You may be excused if you confuse that shock of cold for the arrival of Fall. That chill going up your spine right about now may be the annual autumnal trepidation that comes with the need to ratchet up collection efforts in preparation for that last frantic dash to December. If your firm is like most, you probably have a lot of question marks concerning end-of-year collections. There is no time like the present to make sure that 2012 turns out to be as financially rewarding as possible. Following are 10 steps to take to help ward off that chill and make this a profitable year:
1. Identify attorneys who have difficulty collecting their receivables throughout the year.
You know who they are. They are probably the same attorneys who have problems turning in their timesheets and getting their bills done. It’s a safe bet that they will have similar problems collecting at year end. Either take that responsibility away from them – or provide them with the assistance they need to be successful.
2. Generate a list of clients that have historically paid their bills during the last 30 days of the year, and try to get a sense whether these clients are again anticipating paying in full at year end. Don’t wait until the last minute to contact clients – and find out whether they will be paying your bills in full or just some invoices. At the same time, generate a list of new clients with whom you will be experiencing year end for the first time. Since there is no history, make your best determination whether payments from these clients are on track.
3. Get your arms around your receivables by determining what clients make up the largest dollar amounts of A/R. The best way to determine what size dollar accounts make up the majority of receivables over 60 days is to run various balance level reports, from $10,000 to $100,000. Then check the payment history of these clients to find out how quickly they have paid previous bills throughout the year, including year-end.
4. Don’t depend too much on historical patterns of bill collections. In the past, you could safely assume that collections would increase as the year progressed. That is no longer necessarily true, especially when an unstable economy is causing many clients to adjust their payment patterns. Now, on a monthly basis, measure monthly revenue projections, and be realistic about whether the firm is underachieving in its collection goals. There has to be a month-by-month game plan, and it is essential that the plan be realistic. Remember, cash flow problems are still the number one reason both non-institutional and institutional clients do not pay their legal bills.
5. Project realistic timeframes for collecting older, more difficult receivables. You should be aware that receivables over 180 days past due have a 50% chance of ever being collected, and the percentage continues to drop as the receivables age. These types of accounts must be pursued much more diligently then just writing a letter. Firms can figure that only so much of these accounts will be collected at year end – determine the status and move on to brighter collection pastures. Some of these older clients have realized that no one has been trying to collect bills throughout the year. Work with the attorney to figure out if these clients need to be pursued and, if so, how.
6. Identify bills to determine their collection status. Categorize receivables as either:
(1) collectable
(2) problematic, but potentially collectable, or
(3) have no realistic chance of getting collected.
7. Keep bills coming regularly and consistently. Remember that clients, too, are enduring the tougher economic climate. They may be delaying payments as a result of their own cash flow problems. Don’t exacerbate the problem by neglecting to send bills out timely. If the lawyers are too busy – or disorganized – to get their bills out on time, give them whatever assistance they need. Clients will delay payments if bills are not received when they expect them and do not logically provide the information they need to put the bills in line for payment by year end. Also, if they have a particular problem with a bill – they will wait for you to call rather than calling
you to discuss it.
8. Look at the right reports – and review them regularly. Use your collection software to its
full potential, not merely as a sophisticated follow-up calendar. Your software should help you compare work in process to accounts receivable to recent payments in order to determine a true payment history and what needs to be done.
9. Make sure that the collection committee – or whomever your firm has given responsibility for this work – has clear objectives and direction. For example, they should know that it is their responsibility to speak to delinquent clients directly to find out the status of payment rather than simply reviewing reports and gathering information for the attorneys. Both those with direct responsibility for collections and those overseeing these efforts (perhaps a collections committee) should be in agreement on which clients they are pursuing and the dollar amounts they are working to collect.
10. The person responsible for performing collections should meet one-on-one with the partners to determine the status of their A/R and exactly what they are doing about it. These meetings should provide vital information for the management of the firm to determine the true collection status of the receivables. Remember, partners in charge of managing collections also have a busy practice and require administrative staff that has a solid rapport with the attorneys to gather this information.
Learn more on our web-site - http://www.clientci.com/
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Monday, December 3, 2012
Friday, November 2, 2012
Value -- and Evaluate -- Your Non-Lawyer Rainmakers
With law firms heading toward November and the year-end crunch, now is a good time to evaluate whether the firm has the right administrative staff, and determine whether they are doing the right work the right way. Although firms may think they should wait until after year-end, now is the best time to start building the evaluation to help the bottom line.
