Client Connection

Client Connection

Wednesday, April 23, 2014

Get Back on Course: Manage Your Firm's Receivables and Stop Running in Different Directions

We do know why we have A/R management system and collection efforts -- to get results.  Why would we think otherwise?  We manage A/R to get paid.

Winston Churchill once said, "However beautiful the strategy, you should occasionally look at the results." Yet while many law firms, in theory, want and try to have a results-oriented A/R management structure, they are often working with a system that is moving in all different directions.  It is like trying to herd a bunch of cats. Between attorneys doing what they want to do, clients paying at their leisure (if at all) and collection staff not being proactive with their efforts, many law firms are left with a growing backlog of receivables and no idea how to deal with them. More troubling, though, is that they have a false sense of security; they believe that their collection efforts are working just fine.

To help get your A/R management efforts back on track, here are a few tips to remember:

1. Start by understanding why your receivables have aged -- Yes, you do have a collections problem with your older A/R, but you had it very early -- perhaps as soon as you sent out the first bill. The firm was just not proactive with its collection efforts early in the ageing process.

2. Stop making the exception the norm -- Many A/R systems for law firms break down because policies and procedures are created for attorneys to follow. But policies exist only on paper. Too many exceptions are given, so rules are broken and there is little enforcement.

3. Make your collection efforts proactive instead of reactive -- Many firms will wait for clients to contact them about questions regarding a bill before they inquire about the payment status. If clients don't contact the firm, the firm believes -- mistakenly -- that there is no problem and the client will pay. Firms give way too much professional courtesy.

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Wednesday, April 2, 2014

Come On In. The Water's Fine!

When it comes to managing accounts receivables, if your firm is like many that we know, it has one foot in and one foot out of the water. It has not wholly committed to jumping in. You may be cutting corners, without fully embracing all the accounts receivable management efforts that you need to.

Too often, firms get to December 31 and breathe a sigh of relief that they made it to year-end safely. Yes, firms may have met budget, but too often they left too many unpaid receivables, which will continue to age and become increasingly difficult to collect. They choose to ignore the amount that they have failed to collect by turning a blind eye during the year to how they could perform better.

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 five steps that ensure a full commitment to managing your receivables – and will start showing results quickly on your bottom line.

1. Limit the autonomy you give individual attorneys
2. Build an accounts receivable management program, from the time WIP is billed through when invoices are paid in full
3. Recognize that the effort is year-round
4. Make sure your clients know that it is you who are in control
5. Don't count on the past to predict the future – While past performance should not be ignored, it may be less useful for purposes of ensuring firms will have a successful year unless the right changes are made with A/R management.

Client Connection assists law firms of all sizes throughout the United States by furnishing accounts receivable management services, developing practical receivable programs, training law firm staff in effective collection methods and executive placement of professional collections managers. Learn more by visiting our web-site at