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 2018. For more information about us, please visit our web-site; http://www.clientci.com

Autumn Is Upon Us. Do You Feel That Chill in the Air?

Are you ready for the fourth quarter accounts receivable collection effort?  See for yourself by answering these questions:

1. What are the ways to make sure your firm gets paid for the work it does?
   (a) Identify attorneys who have difficulty collecting their receivables throughout the year and give them the help they need.
   (b) Generate a list of clients that have historically paid their bills during the last 30 days of the year.
   (c) Don't depend too much on historical patterns of bill collection.
   (d) All of the above.
   
2. How do we get a jump in making A/R management and collection efforts a priority throughout the year instead of waiting until the last quarter?
   (a) Give your attorneys the individual autonomy to collect their A/R.  They will eventually make it a priority.
   (b) Be realistic about whether the firm is underachieving in its collection efforts and goals and if the firm has developed bad A/R management habits.
   (c) Focus on clients that pay timely and avoid older accounts because they take too much time
   (d) Keep sending clients reminder statements and letters.
   
3. There are a number of reasons why clients do not pay their bills on time.  Which is NOT one of them?
   (a) The attorneys don't send the bills in a timely fashion. The clients figure that, if the attorneys can't send the bills in a timely way, they don't need to pay in a timely way.
   (b) The client experiences "sticker shock" and is surprised by the size of the bill.
   (c) They can't find a stamp.
   (d) The client is experiencing cash flow problems.

Answers: 
1.   D
2.   B
3.   C

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Do You Know How to Improve A/R Management in Your Firm?

Take this quiz.  It will give you some insight on how well your firm is dealing with its accounts receivables.
(1) ______ and ______ follow-up efforts are the key to making progress with A/R over 90 days.
(2) Informative A/R reports need to provide firm leadership accurate information that shows collection activity is ______ on each account.
(3) If administrative stafff are assigned or hired to help with collection efforts, determine how many actual ______ they are collecting, especially the ______ accounts.
(4) Law firms lose clients by doing ______ work or ______ client service -- not by asking clients to pay their bills.


Answers:
(1) Dedicated and consistent efforts are needed on accounts over 90 days. Mistakenly firms tend to 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.
(2) Reports that help a firm understand collection activity is making progress should include information on whether accounts are being actively pursued, what the payment status is, who is pursuing collections and what success they are having, why clients are not paying, and what steps need to be taken to get them to pay.
(3) Staff should be evaluated on actual dollars they are collecting and the number of older accounts they are handling, along with their knowledge of how best to pursue collection efforts. Staff should not be evaluated on such things as how well they:  send copies of bills to paying clients, multi-task other accounting duties, or provide attorneys with A/R reports.
(4) Poor work and failing to deliver client service are factors that directly contribute to clients not paying. However, managing receivables by directly contacting clients about unpaid bills will not hurt relationships -- as long as the communication is handled professionally.

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

Check Your Accounts Receivable Management IQ

Answer the following questions "true" or "false."

(1) If you have a bill that goes past 90 days unpaid, you are seeing the first sign of potential payment problems.

(2) Attorneys are the only people in your law firm who should have responsibility for collecting receivables.

(3) Many attorneys fear that their clients consider it unprofessional to ask to be paid for their services.

(4) Clients will pay once you remind them.

ANSWERS:

(1) False. Actually, the first sign occurs after just 30 days when clients have not paid.

(2) False. It's true that attorneys know about their client relationships, but a growing number of firms are looking to professionals who have the appropriate expertise, experience, communication skills and professionalism to maintain and enhance strong client relationships while getting bills paid.

(3) True. It's true that some attorneys feel that way, but in today's world, clients tend to be very receptive to appropriate contact. The business environment has evolved and law firms must make adjustments accordingly to routinely communicate with clients to ensure timely payment or resolve problem issues.

(4) False. Frequently, they do not. Make no mistake: collections is a process and must be done timely, diligently and promptly in order to achieve the desired results.

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It Doesn't Pay to Keep Quiet About Your Accounts Receivable

Renowned business management consultant Peter Drucker once said, "The most important thing about communication is hearing what isn't said." So if ageing receivables are not being paid -- why not?!?!?  Law firms should be hearing this silence loud and clear.

In fact, you can expect this quiet to become louder as law firms get closer to year-end.  Compoundng this problem is clever clients who use the silence to their advantage -- by paying slowly or not at all.

Attorneys hold paramount their clients' interests, but they often don't give them the same attention by talking with them about expecting payment at a certain time. Yes, there are legitimate reasons that prevent timely payment, including complicated transactions, equally complex business relationships and disputed resolutions, but these should be the exception, not the rule. Personal, one-to-one communication efforts are essential to getting paid:

• Clients reason that if the firm has waited months to try to collect unpaid bills, they can wait to pay the firm. The longer a firm waits to talk with their clients about unpaid bills, savvy clients realize, the more likely the bills will end up being discounted or forgotten altogether.
• Don't underestimate the need to learn why clients have yet to pay their bills. For example: cash flow problems, "sticker shock" on the size of the bill, and uncertainty about what services were provided are prime reasons why open communication is essential to getting paid.
• Attorneys may lose clients by doing poor work or by failing to deliver client service -- NOT by asking clients to pay their bills.
• Most clients will not call if they have a problem with a bill.  Many are uncomfortable talking about money. It is the attorney's responsibility to initiate the call.

