Keeping the Focus on A/R
in the Second Quarter
Based on over 20 years of experience of accounts receivable management for the legal profession, we know that it is critical that law firms institute regular, steady, professional follow-up of unpaid bills to secure dates of when payment can be expected. This will help guide future follow-up to increase timely payments and decrease ageing, uncollectable receivables.
As you keep your focus on A/R, consider these two questions:
We have policies and procedures for our attorneys to follow. Why aren't they working as well as we'd hoped?
This is a difficult dilemma for many law firms. While your firm's financial managers want to have strong black-and-white procedures that are common in most businesses, they are often challenged because there are so many complicated transactions and relationships that do not lend themselves to black-and-white procedures. All law firms should have written procedures in place concerning A/R management, and communicate their expectations on collections to the attorneys. However, the procedures need to be workable, and for those receivables that must have exceptions, these exceptions should be monitored closely and not be seen as a way to avoid firm collection policies and rules. Giving too much individual autonomy to the attorneys is often the root of a firm's A/R problems.
How can we best overcome the backlog of our older, difficult A/R?
These receivables must be actively pursued until they are paid or determined to be uncollectable. But lawyers should not delude themselves into thinking that they are going to be paid without effort on the part of the firm. There must be dedicated, consistent efforts, with status reports going to the leadership of the firmto ensure progress is being made. Typically, firms focused their efforts on those clients that pay timely and avoid working with older accounts because they take time and are often not pleasant to deal with. Consistent follow-up efforts are the key to making progress with these types of accounts. Law firm are making a big mistake if they think these types of receivables will be paid without working closely with clients and letting clients know their account is being monitored.
Client Connection proudly celebrates its 20th anniversary. Since 1995, we have continued to grow to meet the changing needs of our clients.