Too often, firms simply expect the structure and tools to work -- without taking the time to measure how effective they are in actually reducing their ageing A/R. While it is good that firms are willing to take a proactive approach to managing their A/R, they must not forget that this requires a step-by-step process to determine why a given client is not paying and what needs to be done to make sure that they will be able and willing to pay.
Ask pertinent questions about collections efforts, such as:
- Does the analytical data we have help us analyze our A/R numbers and benchmark our success rate? -- Data will not show why your firm's ageing A/R remains higher than it should unless you understand the stories behind those numbers to determine why clients are not paying (i.e., cash flow problems, dissatisfied with services or fees, etc.) and what measures are being taken to reduce the ageing backlog.
- Are the attorneys and staff properly using our A/R management to handle collections? -- Software is good, but it won't collect your A/R. However, it should be generating the right information to give your leadership a clear picture of key information like: are accounts being actively pursued, what is the payment status, who is pursuing collections and what success are they having; why are clients not paying, and what steps are being taken to get paid?
- Are we taking for granted that our clients understand our payment expectations without the need to change the way we do business? -- Law firms are doing business in a different world. The business environment has evolved, mindsets have changed and firms must make adjustments to account for these changes. Therefore, ensure your firm institutes a regular, steady follow-up process with clients to secure dates when payment can be expected, to help guide future follow-up. While your past collection history should not be ignored, in these changing times, you may need to give more personal, day-to-day attention.