• Are these staff members reporting weekly on the accounts for which they are responsible, including the age of the accounts, how much they have collected and what they have in line for payment?
• Do you know how much they are working on actual collections, as compared to other duties less important to their primary purpose (i.e., generating reports, sending out reminder statements,
providing information that the lawyers request)?
• Are they knowledgeable enough to provide the right reports and management information to the firm that will explain the progress of collection efforts?
Staff much be held to a high level of accountability, but for different reasons than the attorneys. If the firm chooses to have staff contacting clients directly, the staff must not have too many other responsibilities that keep them from dedicating themselves to this mission. Beware of staff that prefers doing clerical work to making telephone calls to clients.
Your collection team member must have a strong understanding of different kinds of transactions and different practices, and what each requires. They must know – and have access to – the right resources for getting bills paid. They must be expected to handle collections on a day-to-day basis. Equally important, they must be evaluated to insure that they are providing concrete results.
Recognize collection managers as the “rainmakers” they can be. Although they are making rain in a different way than the attorneys, the value they can add to the bottom line can be equally great.
• Are these staff members reporting weekly on the accounts for which they are responsible, including the age of the accounts, how much they have collected and what they have in line for payment?
• Do you know how much they are working on actual collections, as compared to other duties less important to their primary purpose (i.e., generating reports, sending out reminder statements,
providing information that the lawyers request)?
• Are they knowledgeable enough to provide the right reports and management information to the firm that will explain the progress of collection efforts?
Staff much be held to a high level of accountability, but for different reasons than the attorneys. If the firm chooses to have staff contacting clients directly, the staff must not have too many other responsibilities that keep them from dedicating themselves to this mission. Beware of staff that prefers doing clerical work to making telephone calls to clients.
Your collection team member must have a strong understanding of different kinds of transactions and different practices, and what each requires. They must know – and have access to – the right resources for getting bills paid. They must be expected to handle collections on a day-to-day basis. Equally important, they must be evaluated to insure that they are providing concrete results.
Recognize collection managers as the “rainmakers” they can be. Although they are making rain in a different way than the attorneys, the value they can add to the bottom line can be equally great.
Monday, October 1, 2012
Are You Ready for the Sprint to Year-End?
Cash flow problems have always been the number one reason why clients do not pay their bills to law firms. And now because of an uncertain economy, this problem has become more prevalent. Last to be paid are bills perceived as being non-essential to business operations. The harsh reality is that legal bills typically fall into this category. For many businesses and individuals, paying their legal bills does not carry the same urgency as payment to others. Additionally, firms are faced with e-billing issues that require a more thorough A/R management strategy.
Clients are smart. They know very little will happen if they don’t pay their legal bills on time. Law firms have conditioned their clients to pay at their convenience, without penalty. Clients often disguise their cash flow problems through delay tactics in order to buy more time, or avoid paying altogether.
Law firms should have a sense of urgency to shorten their collection cycle, not only because of the uncertain future, but also because it is critical to determine if and when client will pay in order to understand how it will affect cash flow within the firm. Here are a few tips to remember:
• Establish Realistic Time Frames – Don’t take the approach that older receivables will be paid without the right approach. Be aware that receivables over 120 days have a 50% chance of being collected, and the rate continues to drop as receivables age. If you have any hope of getting paid, these accounts must be pursued diligently; don’t wait for a client meeting, a phone call or a letter. Work with the attorneys to figure out if the clients need to be pursued, and if so, how and by whom.
• Give Your Attorneys Less Autonomy – Attorneys are often reluctant to follow up on receivables – or even to have others help them do so – because they fear that by pushing to collect outstanding receivables they will jeopardize their chances for more and better work. Many firms are losing revenue by giving attorneys too much individual autonomy in making sure bills get paid. We wonder when firms will stop tolerating “good clients” who just don’t pay their bills. When are they going to stop permitting clients to pay slowly or not at all?
• Start Addressing the Real Issues Going Into Year End -...So your firm can hit the ground running with productive A/R changes to start 2013. Firms have created accounts receivable management programs, but many do a poor job of setting attainable goals and measuring the success of their efforts. Take a step back to evaluate your objectives, and the policies, procedures and personnel you are using to achieve these objectives. Be realistic about whether or not the job is getting done and look to make changes accordingly. Accounts receivable will age rapidly unless you keep your eye on the ball and put in processes that get the job done in collecting your receivables timely.
