Managing Accounts Receivable in an Ever-Changing, Spiraling Economy
No one has to tell you that 2020 is going to be a tough year for every law firm. There will be numerous challenges, and collecting your accounts receivable will certainly be a priority. With the Coronavirus pandemic now squarely affecting law firms being paid for their services, accounts receivable management will require a very hands-on approach.
The reality is that there are a number of unsettling circumstances in today’s economy, and firms must change their approach to receivables management if they want to be successful in pursuing all accounts. If your firm has an accounts receivable management strategy, now is the time to re-evaluate that strategy – top to bottom. If you do not have an A/R management plan – creating one needs to be a priority.
The business environment is evolving every day, mindsets are changing rapidly and so are business practices of all types. Law firms must start routinely communicating with their clients about unpaid bills to determine payment dates, resolve problems that are preventing payments and discuss payment options.
Start instituting regular, steady, professional follow-up of unpaid bills to secure dates of when payment can be expected. By showing your clients that the firm is regularly contacting them and monitoring their payment status, they will know you are well-aware of their bills and that you expect payment – or, helping them develop a payment plan based on their cash flow needs. Also, understanding when payments are expected will help determine your follow-up dates if payment is not made.
These times are stressful for everyone, so be understanding of your clients’ own challenges. But managing accounts receivable with clients that are faced with an unexpected, on-going cash flow dilemma is a step-by-step process that must be closely monitored.
Past collections experience should not be ignored, but firms will need to address best practices for these economic times. It is a new beginning for all of us.