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Friday, September 7, 2018

In the Fourth Quarter, Try Less Talk and More Action

The co-founder and former CEO of Southwest Airlines, Herb Kelleher, once said, "We have a 'strategic' plan. It's called doing things." This, of course, alludes to the problem that many firms have: too much talk, not enough action. It's a simple statement, and does hold true: we often spend too much effort thinking about what we are going to do, and not enough on just getting it done.

In the world of accounts receivable management, it's easy to fall back on the strategy you need at year-end to accelerate collections during the last quarter to meet your revenue goals. But don't just remember what you did. Consider how effective it was for you in the past. Did it accomplish what the firm really wanted? Are the obstacles of collecting A/R at the end of the year becoming tougher to overcome? Are your attorneys becoming less open to new approaches to year-end collections? This leads to a question: will those ageing receivables that are on your A/R reports now continue to sit there in 2019?

The business environment has evolved: mindsets have changed, and so have business practices. Because law firms are doing business in a different world, they also need to ensure timely payment and/or address payment issues. Past collections experiences may be worth considering, but in these changing times, they may not be wholly useful as a guide.

Ask these four questions about what you did in the past -- and what may need to change this year to ensure a brighter future:

  1. What role should firm leadership play at year-end? Firm leaders need to not only tell the attorneys to address collections, they must be diligent in ensuring attorneys are making progress. They need to establish clear expectations about what has to be accomplished with collection efforts now and through year-end. Leadership must also provide the right resources to help the attorneys and assess whether the firm has in place the right people, with the right skills, to do the right job.
  2. To what information should we be paying particular attention during the last three months of the year? Detailed reports should answer key questions: 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.
  3. How do we proactively pursue receivables at year-end while respecting the attorneys' concerns about hurting client relationships? Educate your attorneys that many other businesses are contacting their clients for this reason, so it's entirely reasonable for your firm to do the same. Law firms lose clients by doing poor work or failing to deliver client service, not by asking clients to pay their bills.
  4. How can firms overcome the backlog of older, difficult A/R to be collected by December? Because the older receivables require more time and skill, you had better start now. No firm should delude itself into thinking that it is going to be paid unless it proactively pursues older accounts.
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Tuesday, July 24, 2018

Tips for Being Productive During the Dog Days of Summer

We recently published our summer newsletter -- Dog Days of Summer? Not for Long.  It was filled with tips and ideas on how you and your firm can start improving your A/R management now to get a head start going into the last quarter of the year.

Here are a few excerpts from our newsletter:

First, take the lead to determine how well your firm is doing with its A/R management - At most law firms, everyone shares the responsibility for accounts receivable management which, of course, means that no one really takes full responsibility.  Ask these important questions:

• How are we doing with managing our ageing A/R?
• What do we need to be doing differently?
• Do we have the resources to make improvements?

Educate the leadership of the firm where improvements can be made - Leadership can be at a disadvantage when trying to determine how to Improve A/R management and collections since they are flying at 40,000 feet overseeing the direction and vision of the firm and don’t have their ear to the ground assessing why the firm is under-achieving with its A/R management. Provide them with insight on how well the attorneys and staff are performing in getting accounts paid, and discuss best practice solutions to improve collection results, especially with ageing, difficult-to-collect A/R.

Identify bills that will get paid and those that may not - Past due ageing buckets (61 to 90 days, 91 to 120 days, etc.) often don’t give you a clear understanding of the status of unpaid bills.  The numbers may be encouraging, but you need to get the story behind each receivable to determine the probability of getting paid, either within a viable time frame or, at least, by year-end.  At the very minimum, classify receivables for accounts being handled by attorneys and staff to determine:

• Is it collectible?
• If so, when can we expect payment?
• Is it problematic?
• If so, how good are the chances we will get paid?
• Is it simply uncollectible?

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

Wednesday, June 20, 2018

Overcoming the Hurdle of Attorney Complacency

Complacency. When it comes to accounts receivable management, this is often one of the biggest challenges for law firms. While those responsible for financial management want to take a diligent approach to ensuring steady collection efforts, which are common in most businesses, they are often stymied because there are so many client payment variables, complicated transactions and relationship issues that do not lend themselves to strict procedures.

By and large, attorneys tend to make the easy collections during the course of the year. However, when there are problems, they let the receivables sit...and sit...and sit. Which is why law firms have more receivables going well over 90 days then they would want or expect.

Yes, it would be helpful to educate your attorneys on various techniques and strategies for how to best contact clients. It is still up to the attorneys to do so.  But remember: attorneys typically do not have the time or inclination to contact their clients about unpaid bills.

So where do you start?  Start small, gain momentum and report your progress.

  • Prioritize your attorneys. Begin with those having the most difficulty collecting their A/R. Take the time to meet with these attorneys on a regular basis and ask them to tell you specifically when bills can be expected to be paid or what needs to be done with older receivables that are just getting older.
  • Project realistic timeframes for when receivables are expected to be paid and when the attorney plans to contact clients to learn why payment has not been made. Communicate to the attorney that A/R management is a process that must be followed diligently if progress is to be made. Remind them that many clients will not pay unless they hear the firm is expecting payment.
  • Report progress to the leadership of the firm and give them information to help them do their jobs. Effective receivable management starts from the top, but they must have details if they are going to hold attorneys accountable. It is often a judgment call as to how leadership chooses to deal with attorneys not managing their A/R.
For many clients, paying their legal bills does not carry the same urgency as payment to others. Payment becomes even slower when attorneys are not making A/R management a part of their daily practice management. Learn more on our web-site at https://clientci.com/

Thursday, April 12, 2018

Are You Hearing Only What You Want to Hear?