Law firms have a great deal at stake when they see receivables sitting there….and sitting there…..and sitting there. Start making the necessary adjustments and help your firm improve its revenue, cash flow and profitability objectives. Learn more on our web-site - http://www.clientci.com/
Clients are smart. They know very little will happen if they don’t pay their legal bills on time. Law firms have conditioned their clients to pay at their convenience, without penalty. Clients often disguise their cash flow problems through delay tactics in order to buy more time, or avoid paying altogether.
Law firms should have a sense of urgency to shorten their collection cycle, not only because of the uncertain future, but also because it is critical to determine if and when client will pay in order to understand how it will affect cash flow within the firm. Here are a few tips to remember:
• Establish Realistic Time Frames – Don’t take the approach that older receivables will be paid without the right approach. Be aware that receivables over 120 days have a 50% chance of being collected, and the rate continues to drop as receivables age. If you have any hope of getting paid, these accounts must be pursued diligently; don’t wait for a client meeting, a phone call or a letter. Work with the attorneys to figure out if the clients need to be pursued, and if so, how and by whom.
• Give Your Attorneys Less Autonomy – Attorneys are often reluctant to follow up on receivables – or even to have others help them do so – because they fear that by pushing to collect outstanding receivables they will jeopardize their chances for more and better work. Many firms are losing revenue by giving attorneys too much individual autonomy in making sure bills get paid. We wonder when firms will stop tolerating “good clients” who just don’t pay their bills. When are they going to stop permitting clients to pay slowly or not at all?
• Start Addressing the Real Issues Going Into Year End -...So your firm can hit the ground running with productive A/R changes to start 2013. Firms have created accounts receivable management programs, but many do a poor job of setting attainable goals and measuring the success of their efforts. Take a step back to evaluate your objectives, and the policies, procedures and personnel you are using to achieve these objectives. Be realistic about whether or not the job is getting done and look to make changes accordingly. Accounts receivable will age rapidly unless you keep your eye on the ball and put in processes that get the job done in collecting your receivables timely.
Law firms have a great deal at stake when they see receivables sitting there….and sitting there…..and sitting there. Start making the necessary adjustments and help your firm improve its revenue, cash flow and profitability objectives. Learn more on our web-site - http://www.clientci.com/
Sunday, September 2, 2012
Are You Ready for the Fourth Quarter?
It may still feel like summer, but the fourth quarter is fast approaching, and if you are like most firms, you are starting to give more serious thought to collecting your accounts receivable. Now is the right time to determine what needs to be addressed going into year-end.
You probably have a number of question marks regarding end-of-the-year collections. Your firm's ability to increase its cash flow and, in turn, increase profitability, cannot be taken for granted. However, the economy and its effect on your clients must be taken into consideration. One way to increase cash flow is to increase the flow of new work. Equally important, however, is to make sure that the firm gets paid for the work it does. Here are a few things that could help:
1. Ensure that firm leadership has the right information and reports – Get your arms around your receivables and payment commitments. Reports should provide good information about which clients are going to pay and when; if clients are not going to pay, and why not; and what needs to be done to keep the ball moving forward. There’s nothing more frustrating than having reports that only provide numbers, without the story behind those numbers.
2. Do not depend too much on historical patterns of bill collections -- Whether or not payment patterns will change may not be determined until year-end and all the checks are accounted for, especially when the economy is causing many clients to adjust their payment patterns. Be realistic about slowdowns in payments. And, to take this one step further….
3. Know your clients -- Understand those that have historically paid their bills at year-end, and try to gauge whether these clients are again anticipating paying in full at year-end. At the same time, know who your new clients are, with whom you will be experiencing year end for the first time. Since you have no history with them, make your best determination whether payment from these clients is on track.
4. Project realistic timeframes for collecting older, more difficult receivables – Don’t underestimate the effect payment of these receivables can make. But collections efforts need to be made sooner rather than later -- which means getting started now, not in December.
The chill that you will feel after Labor Day may be the traditional autumnal trepidation that comes with the need to ratchet up collection efforts in preparation for the last quarter. Are you ready?
