Moving the Ball Forward During Unpredictable Economic Times
Law firm clients may take longer to pay their legal bills because of the recent economic slide Although you may be already seeing changes in payment patterns, these new delays can trigger and magnify a growth trend in your firm’s ageing accounts receivable — unless you take precautions to manage these payment situations. Act promptly and don’t lose sight of reasons clients are not paying.
Most firms are accustomed to looking at an abundance of financial information and ageing reports to evaluate their progress in managing receivables. Although some of this information may have been useful in the past, those reports may not have dug deep enough beneath the numbers to provide a complete and up-to-date progress status on payments. At minimum, you need to know:
• if an account is actively being pursued
• what the payment status is and when can you expect payment
• who is pursuing the collection efforts and whether they are getting results
• why clients are not paying, and
• if not, what needs to be done to get them to pay.
Also, as these difficult financial times continue, your firm needs to learn as soon as possible whether accounts have become payment problems, what the chances are that you will get paid and whether particular receivables are simply not collectible.
Do not wait for a build-up of accounts receivable over 60 or 90 days before you decide that you have a collections problem. More often than not — and especially now — the truth is that you had a problem much sooner – but you did not address it quickly.