It's Always the Right Time to Ask "How Are We Doing?"

At many law firms, everyone shares responsibility for accounts receivable management. Which, of course, means that no one has complete responsibility.  If your firm has invested in the people, processes and technology to help ensure collection success, take the time to step back and ask the question: Are we getting the results we should from our collection efforts?
Too often, firms simply expect the structure and tools to work -- without taking the time to measure how effective they are in actually reducing their ageing A/R. While it is good that firms are willing to take a proactive approach to managing their A/R, they must not forget that this requires a step-by-step process to determine why a given client is not paying and what needs to be done to make sure that they will be able and willing to pay.
Ask pertinent questions about collections efforts, such as:

• Does the analytical data we have help us analyze our A/R numbers and benchmark our success rate?  -- Data will not show why your firm's ageing A/R remains higher than it should unless you understand the stories behind those numbers to determine why clients are not paying (i.e., cash flow problems, dissatisfied with services or fees, etc.) and what measures are being taken to reduce the ageing backlog.
• Are the attorneys and staff properly using our A/R management to handle collections?  -- Software is good, but it won't collect your A/R. However, it should be generating the right information to give your leadership a clear picture of key information like: are accounts being actively pursued, what is the payment status, who is pursuing collections and what success are they having; why are clients not paying, and what steps are being taken to get paid?
• Are we taking for granted that our clients understand our payment expectations without the need to change the way we do business?  -- Law firms are doing business in a different world. The business environment has evolved, mindsets have changed and firms must make adjustments to account for these changes. Therefore, ensure your firm institutes a regular, steady follow-up process with clients to secure dates when payment can be expected, to help guide future follow-up. While your past collection history should not be ignored, in these changing times, you may need to give more personal, day-to-day attention.

If you will be attending the ALA conference in Nashville, May 17-20, stop by to see us at booth #432. We would enjoy saying hello. Learn more on our web-site - http://www.clientci.com/

Putting Collection Rules in Place -- and Enforcing Them -- Can Only Help

Unfortunately, firms often put procedures in place and neglect to consider whether or not they are really working -- especially for older, difficult accounts. Yes, it is essential that all firms state their position on collection procedures, but they also need to allow a fair amount of latitude for decisions based on individual client relationships. This is where it gets tricky! Firms can no longer accept that ageing receivables are simply a part of doing business. Therefore, they need to ask: do we really have the right processes and procedures in place or are we kidding ourselves that what we are doing is working?
No matter the size of your firm, much of the success of your collection efforts is dependent on direction from firm leadership itself and its willingness to fully address the issue. 
There is no doubt that, however good the procedures, enforcement is difficult, even at the best-run firms. Giving too much autonomy to attorneys often lies at the root of a firm's A/R problem. However, having procedures in place gives firm leadership the gateway to step in to help attorneys understand what specific actions they must take to ensure payment, provides a clear timeframe for getting accounts collected and provides the right support to help them in their efforts.
Policies help leadership and management work through receivable issues and not just accept attorney statements like: "I'm working on it" or "I'm in contact with my client about this."  It gives the firm the opportunitiy to help move forward before a receivable becomes uncollectible.
Avoid the pitfall of waiting too long to say "we have a collection problem." It was a problem much sooner, but the firm did not address it. Learn more on our web-site at http://www.clientci.com/

Is Your A/R Team Up to the Job?

Determine if you have the right people and knowledge in place to perform collections successfully.

Jack Welch, legendary former CEO of General Electric, said, “Change before you have to.”  It’s never too early to assess if change is necessary.  If your firm has made a commitment to using non-attorney staff to perform collections, be realistic about whether or not the job is getting done, and if changes may be needed.  Collections should be measured, so you can determine the ROI of your collections team. 

Your collection team must have a solid understanding of the different kinds of transactions and the effective collection techniques needed to ensure payment.  They must know – and have access to – the right resources for getting paid.  They must understand the different payment requirements for 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 getting concrete results. 

Recognize the collection staff as the “rainmakers” they can be.  Although they are making rain in a different way than the attorneys, they can add equal value to the bottom line.

