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Best Practice tip of the week: Getting clients to pay

Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC

Q. These economic times have been challenging for our firm at best. A major problem for us is collecting our client receivables. Do you have any suggestions? A. Regardless of whether economic times are good or bad, cash flow is always a matter of prime concern for law firms. With it taking in general 3-4 months to convert client work to cash anything the firm can do to speed up the collection cycle is always desirable. Here are a few ideas: 1. Do everything you can to keep receivables from going out to 90 days. Receivables aged one month are 93.2% collectable; three or more months are 72.3% collectable, and one year or more are 28.4% collectable. 2. Call - don't waste time with mailing follow-up letters. 3. Treat collection calls as an extension of client service. Calls should be treated as client service calls - not collection calls. 4. Caller should be someone other than the attorney who did the work for the client, qualified staff member or outsourced Accounts Receivable Account Manager. 5. Calls should be made by a trained Accounts Receivable Account Manager with client-friendly people skills. 6. Calls should be made on each account as soon as it reaches the due date. 7. Accept credit cards and offer it as a payment option. 8. Discount bills when necessary if it will expedite payment and engineer payment plans. 9. Diary, calendar, and follow-up. 10. Consider outsourcing to an Accounts Receivable Account Manager - not a collection firm. John W. Olmstead, MBA, Ph.D, CMC,  is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA General ListServ, which the John and other committee members reviews, or view archived copies of The Bottom Line Newsletters. John may be contacted via e-mail at jolmstead@olmsteadassoc.com.
Posted on Dec 30, 2009 by Chris Bonjean | Comments (0)
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