Coming Down the Home Stretch for 2016: Here Are a Few Last-Minute A/R Collection Tips

Don't look now, but year-end is rapidly creeping up on you and your firm. All those questions about accounts receivable are front and center -- and take on a greater urgency as December 31 stares you in the face. Remember, do not allow your lawyers to delude themselves into thinking that they are going to be paid unless receivables are pursued. Just as important: they also must be reminded that clients are savvy -- and smarter at year-end, too -- regarding when -- and if -- they will pay.
Here are a few tips to help:

• Schedule a meeting with each attorney who needs assistance getting his or her accounts collected. Figure out what help they need, and how you can give them that help.
• Compile a list of clients who are expected to pay by year-end -- and when payments are expected. Regularly update your attorneys when collections come in, and let them know if clients pass their commitment date, so the appropriate attorney can take the necessary action.
• Give the attorneys a checklist to help ensure payments are made. This will include verifying clients have copies of all outstanding invoices. Find out if clients are closing their offices around the holidays. Provide clients with the necessary information to get their money to you, whether it is routing instructions if payment is to be sent by wire, or an overnight express mail account number for quick delivery.
• Walk the halls. Check in with attorneys on their collections progress. The fact of your visits will remind them that collections are a priority.

The holidays are never a restful time in a law office, but if you want peace of mind when that clock strikes midnight, take the time to take these steps. And don't forget, you can always learn more on our web-site at: http://www.clientci.com/

Happy Holidays and Happy New Year!

False Assumptions Law Firms Make in Managing A/R at Year End -- And How to Avoid Them

Let's be honest. Among the tasks that take lawyers away from practicing law, is there anything they want to do less than managing accounts receivable? Then why do we think they are going to enjoy it any more at year end? Yes, it is crunch time, time for all hands on deck. But let's face it -- many attorneys don't like it, many are not good at it, and many just want to avoid it altogether. 
The following are four common assumptions law firms make at year end in managing receivables -- and how to avoid them:

Assumption #1 -- Lawyers collect their bills timely and efficiently.  Actually, lawyers are concerned about servicing their clients, and not about when they are going to get paid. They have so many hours in the day and they prefer to spend it practicing law. Although managing accounts receivable should be among their year-end priorities, similar to the rest of the year, it's not. Keep the communication to the lawyers about what they should be doing constant but simple, and don't underestimate the need to provide them with ideas, techniques and strategies that will help their efforts.

Assumption #2 -- Clients understand year-end payment obligations, and all you need to do is remind them.  Seriously, you don't think it's that simple, do you? Collecting accounts is a process that must be followed very methodically and diligently if firms expect consistent results. Although waiting until the last few weeks of the year may work for a few clients that have a regular December payment history, most clients require much more vigilant efforts. If you don't spend the time routinely following up with them -- why do you think they will just pay?

Assumption #3 -- Client will call if they have a problem with your bills.  This often proves untrue. Some clients will, in fact, be quick to call if they perceive a problem. Most, however, will not -- for many reasons: they are uncomfortable talking about money, or they are confused by the bill and don't know where to begin. The most prevalent reason is -- they are either unprepared or unable to pay. So remember, the phone works both ways -- the problem will only escalate into next year if you don't have a conversation now and put it behind you.

Assumption #4 -- The most effective way to communicate with those who have not paid is through e-mail. E-mails can be erased and ignored, especially when it involves making payment. A brief telephone conversation can communicate to clients a sense of urgency concerning your need for payment, and allow you to learn quickly if there are any problems or concerns -- and what it will take to get the bill paid by December 31.

Nine weeks left in 2016. Are you kidding me??? Visit us online at http://www.clientci.com

A/R Management Software: Using It for What It Should Do, Not What You Hope It Will Do

A/R management software is not the solution to a law firm's collection problems nor is it a substitute for the consistent personal contacts, techniques and strategies needed to get bills paid. There is no getting around the fact that collections is "roll up your sleeves" work.
The right management software can support and complement your firm's efforts to collect A/R. But make no mistake: software alone is not the answer. Many firms have believed, mistakenly, that by installing collection software, their receivables problems are over. In many situations, the use of software just hides the truth: that firms are searching for the answers to how they can better collect their receivables without first honestly evaluating what they are doing wrong.
They lose sight of the fact that the software is simply a tool, though it is potentially a powerful one when used correctly.  More important is the strategy the firm adopts in using the software and the people who are using it.
What software should do is track day-to-day collection efforts -- what tasks need to be completed each day -- and provide firm leadership with real, actionable information to show that collection activity is moving forward and progress is being made on each account. The detailed reports from the software 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. And, for firms that have a large number of client matters, it helps track the higher balances that require action.
No matter what tools or infrastructure you have in place, collections will not succeed unless your firm understands the stories behind the numbers -- the reasons that clients are not paying. Information can be a powerful tool -- but it's the people and their know-how that will get accounts paid.

