Sometimes You Hear Only What You Want to Hear
There is no doubt that firms need and want to collect their receivables timely and prevent receivables ageing too far – considering the economic and cash flow challenges they face. Although firms should ramp up their collection efforts as soon as possible to help improve their revenue, how they handle the collection process – which can be long, sometimes tedious and requiring daily attention — can make or break how successful they will be with their A/R management efforts.
Many law firms have missed the message as it relates to managing and collecting their receivables timely. Such firms have relied – very much to their detriment – on a culture of collegiality and camaraderie among the attorneys to set the tone for how they approach getting paid. Firms struggle with how they communicate to their attorneys what is required of them. At the same time, attorneys have a knack for hearing only what they want to hear on how they should pursue clients for payment. On top of this, there are other issues that hamper firms’ efforts to get paid – different practices with different clients can experience different difficulties – requiring different A/R management strategies and techniques.
So, in today’s new normal, here are three things to keep in mind when making your best efforts to get paid:
- Firms that ‘talk the talk but don’t walk the walk’ will have weaker collection results. So stop discussing it endlessly with your attorneys and recognize that there are times when it is most effective to make your attorneys aware of the rules and procedures, and ask that they follow them. It will not get you far to just tell your attorneys: “Go collect your accounts.”
- Firms need to understand the difference between implementing A/R management policies, processes and procedures and spending time creating and revising collection rules. Too often policies are not effective because leadership of the firm gives attorneys too much professional courtesy, allowing them to make exceptions to the rules. It’s one thing to commit procedures to paper, but it’s another to ensure attorneys are following the rules.
- Don’t think a few quick successes are an indication that collection efforts are working. Take a hard look at receivables you are not collecting and how you are dealing with issues that are preventing timely payment, particularly for those receivables over 90 days. Such receivables are more of a challenge to collect and take more time, and are consequently left to the side