Managing Receivables: Pursue Them or Accrue Them

Moving the Ball Forward During Unpredictable Economic Times

Law firm clients may take longer to pay their legal bills because of the recent economic slide  Although you may be already seeing  changes in payment patterns, these new delays can trigger and magnify a growth trend in your firm’s ageing accounts receivable -- unless you take precautions to manage these payment situations. Act promptly and don’t lose sight of reasons clients are not paying.

Most firms are accustomed to looking at an abundance of financial information and ageing reports to evaluate their progress in managing receivables. Although some of this information may have been useful in the past, those reports may not have dug deep enough beneath the numbers to provide a complete and up-to-date progress status on payments. At minimum, you need to know:

• if an account is actively being pursued
• what the payment status is and when can you expect payment
• who is pursuing the collection efforts and whether they are getting results 
• why clients are not paying, and 
• if not, what needs to be done to get them to pay.

Also, as these difficult financial times continue, your firm needs to learn as soon as possible whether accounts have become payment problems, what the chances are that you will get paid and whether particular receivables are simply not collectible.

Do not wait for a build-up of accounts receivable over 60 or 90 days before you decide that you have a collections problem. More often than not -- and especially now -- the truth is that you had a problem much sooner - but you did not address it quickly. You can learn more on our web-site at: https://clientci.com/.

It's a Rough Road Ahead -- Are You Prepared for the Ride?

Managing Accounts Receivable in an Ever-Changing, Spiraling Economy

No one has to tell you that 2020 is going to be a tough year for every law firm. There will be numerous challenges, and collecting your accounts receivable will certainly be a priority.  With the Coronavirus pandemic now squarely affecting law firms being paid for their services, accounts receivable management will require a very hands-on approach. 

The reality is that there are a number of unsettling circumstances in today’s economy, and firms must change their approach to receivables management if they want to be successful in pursuing all accounts. If your firm has an accounts receivable management strategy, now is the time to re-evaluate that strategy – top to bottom.  If you do not have an A/R management plan – creating one needs to be a priority.

The business environment is evolving every day, mindsets are changing rapidly and so are business practices of all types. Law firms must start routinely communicating with their clients about unpaid bills to determine payment dates, resolve problems that are preventing payments and discuss payment options. 

Start instituting regular, steady, professional follow-up of unpaid bills to secure dates of when payment can be expected. By showing your clients that the firm is regularly contacting them and monitoring their payment status, they will know you are well-aware of their bills and that you expect payment – or, helping them develop a payment plan based on their cash flow needs. Also, understanding when payments are expected will help determine your follow-up dates if payment is not made.

These times are stressful for everyone, so be understanding of your clients’ own challenges. But managing accounts receivable with clients that are faced with an unexpected, on-going cash flow dilemma is a step-by-step process that must be closely monitored. 

Past collections experience should not be ignored, but firms will need to address best practices for these economic times. It is a new beginning for all of us. For more information, please visit us at https://clientci.com/.