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

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 proess 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).

We invite you to learn more on our web-site at http://www.clientci.com/

That's Not My Job: How Law Firms Fail to Take Responsibility for Accounts Receivable Management

When does a firm decide it needs to be more realistic about whether it is underachieving in collecting older receivables over 90 days (and whose job is it to make this happen?)? At the beginning of the year? Maybe, because with the start of the new year, firms have the time to make corrections on the previous year's collection mistakes and have time to implement a new plan. However, it's tough to get people moving in that direction after an exhausting year-end push. 

At the end of the year? Maybe, but it is going to take time to dig through these accounts and determine when and if they can be collected.

Which leaves us where we are today -- in the middle of the year, and logically, a good time to get started.  BUT mid-year is not a good time because...

Are you getting the picture? No time is ideal for handling this job. And, adding fuel to the fire is that at most law firms, everyone shares the responsibility for A/R management. Which, of course, means that no one ultimately has complete responsibility.

Individual autonomy can be a great asset when tackling problems that need fixing. But autonomy can also be a disadvantage when it doesn't help grow revenue.

Over the course of the past 5 to 10 years, law firms have strategically made large investments on the front end, attracting and maintaining strong clients only to lose profits on the back end by leaving revenue on the table, in the form of unpaid receivables from clients that require hands-on attention.

So what are you to do? You need to start somewhere, take an aggressive approach to getting information to firm leadership and keep it in front of them 12 months of the year.

Take concrete monthly steps to ensure that receivables over 90 days are in line for payment. Review whether accounts are actively being pursued and, if not, why; 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.

Yes.  This takes time, tenacity and organizational skills.  So, if it's really not your job, figure out whose job it is and make sure they do it right. Time is of the essence: six months left in 2016 and the clock keeps ticking. Learn more on our web-site at: http://www.clientci.com/

Talk to you next month!

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

The well-known management consultant, Peter Drucker, once said: "The most important thing in communication is hearing what isn't said."

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.

Find out more about Client Connection on our web-site at: http://www.clientci.com
Talk to you next month!

Confronting Common Mistakes in Managing A/R: It's Time to Face Up to Facts

All talk, no action. That would be a good description of the way some firms choose to address (or, more accurately, NOT address) their accounts receivable issues. There are various problems and stories behind A/R numbers that can delay payment, and there may not be anything that can be done about them. But do not assume that is typically the case.
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 most concerned about servicing their clients and are not giving a lot of thought to when they are going to get paid. Moreover, they are not held accountable for not collecting receivables and they are given too much autonomy.
• Clients understand payment obligations -- Cilents 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. Be as smart as your clients and factor that into your thinking.
• Collection problems begin when receivables 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.
• Administrative staff is in place to help manage and collect our A/R -- Do they have other accounting duties and/or are they spending their A/R time mailing reminder statements, generating reports or attending to attorneys' requests? They must have the expertise, desire and time to do the job. And their work must be measured by how many contacts they make daily and how many dollars they are collecting, especially the older accounts.

Understanding and addressing some basic misconceptions won't solve all your ageing A/R problems, but it will help your firm move forward in the right direction. Learn more on our web-site at http://www.clientci.com/

AR Management - Start 2016 Strong

The business environment has evolved. Mindsets have changed, as have business practices. Because law firms are doing business in a different world, it also requires that they routinely communicate with their clients about unpaid bills to ensure timely payment or resolve problem issues. 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.

At this time of year, frequent questions we hear include:

How do we make our collection efforts a priority throughout the year instead of waiting until the last couple of months?

Throughout the year, stop tolerating “good clients” who don’t pay their bills. Although waiting until year-end may work for some institutional clients, many clients require effort throughout the year. Be realistic about whether the firm is underachieving in its collections goals and has developed bad collection habits.

How should we evaluate administrative staff dedicated to managing and collecting our A/R?

Do not evaluate your staff on how well they keep the attorneys happy by getting them copies of bills and reports; anybody can do such administrative work. Instead, determine:

• What age group of receivables are they working?
• Are they successful with good-paying clients that just need reminding, or are they making collecting older, difficult accounts the focus of their efforts?
• How many direct contacts are they making daily with clients?
• How many accounts are they handling?

And, most important:

• How many actual dollars are they collecting (especially the older, difficult accounts that continue to age)?

How can we overcome the backlog of our older, difficult A/R?

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.

We invite you to learn more on our web-site at http://www.clientci.com/