Client Connection

Client Connection

Thursday, July 11, 2013

Mid-Year: Taking a Hard Look and Setting Things Straight

As the saying goes -- if it ain't broke, don't fix it.  But how do you know your firm's A/R management is not broke -- or doesn't at least need some adjustments?

Now that we are halfway through 2013, law firms can take a hard look at where they stand with collections after the first six months and determine what they have to do over the next six months to achieve their goals. While past collections experiences should not be ignored, in these changing times, those experiences may not be entirely useful as a guide for the rest of the year (and beyond) -- especially if your firm has clear financial goals, and strong collection efforts are required to achieve these goals.

Law firms should not fool themselves into thinking that their A/R management and collection practices can succeed without understanding which moving parts are working and which need closer attention and evaluation. To do so, firms must take concrete steps to ensure that bills are in line for payment.They should review whether accounts are actively being pursued, 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.

There is often a perception that a backlog of ageing receivables will translate into timely payments and the money will simply roll in by year-end. However, firms need to be more realistic about whether they are underachieving their collections goals and, if so, whether it is due to bad collection habits. Everyone needs to understand that when they see problems with older A/R later in the year, these ageing receivables actually started early in the year -- but nothing was done to resolve the payment problems early on. Learn more at our web-site: