At a Loss: All A/R is Not Created Equal

Managing accounts receivable is all about timing; and so, you can’t view it simply as a lump sum that you are owed.  Ideally, you’re running and reviewing aged accounts receivable reports – which most bookkeepers will do as a matter of course @ 30-day, 60-day and 90-day+ intervals.  That will give you a sense about a lot of things, related to the financial management of your business, including how your cashflow projects, on a go-forward basis. 


 

But, most importantly, you’ll get a sense of how those dollars escalate in your law practice.  That escalation, of course, needs to be matched by your collection process.  When clients don’t pay you, as they should: you can’t just watch the dollars stack up.  You need to meet that escalating mountain of cash, with a more aggressive collection program.  And, that collection process should be established in your engagement agreement. 

 

There are template clauses accessible online.  But, the general idea is that you want to be able to ramp up your collection process, as the non-payment period extends.  Start by adding interest.  Ramp up followup.  Negotiate, if you need to. 

 

For most law firms, the collection rate is sub 100%.  But, before you write off collecting what you can’t grab on the first pass, pull levers to try to increase that percentage by increments, moving forward. 

 

. . . 

 

Oftentimes, for law firms, invoicing is a process, not a single action – so, lean into it, to reduce your accounts receivable, over time. 

Through a unique partnership between the Maine Board of Overseers of the Bar and Jared Correia’s Red Cave Law Firm Consulting, Maine attorneys have access to experienced law practice management consultants at a special discounted rate. 

To get started, visit Red Cave’s landing page for Maine attorneys, and start running your law practice like a business.

Comments

Post a Comment

Popular posts from this blog

Perfect Timing: New Calendaring Tools Make It Easy to Connect with Leads and Clients

Image
Lawyers tend to be inefficient, and have difficulty engaging both leads and clients.  These hurdles are apparent when it comes to the scheduling process.  Attorneys and staff onboard leads for meetings, and schedule appointments with existing clients, via strings of emails -- and, delayed response s only extend the conversation, and the time frame.  And, while this is detrimental for client s (who demand speed and convenience), it’s even worse for leads, who may never convert, if they’re not onboarded simply, and easily.   The good news is that modern technology tools allow for scheduling without the intervention of humans, including you and your staff.  That means that you can say goodbye to all those extra emails, and wasted time.  Programs like Calendly and Acuity allow clients to book appointments directly onto a law firm or lawyer’s calendar, and include buffers and controls, so users aren’t overwhelmed.  LawTap offers a similar tool focu...
Read more

Get That Bag: How to Build a Collection Process for Your Law Firm

Image
Law firm account s receivable can be gnarly, sometimes extending into the six figures .     Now, there are a couple of responses to that .  The preferred option is to eliminate accounts receivable altogether, which can be done using epayment options, and potentially evergreen retainers combined with stop work order s .   Of course, you may not ever get to 100% collection rates – that’s a tall order – and, you may have some accounts receivable to deal with already .  And so, you’ll need to establish a collection process – and, that should flow from your engagement agreement.     The components relating to money that you need in your engagement agreement, aside from your rate(s) and/or basis of your rates, would be: An escalating series of penalties for non-payment .  An arbitration clause, potentially including access to a state bar’s fee arbitration board .  That stop work order .  This will allow you to put pressure on non-pay...
Read more

The Right Profile: Claiming Directory Profiles Is a Web Presence Win

Image
For referral-heavy businesses like law firms, there needs to be a focus on a very narrow version of a web presence.     Since most potential referrals will trust but verify the recommendations of their referrers (your referral sources), it’s imperative that when a potential referral Googles you, that they like what they see .  What shows up in Google search, when a legal consumer searches your name or your business name, is usually three main things: your website + website pages, your social media profiles and your direct ory profiles.   Directory profiles are basically business listings, for law firms or individual attorneys .  These are places like Avvo or FindLaw .  And, some attorneys even utilize non-legal specific business listing services, like Thumbtack or Yelp .  Many of these services allow you to claim a free profile – which you should do, because that will allow you to add some further content to your page, like a headshot, business...
Read more