Client Connection

Client Connection

Wednesday, March 9, 2016

Confronting Common Mistakes in Managing A/R: It's Time to Face Up to Facts

All talk, no action. That would be a good description of the way some firms choose to address (or, more accurately, NOT address) their accounts receivable issues. There are various problems and stories behind A/R numbers that can delay payment, and there may not be anything that can be done about them. But do not assume that is typically the case.
Frequently, firms are not doing a good job at collecting their A/R, but they cannot admit it, or they are unsure of how to move forward or where the problems lie. Or they believe -- in error -- that they are doing a good job and the money will just begin rolling in. Take time to recognize some common misconceptions and the reality behind them:
  • Most attorneys collect their bills timely and efficiently -- Actually, attorneys are most concerned about servicing their clients and are not giving a lot of thought to when they are going to get paid. Moreover, they are not held accountable for not collecting receivables and they are given too much autonomy.
  • Clients understand payment obligations -- Cilents are smart. Because they realize that lawyers and law firms are poor A/R managers, it is they, rather than the lawyers, who dictate when -- and, sometimes, if -- they will pay. Be as smart as your clients and factor that into your thinking.
  • Collection problems begin when receivables age past 90 days -- Yes, many clients have their own policy dictating when they pay their bills. But if you have not been paid within 30 days, you've gotten the first sign that you may have a collections problem.
  • Clients will call if they have a problem with your bills -- Some clients will, in fact, be quick to call if they perceive a problem. Most, however, will not because they are uncomfortable talking about money, they are confused about the bill and services, they are unprepared for the amount they owe or find themselves unable to pay.
  • Administrative staff is in place to help manage and collect our A/R -- Do they have other accounting duties and/or are they spending their A/R time mailing reminder statements, generating reports or attending to attorneys' requests? They must have the expertise, desire and time to do the job. And their work must be measured by how many contacts they make daily and how many dollars they are collecting, especially the older accounts.
Understanding and addressing some basic misconceptions won't solve all your ageing A/R problems, but it will help your firm move forward in the right direction. Learn more on our web-site at

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