Client Connection

Client Connection

Monday, June 20, 2016

That's Not My Job: How Law Firms Fail to Take Responsibility for Accounts Receivable Management

When does a firm decide it needs to be more realistic about whether it is underachieving in collecting older receivables over 90 days (and whose job is it to make this happen?)? At the beginning of the year? Maybe, because with the start of the new year, firms have the time to make corrections on the previous year's collection mistakes and have time to implement a new plan. However, it's tough to get people moving in that direction after an exhausting year-end push. 

At the end of the year? Maybe, but it is going to take time to dig through these accounts and determine when and if they can be collected.

Which leaves us where we are today -- in the middle of the year, and logically, a good time to get started.  BUT mid-year is not a good time because...

Are you getting the picture? No time is ideal for handling this job. And, adding fuel to the fire is that at most law firms, everyone shares the responsibility for A/R management. Which, of course, means that no one ultimately has complete responsibility.

Individual autonomy can be a great asset when tackling problems that need fixing. But autonomy can also be a disadvantage when it doesn't help grow revenue.

Over the course of the past 5 to 10 years, law firms have strategically made large investments on the front end, attracting and maintaining strong clients only to lose profits on the back end by leaving revenue on the table, in the form of unpaid receivables from clients that require hands-on attention.

So what are you to do? You need to start somewhere, take an aggressive approach to getting information to firm leadership and keep it in front of them 12 months of the year.

Take concrete monthly steps to ensure that receivables over 90 days are in line for payment. Review whether accounts are actively being pursued and, if not, why; what the payment status is; who is pursuing collection efforts and what success they are having; why clients are not paying; and what steps are being taken to get them to pay.

Yes.  This takes time, tenacity and organizational skills.  So, if it's really not your job, figure out whose job it is and make sure they do it right. Time is of the essence: six months left in 2016 and the clock keeps ticking. Learn more on our web-site at:

Talk to you next month!

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