Many law firms are still missing the message when it comes to managing and collecting their receivables timely. To their disadvantage, such firms still rely on a culture of collegiality among the attorneys to set the tone for meeting collection goals. They 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, especially on issues they do not want to deal with, like asking clients to pay their bills. Particular practices are faced with other factors that hamper their efforts to get paid. 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.

Here are three things to keep in mind to make sure you are being heard:

  1. Firms that talk the talk but don't walk the walk will have weaker collection results.  Many firms believe that open dialogue between management and the attorneys will lead to effective collection efforts. They need to back up such dialogue by enforcing policies and procedures. 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.
  2. Make sure everyone is following the rules. 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
  3. Don't be misled by an increase in revenue or meeting budget. While certainly good for the firm, these are not necessarily indications 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.


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

Tuesday, March 20, 2018

Check Your Attorney's Attitudes - and the Behaviors that Follow

See if you can answer these multiple choice questions correctly.

(A) What is the first warning sign of potential payment problems?
1. A bill goes past 30 days unpaid
2. A bill goes past 120 days unpaid
3. The attorney did not hear from the client after the bill was sent
4.The client stops responding to e-mails

(B) Attorneys need to make collections a priority.  Which of the following should they NOT do?
1. Regularly communicate with clients about unpaid bills to ensure timely payment
2. Ask when payment can be expected
3. Let clients make payments at a time that is suitable to them
4. Resolve problem issues that are keeping clients from paying

(C) How can attorneys be held accountable for getting A/R paid?
1. Ask them regularly when they expect bills to be paid
2. Ask them to establish -- and meet -- self-imposed deadlines
3.None of the above
4. A and B

(D) Attorneys beieve they are the only ones who can contact their clients about their receivables  They are incorrect.  Why?
1. They don't like to do it
2. They aren't very good at it
3. They don't want to do it because they have other priorities
4. All of the above



ANSWERS:
(A) 1 -- Starting early in the ageing process, attorneys have allowed clients to pay at their leisure.  Because attorneys are not inclined to make contact sooner rather than later, clients do not feel obligated to pay.
(B) 3 -- Attorneys need to communicate to their clients about unpaid bills, just as they communicate regarding the status of the matter they are handling.  They must have regular follow-up to learn when payment can be expected and to help guide future follow-up.
(C) 4 -- Attorneys must be contacted on a regular basis and asked specifically about when they expect bills to be paid.  The culture of forgiveness needs to be replaced with a culture of high expectations of getting accounts paid through better A/R management efforts.
(D) 4 -- Firms should provide their attorneys help from trained personnel who have the appropriate communcation skills, professionalism and time to help gets bills paid.  Experienced help should have good relationship-building skills, the ability to understand payment problems and an understanding of solutions that are tailored to various practice areas and client situations.

Learn more how Client Connection can help you  and your firm. Visit us at http://www.clientci.com/

Tuesday, February 13, 2018

Start Taking a Strong Position NOW in Managing Accounts Receivable in 2018

All law firms should take a strong position on accounts receivables management and be able to communicate their expectations on collections to the attorneys, knowing that complicated transactions and relationships do not lend themselves to black-and-white procedures. A/R management procedures need to be practical and workable, but there needs to be room for exceptions. Yet these exceptions should be monitored closely and not 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.

Remember, managing accounts receivable for a law firm is a step-by-step process, which must be monitored closely, whether the economy is up or down.  Beware of certain attitudes that can prevent procedures and rules from working, such as:
  1. Thinking that having an infrastructure in place alone will result in relieving the firm from ensuring that it works.  A strong A/R management infrastructure must be supported by a strong commitment to action and a change in mind-set necessary to address all the issues preventing clients from paying. Whatever the issues are -- attorneys or collection staff not doing their jobs, not working closely with clients to monitor when and if they will pay, or not using the right collection strategy – changes must be made if you want to see results.
  2. Giving the attorneys too much leeway in managing their receivables. Firms have long been inclined to give their attorneys “professional courtesy” to manage their receivables as they see fit.  The traditional culture of forgiveness needs to be replaced with high expectations. We use the term “manage” very loosely because, in far too many instances, the attorneys are not being managed at all.
  3. Not focusing on collection efforts on receivables starting at 60 days past due. Thinking that older receivables dictate when collection problems begin is not true. The reality is that collection problems begin early in the ageing process, but firms often do little to address issues sooner rather than later. Due to the nature of the transaction or the client arrangement, there may be a need for alternative payment arrangements. But do not let these payment exceptions become the rule.

Having a plan is one thing. Putting it into action, monitoring it, and making sure it works is quite another. Learn more on our web-site at http://www.clientci.com.

Monday, January 1, 2018

Accounts Receivable: It's Not Just a Fourth Quarter Thing

Well-managed law firms need to recognize that accounts receivable management is a year-round effort.

Too many law firms continue to think that collections is an easy process; all you have to do is remind clients to pay and they will.  Having recently come through year-end, you KNOW that's not true.

Throughout the year, firms must stop tolerating "good clients" who just don't pay their bills.  Although until year-end may work for some institutional clients, many institutional and non-institutional clients require much more effort year-round.  Be realistic about whether the firm is underachieving in its collections goals and effort and if the firm has developed bad collection habits.  Taking a hard look at how the firm and lawyers are underachieving with A/R management can often put the firm on the right path to improving cash flow with the right collection efforts.

The first part of the year is critical for evaluating how your firm can do better to diligently manage and collect its receivables.  While the year is still relatively young, take steps that ensure a full commitment to managing your receivables.

Please feel free to contact us to let us know if we can help you. Visit us at: http://www.clientci.com/