
5. Don't count on the past to predict the future – While past performance should not be ignored, it may be less useful for purposes of ensuring firms will have a successful year unless the right changes are made with A/R management.


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 by visiting our web-site at http://www.clientci.com.

Thursday, February 27, 2014

One Foot In and One Foot Out: Why Your Law Firm Needs to Jump Into the Water With Its A/R Management Strategy

When it comes to managing accounts receivables, if your firm is like many that we know, it has one foot in and one foot out of the water. It has not wholly committed to jumping in. You may be cutting corners, without fully embracing all the accounts receivable management efforts that you need to. Too often, firms get to December 31 and rationalize that they made it to year-end safely. Yes, firms may have met budget, but too often they left too many unpaid receivables, which will continue to age and become increasingly difficult to collect. They choose to ignore the amount that they have failed to collect by turning a blind eye during the year to how they could perform better. The first part of the year is critical for evaluating how your firm can do better to diligently manage and collect its receivables. While the year is still relatively young, we recommend that you take the five steps that ensure a full commitment to managing your receivables – and will start showing results quickly on your bottom line.


1. Understand and Limit the Complete Autonomy You Give Individual Attorneys
For all sorts of reasons – good and bad – firms continue to give their attorneys too much control of collecting receivables from their clients. This is often done without ensuring the attorneys are making progress and spending the necessary time to collect their A/R. Identify your problem attorneys, your problem practice groups and your problem clients – and take action. Take the time to meet with these attorneys on a regular basis and ask them to tell you specifically when bills can be expected to be paid. If they do not meet those dates or don’t have a good explanation, make sure others in the firm are available to help. Attorneys are given too much leeway in dealing with their clients during the first 11 months of the year, only to have their feet held to the fire during the year-end sprint. The traditional culture of forgiveness needs to be replaced with a culture of high expectations to increase revenue through better collection efforts throughout the year. If attorneys cannot make the time to monitor payment status, the firm must have collections professionals to help monitor it for them. The attorneys are vital to assess the clients’ ability and inclination to pay. They do not necessarily have to be the ones getting them to do so.


2. Connect the Dots, Manage Each Step and Believe in The Process
Stop throwing spaghetti against the wall to see what sticks. Take appropriate steps to build an accounts receivable management program, from the time WIP is billed through when invoices are paid in full. Manage it throughout the course of the year, and don’t wait until the last quarter – or, even worse, the last month – of the year to pay attention. Too often, firms want the results of a strong accounts receivable management program, without putting in the time and effort needed to make it happen. There is no doubt that firms want to collect their receivables timely and want to prevent their receivables from aging out. But they need to recognize that the collection process is long and, sometimes, tedious – and requires daily attention. There needs to be a clear plan of attack, clear assignment of responsibilities and clear expectations and ramifications if those involved in the process do not take ownership of their responsibilities.


3. Recognize That the Effort is Year-Round
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. 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, many institutional and non-institutional clients require much more effort year-round. Be realistic about whether the firm is underachieving in its collections goals and efforts and if the firm has developed bad collection habits. Taking a hard look at how the firm and lawyers are underachieving with A/R management can often put the firm on the right path to improving cash flow with the right collection efforts.


4. Take Control Away from Your Clients
Do not give your clients the opportunity to dictate the terms of payment. From the start of the relationship, make clear your clients know what to expect from you – and what you expect in return. Let them know that you are open to hearing any questions or concerns they may have, but that if they expect prompt service from you, you expect prompt payment from them.


5. Don’t Count on the Past to Predict the Future
While past performance should not be ignored, it may be less useful for purposes of ensuring firms will have a successful year unless the right changes are made with A/R management. If a firm has not addressed its collection issues and is unhappy with the results it is getting, it is time to try something different. Remember the definition of insanity: making the same mistake over and over, hoping for a better result.


If your firm has created an accounts receivable management program, take the time to set attainable goals, and evaluate your success in achieving them. Do not allow your collections infrastructure to balloon into an inefficient bureaucracy with lots of committees and attorneys who are focused on issues that do not lead to collections.


Law firms can no longer accept that ageing receivables are simply a part of doing business. Those firms that address and actively work at getting results from their collection efforts will see a real payoff in the end. For those that do not – it will be a long year.


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 by visiting our web-site at http://www.clientci.com/.

Wednesday, January 1, 2014

Start Making Plans for A/R Solutions in the First Quarter of 2014

The success of efforts to improve accounts receivable management depends on the ability to change law firms’ attitudes regarding payments and teach them why it is necessary to keep bills from aging too long.  This requires overcoming common misconceptions during the first few months of the new year:
  • A/R problems begin when receivables start aging past 90 days – If bills have not been paid within 90 days or without a reasonable explanation from clients, your payment problems have already begun. The longer a law firm waits to collect unpaid bills, the more likely the firm will end up getting paid less – or not at all.
  • Lawyers damage their relationships by asking clients to pay their bills – You lose clients by doing poor work or by failing to deliver excellent client service, NOT by asking clients to pay their bills.  Contacting clients early in the aging process can actually strengthen relationships.
  • Clients will call if they have a problem with a bill – They can, but they won’t, for various reasons:  discomfort talking about money, confusion about the bill or reluctance to admit they don’t have the means to pay.
  • Sophisticated collection software is the answer to all our collection problems – Software is a terrific tool and can provide meaningful information if a firm has a strong understanding of what reports are needed, but it is only as good as the people using it.
  • We have the right reports to help analyze our receivables – Many firms still use reports that offer insufficient or inappropriate information to pursue offenders, whether those offenders are the clients or the attorneys.

Happy New Year from everyone at Client Connection!
Visit our web-site at
http://www.clientci.com/