Would you like to learn more. Please visit our web-site at: http://www.clientci.com

What's That Elephant in the Room??... It's Your Firm's Ageing A/R, Sitting There Doing Nothing

The elephant typically starts to be more noticeable at the end of the second quarter of the year when ageing receivables remain uncollected -- and the firm starts to closely monitor where it is in revenue as compared to where it wants to be by the end of the year. Time starts to creep up on every firm, but the fact remains: that elephant needs to be turned into cash. And there is no better time than halfway through the year to start. Yes -- everyone is busy, but so are your clients, who are not making it a priority to get your bills paid.

Take a step back and determine what changes need to be made considering your firm's size, culture, practice areas and management objectives. It's June. Here are three areas to work on to light a fire under your firm to improve collection efforts and A/R management:

• Analyze what is going on in your firm. Have we relied too much on clients paying at their own discretion? Does the make-up and culture of our firm permit attorneys to go it alone in how they manage their receivables? Have we built an administrative A/R management infrastructure without measuring how well it is accomplishing payments?
• Have an honest conversation with the leadership of the firm, explaining why the firm needs to do a better job managing its A/R. Recognize that you cannot entirely revamp your collection practices overnight -- but you can start making the changes that are needed now and over the next six months.
• Start having meaningful conversations about what needs to be done. Let your attorneys know what the firm is trying to accomplish and show them best practices and strategies that will help to move collections forward. Tell them the firm wants to take decisive action early in the ageing process to help combat the ageing A/R that does not get paid. Help them understand that they need to collect the A/R themselves, but also to ask for assistance sooner rather than later from the firm's A/R management team.

It is not too late to kick the elephant out of the room -- but it is waiting on you to make the first move. Want to learn more? Visit our web-site at http://www.clientci.com

It Takes a Village: Attorneys Aren't Alone in Collecting Receivables

When it comes to accounts receivable, one of the "elephants in the room" is the awkward situation that arises when attorneys believe they are the only ones who can contact their clients about their receivables. We understand that inclination, and that makes sense in the best of all worlds. But there is a problem with the idea. Many lawyers really do not like to deal with collections, nor do they want to have to deal with them. And, truth be told, many just aren't very good at it.

Attorneys have a professional relationship with their clients and are the logical people to talk to the clients. They also may have little confidence in letting others at the firm contact those clients.

Attorneys have the knowledge to talk the talk and walk the walk regarding the matter for which they have been retained by the client. However, it is important for the partners to recognize that they are not in this by themselves. They should have a team to support them, comprised of people with the appropriate communication skills and the professionalism to allow them to build strong relationships while getting bills paid. If your firm does not have such people on staff, it should retain those with experience who can provide the collection strategy that will preserve the attorney-client relationships, analyze payment problems and understand solutions that apply to different practice areas and client situations.

Inspire your attorneys to have confidence in the people on their team who will help them with collection efforts. That message can, and should, come from the top. Firm management can lead by example, demonstrating to the attorneys that it has confidence in such professionals. Learn more at http://www.clientci.com.

Keeping the Focus on A/R in the Second Quarter

Based on over 20 years of experience of accounts receivable management for the legal profession, we know that it is critical that law firms institute regular, steady, professional follow-up of unpaid bills to secure dates of when payment can be expected.  This will help guide future follow-up to increase timely payments and decrease ageing, uncollectable receivables.

As you keep your focus on A/R, consider these two questions:

We have policies and procedures for our attorneys to follow.  Why aren’t they working as well as we’d hoped?

This is a difficult dilemma for many law firms.  While your firm’s financial managers want 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 A/R 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. 

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

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 focused 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 firm 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.

Want to learn more? Please visit us online at: http://www.clientci.com

Start 2017 Strong!

A message from our president as we begin planning to manage A/R in 2017

Based on over 20 years of experience of accounts receivable management for the legal profession, we know that it is critical that law firms institute regular, steady, professional follow-up of unpaid bills to secure dates of when payment can be expected. This will help guide future follow-up to increase timely payments and decrease ageing, uncollectable receivables.

By showing clients that your 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 the beginning of the 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)?

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 our firm's accounts receivable management needs and strategy to ensure we are making progress?

Ask yourselves and the leadership around you – are we doing the right job, or do our processes, policies and procedures exist only on paper? 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:

1. Do we know how the attorneys are managing their A/R and if they are spending enough time on their collection efforts? And, realistically, are they willing to make changes?
2. Do we have the right administrative staff in place and are they doing the work that can be measured of how many dollars they are actually collecting, including the older, difficult account, versus time spent on administrative duties?
3. Do we have meaningful reports and information to help the leadership of the firm understand how well the firm is managing its A/R and decide on what changes need to be made?
4. Is the firm regularly collecting and reducing older A/R well over120 days past due?

Help your firm get off to the right start in 2017!
Lear more on our web-site at: http://www.clientci.com