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Almost every law firm has issues with collections at one time or another. At the very least, most firms would benefit from making improvements to their collections processes.
So let’s take a look at some different approaches to see what might pay off for your firm.
If you want to improve collection results, you’ll need to examine what you’re doing and be prepared to make some changes. Start by looking at internal processes. A few simple (and quick) changes and tweaks like these can make a big difference:
Unlike fine wines, receivables do not age well. Don’t wait until an invoice is 90 days past due to follow up. If there is no follow-up until the invoice is past due and the client fails to pay, it means no one owns the process. You have to put just one person in charge.
For many firms, that person might be the office manager. But no matter who it is, that person needs to have regular, face-to-face progress meetings with an owner or supervisor. It’s not too much to ask for that meeting to be held weekly. In fact, it’s preferable if you want to make real and steady progress. If the collections meeting is every Friday, guess when most of the follow-ups will get done? “Every Thursday afternoon” is the correct answer.
Several years ago, a client doing multiple high-dollar projects for a large international company was having a big collections issue. The customer’s accounting office was several states away, and invoices went unpaid due to improper formatting and poor communications. When it was clear that emails were not getting the job done, our client had his office manager and receivables clerk fly out and meet with the customer’s accounting staff and take them to lunch to discuss it.
The result? An open line of communication and better collections. The collections staff developed a personal working relationship with the customer’s payables clerk, and soon collections were no longer a problem. You’ll never develop that kind of relationship by trading emails. Put your people and your client’s people in the same room and have them share a meal! If the client is close by, making this happen is easy. But even a short trip could pay real dividends.
Think of yourself as a loan officer when it comes to clients who won’t pay. Would you lend this client money? As long as you’re not getting paid, that is exactly what you’re doing. If you would not make that loan, it’s time to lower the client’s credit limit or revise payment terms.
I once heard someone say they’d rather go broke fishing and drinking beer all day than doing work with a thin margin for someone who’s slow to pay. If you have doubts about a client’s ability to pay, take action. Securing advance payment before beginning any additional work is one way to limit your exposure with a client deemed to be a credit risk.
Being on top of collections and contacting a slow-paying client in a positive, courteous manner not only reflects professionalism, it demonstrates your competency to the client.
Never be bashful about asking for your money. It is, after all, your money.
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