If your firm has experienced administrative staff in place performing collections, evaluate whether they are doing the right work the right way.  Ask: 

• For the accounts they are pursuing, are they regularly reporting on the age of the accounts, how much they have collected, and what they have in line for payment? 
• How much they are working on actual collections, as compared to other, less important duties (i.e., generating reports, sending out reminder statements, providing information that the attorneys request, etc.)? 
• Are they knowledgeable enough to provide the right information to the firm that will explain the progress of collection efforts?

Most importantly – determine if your collection staff is picking and choosing the accounts they follow up on – instead of making older, difficult accounts the focus of their collection efforts. Learn more on our web-site at http://www.clientci.com/.

Aged A/R Has Gone Too Far...Literally

Albert Einstein once said, “We cannot solve our problems with the same thinking we use when we created them.”  This reminded me of how many firms continuously carry ageing receivables that are difficult to collect. Yet, year after year, they never change their mindset about managing their backlog of A/R. By and large, law firms end up focusing on receivables that are easier and more straightforward in getting paid. When there are problem receivables -- and there inevitably are -- most firms let the receivables sit – and sit – and sit – and sit. Which is why A/R starts to accumulate over 120 days. And while many clients, both institutional and non-institutional, are much more thorough in reviewing bills that can delay payment, the larger problem still lies with law firms and their attorneys not dealing with the problem.

The fact is that most of the receivables collected during the year-end crunch are less than 120 days old. Because receivables over 120 days are usually more problematic, attorneys realize they can’t resolve them by year end. So many don’t bother. In the effort to get as much money in as possible, they focus on the more current billing and avoid dealing with unhappy clients, clients who are unable to pay, situations in which the clients did not get the result they wanted, etc. With the pressure off in the first quarter, attorneys are even less inclined to face older receivables.
 
The first quarter is actually the best time to focus on cleaning up old A/R, precisely because the pressure is less intense, and because the effort will take some time. 
Here’s what to do now:

• Take time to assess the ageing A/R problem. Evaluate your older accounts top to bottom and get a handle on which receivables need to be pursued and which really are uncollectable. Sit down with each billing attorney. Request an action plan to get the accounts collected or find out if they need help.
• Get a handle on those accounts that had a payment problem early in the ageing process and figure out why the problem was not dealt with sooner and has now left older accounts uncollectable.
• Sit down with firm leadership and provide facts about your findings. They need to have the information to tell the attorneys to address their ageing receivables and the will to hold attorneys accountable.

Whether or not your firm had a good 2014, as you look forward, you need to recognize that getting accounts collected sooner rather than later can help make the difference in 2015. Learn more on our web-site at http://www.clientci.com.

Starting the New Year on the Right Foot

• All firms should take the time and effort to evaluate if they have A/R management best practices in place. Ask whether you are doing the right job, or do processes, policies and procedures exist only on paper or in theory? The key questions to ask are:

• Do you have the appropriate governance and leadership structure in place?
• Do you have meaningful reports and information?
• Do you have a good understanding of how the attorneys are managing their A/R and if they are spending enough time on their collection efforts?
• Do you have the right administrative staff in place, and are they doing the right work the right way?
• Are you measuring their performance by results they are achieving?
• Is the firm regularly collecting its older, difficult A/R?

• The financial management sector of a law firm wants to have strong black-and-white procedures that are common in most businesses, but 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 accounts receivable 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.
Also, firm leadership must step in to help attorneys understand what specific actions they must take to ensure payment, give them a time frame for getting accounts collected, and provide the right professional support to help them.

• The business environment has evolved. Mindsets have changed, as have business practices. Because law firms are doing business in a different world and making adjustments accordingly, it also requires that they routinely communicate with their clients about unpaid bills to ensure timely payment or resolve problem issues. While past collections experiences should not be ignored, in these changing times it may not be entirely useful as a guide. Although some clients have set roles 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. However, sometimes it becomes the attorney's problem because he or she is uncomfortable about asking for payment and grants too much leeway about timely payment.

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

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.

"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/