Client Connection

Client Connection

Tuesday, October 14, 2014

It's October. Do You Know Where Your Receivables Are?

Where has the year gone? Yes, no matter how you look at it, year-end has snuck up on us again. The last quarter of the year is front and center, and we are again faced with year-end collection efforts. How did we get here? It doesn't matter! Let's just get moving.

Here are a few essential questions and answers to help you get accounts collected before December 31:

• What role should firm leadership play at year-end?  Firm leaders need to be able to tell the attorneys to address their collections, but also understand the need to provide them with other resources to help them achieve results during the last quarter.  Assess whether you have in place the right people, with the right skills, to do the right job.
• How can firms overcome the backlog of older, difficult A/R to be collected by December?  Because the older receivables require more time and effort, you had better start now.  Do not allow your lawyers to delude themselves into thinking that they are going to be paid unless the firm clearly makes the effort to pursue the older accounts.
• What information should we be paying particular attention to at year-end?  Detailed reports should answer key questions: whether accounts are actively being pursued, what the payment status is, who is pursuing collection and what success they are having, why clients are not paying, and what steps are being taken to get them to pay.
• How do we proactively pursue receivables at year-end while respecting attorneys' concerns about hurting client relationships?  Remind your attorneys that many other business partners are contacting their clients for this reason, so it is entirely reasonable for your firm to do the same.  Law firms lose clients by doing poor work or by failing to deliver client service, not by asking clients to pay their bills. 
• What problems do law firms experience at year-end concerning the slowdown in payments?  Cash flow problems and clients hoarding cash are the main reason why clients do not pay or pay slowly.  They understand that they can ease their cash flow problems by delaying payment or by not paying at all.
There’s a chill in the air – but don’t make the mistake of waiting to get your collection plan in place until it is freezing cold in December.  Get going! You may be surprised what you can accomplish – if you start doing it NOW!

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