For more information on accounts receivable management, check our website -- www.clientci.com
You probably have a number of question marks regarding end-of-the-year collections. Your firm's ability to increase its cash flow and, in turn, increase profitability, cannot be taken for granted. However, the economy and its effect on your clients must be taken into consideration. One way to increase cash flow is to increase the flow of new work. Equally important, however, is to make sure that the firm gets paid for the work it does. Here are a few things that could help:
1. Ensure that firm leadership has the right information and reports – Get your arms around your receivables and payment commitments. Reports should provide good information about which clients are going to pay and when; if clients are not going to pay, and why not; and what needs to be done to keep the ball moving forward. There’s nothing more frustrating than having reports that only provide numbers, without the story behind those numbers.
2. Do not depend too much on historical patterns of bill collections -- Whether or not payment patterns will change may not be determined until year-end and all the checks are accounted for, especially when the economy is causing many clients to adjust their payment patterns. Be realistic about slowdowns in payments. And, to take this one step further….
3. Know your clients -- Understand those that have historically paid their bills at year-end, and try to gauge whether these clients are again anticipating paying in full at year-end. At the same time, know who your new clients are, with whom you will be experiencing year end for the first time. Since you have no history with them, make your best determination whether payment from these clients is on track.
4. Project realistic timeframes for collecting older, more difficult receivables – Don’t underestimate the effect payment of these receivables can make. But collections efforts need to be made sooner rather than later -- which means getting started now, not in December.
The chill that you will feel after Labor Day may be the traditional autumnal trepidation that comes with the need to ratchet up collection efforts in preparation for the last quarter. Are you ready?
For more information on accounts receivable management, check our website -- www.clientci.com
Wednesday, August 1, 2012
Do You Have the Right Collections Team in Place?
As we mentioned in our last blog post, law firms should evaluate whether they have the right team in place.
Determine whether the firm has the right administrative staff, and judge whether they are doing the right work the right way. Are these staff members reporting weekly on the accounts for which they are responsible, the age of the accounts, how much they have collected, and what they have in line for payment? Do you know how much they are working on actual collections, as opposed to other duties less important to their primary purpose (i.e., generating reports, sending out reminder statements, providing information that the lawyers request, etc.)? Are they knowledgeable enough to provide the right reports and management information to the firm that will explain the progress of the collection efforts?
Staff must be held to a high level of accountability, but for different reasons than the attorneys. If the firm chooses to have staff contacting clients directly, the staff must not be distracted by too many other responsibilities that keep them from dedicating themselves to the primary mission. Beware of staff that prefers doing clerical work to making telephone calls to clients.
Your collection team members must have a strong understanding of different kinds of transactions and different practices, and what each requires. They must know -- and have access to -- the right resources for getting bills paid. They must have a strong understanding of payment for both institutional and non-institutional clients. They must be expected to handle collections on a day-to-day basis, but, equally important, they must be evaluated to insure that they are providing concrete results.
December will be here soon! Are you staffed and ready?
Recognize collection managers as the "rainmakers" they can be. Although they are making rain in a different way, the value they can add to the bottom line can be equally great.
For more information on accounts receivable management, check our website -- www.clientci.com.
Determine whether the firm has the right administrative staff, and judge whether they are doing the right work the right way. Are these staff members reporting weekly on the accounts for which they are responsible, the age of the accounts, how much they have collected, and what they have in line for payment? Do you know how much they are working on actual collections, as opposed to other duties less important to their primary purpose (i.e., generating reports, sending out reminder statements, providing information that the lawyers request, etc.)? Are they knowledgeable enough to provide the right reports and management information to the firm that will explain the progress of the collection efforts?
Staff must be held to a high level of accountability, but for different reasons than the attorneys. If the firm chooses to have staff contacting clients directly, the staff must not be distracted by too many other responsibilities that keep them from dedicating themselves to the primary mission. Beware of staff that prefers doing clerical work to making telephone calls to clients.
Your collection team members must have a strong understanding of different kinds of transactions and different practices, and what each requires. They must know -- and have access to -- the right resources for getting bills paid. They must have a strong understanding of payment for both institutional and non-institutional clients. They must be expected to handle collections on a day-to-day basis, but, equally important, they must be evaluated to insure that they are providing concrete results.
December will be here soon! Are you staffed and ready?
Recognize collection managers as the "rainmakers" they can be. Although they are making rain in a different way, the value they can add to the bottom line can be equally great.
For more information on accounts receivable management, check our website -- www.clientci.com.
Sunday, July 1, 2012
Money is Not Going to Just Drop Out of the Sky
Among the tasks that lawyers are asked to take time out from practicing law for, is there anything they want to do LESS than managing accounts receivable? Many lawyers find it tough enough to spend time sending bills. Facing unpaid bills -- and trying to get them paid -- is worse.
Lawyers need to ask for assistance and understand that others can help. Law firms need to support them by providing workable A/R programs that provide results.
Attorneys have other priorities than collecting their bills timely and efficiently. They are concerned about servicing their clients, like they should be, and less about when they are going to get paid.
Consider the following:
• Most clients will not call if they have a problem with ther bills, for a number of resons. They may be uncomfortable talking about money, they are totally confused by the bills and don't know where to begin, or they may be unprepared for the total amount of the bill and find themselves unable to pay.
• Collection problems continue to grow as receivables age. If bills have not been paid within 30 to 60 days, you have received a good sign that there may be a collection or a cash flow problem for the clients. And clients reason that if the firm has waited and not been diligent about collecting unpaid bills, they can wait to pay them. The longer a law firm waits to collect unpaid bills, savvy clients realize, the more likely bills will be discounted or written off altogether.
If you understand some of the common mistakes law firms make, you can address them, which will result in less stress for you and more dollars coming across the threshold.
For more information on accounts receivable management, check our website -- http://www.clientci.com
Lawyers need to ask for assistance and understand that others can help. Law firms need to support them by providing workable A/R programs that provide results.
Attorneys have other priorities than collecting their bills timely and efficiently. They are concerned about servicing their clients, like they should be, and less about when they are going to get paid.
Consider the following:
• Most clients will not call if they have a problem with ther bills, for a number of resons. They may be uncomfortable talking about money, they are totally confused by the bills and don't know where to begin, or they may be unprepared for the total amount of the bill and find themselves unable to pay.
• Collection problems continue to grow as receivables age. If bills have not been paid within 30 to 60 days, you have received a good sign that there may be a collection or a cash flow problem for the clients. And clients reason that if the firm has waited and not been diligent about collecting unpaid bills, they can wait to pay them. The longer a law firm waits to collect unpaid bills, savvy clients realize, the more likely bills will be discounted or written off altogether.
If you understand some of the common mistakes law firms make, you can address them, which will result in less stress for you and more dollars coming across the threshold.
For more information on accounts receivable management, check our website -- http://www.clientci.com
Friday, June 1, 2012
A Few Things to Remember About Collection Software...
Software alone is not the answer. Many firms have believed, erroneously, that by installing collection software, their receivable problems are solved. They lose sight of the fact that the software is just a tool, though potentially a powerful one. More importantly, however, is the firm's strategy for using the software, and the people who are using it. Software is an aid to -- not a substitute for -- the personal contact and the strategy to get bills in line for payment -- especially older, difficult accounts.
Software works best when it is used correctly. A surprising number of law firms install software, and pay for upgrades and training, but they do not get around to using it to improve collection results. Many are unsure how to use collection software as a strategic business tool to help increase revenue, cash flow and overall profitability.
Law firms need to be ready for what software offers. Do not fall victim to your own culture, neglecting to adopt a forward-thinking approach to managing receivables. Understand what information about your receivables you need to gather and how to analyze that information.
Many firms don't know how to determine if collection efforts are successful. They make the mistake of believing that since they are using collection software, they are making effective collections progress. However, firm management needs a clear picture of the progress of collection efforts. Software -- if used right -- and the people who use it, can provide that picture.
Remember it is up to firm leadership to use software information to predict cash flow, determine when and if clients will pay, and what methods will work to achieve the best results.
For more information on accounts receivable management, check our website -- http://www.clientci.com/
Software works best when it is used correctly. A surprising number of law firms install software, and pay for upgrades and training, but they do not get around to using it to improve collection results. Many are unsure how to use collection software as a strategic business tool to help increase revenue, cash flow and overall profitability.
Law firms need to be ready for what software offers. Do not fall victim to your own culture, neglecting to adopt a forward-thinking approach to managing receivables. Understand what information about your receivables you need to gather and how to analyze that information.
Many firms don't know how to determine if collection efforts are successful. They make the mistake of believing that since they are using collection software, they are making effective collections progress. However, firm management needs a clear picture of the progress of collection efforts. Software -- if used right -- and the people who use it, can provide that picture.
Remember it is up to firm leadership to use software information to predict cash flow, determine when and if clients will pay, and what methods will work to achieve the best results.
For more information on accounts receivable management, check our website -- http://www.clientci.com/
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