A/R Best Practices: Getting Money Owed

Billing & A/R is the lifeblood of the business – it’s how you get paid and how you take risk.

However, it’s not something most law firm owners want to spend much time on, despite it being what keeps the firm afloat.

Besides bringing the money in the door, the way you handle your Accounts Receivables also sends a message to your clients, who appreciate easy to understand content, professionalism and transparency when it comes to their bill.

However, there is often a breakdown in this process, which can lead to collection issues.

How Do You Currently Collect Payments?

Are you still mailing out invoices? Do you take electronic forms of payment? How can you make the process faster? We asked the attorneys on this call how the currently are collecting payments. Some of the answers included:

  • They don’t – or at least not on a consistent basis
  • Online credit card or ACH via LawPay or other systems
  • Replenishing retainers or trust accounts
  • Accepting ACH or Checks

Some of these obviously are easier to implement than others. With online billing and payment options, it’s often easier to remind clients about the bill and most of the invoicing process is automated.

With ACH and Checks, there is often a longer recovery time.

What Are Your Biggest Challenges With A/R?

Some of the biggest challenges law firm owners identified in A/R had to do with recovery time.

When longtime, big paying clients suddenly rack up too much unpaid invoices or non-replenished retainers, it can make for an uncomfortable conversation. And you don’t want any unpaid invoices to effect your ongoing case or work for that client.

Another issue law firm owners noted was that during the COVID-19 pandemic, there seems to be a longer recovery time. Some firms amended their invoicing due dates to reflect the needs of their clients during this time, while others approached it on a case by case basis.

This also provided them time to check in with their clients and assess how the pandemic was affecting them.

Latrice’s Tips & The LBO A/R Process

Latrice Notaker of Legal Back Office’s account team provided some tips and insights based on her experience doing A/R for many of our clients.

Gather Intel From Law Firm

What procedures are already in place? Do they seem to be working for both the clients and internal team? Have you recently assessed your data integrity and intake process?

Having the most up to date information for the client – correct name, phone number and sometimes a different billing contact when power of attorney is needed. And in 2020, pronouns matter.

It may not be clear from the client’s name or file how they like to be referred to, so make sure to update your intake process to include this step. It will save you an embarrassing phone call later on in the bill collection process.

Have A Clear Opening Line & Introduction

It’s important to have a good call script for billing collection, which starts will a warm introduction. Make sure to say the clients name, your name, and the name of the firm you are calling with.

“Hello, CLIENT. My name is X and I’m calling on behalf of FIRM. Attorney NAME has asked that I reach out to you to replenish you trust account/pay this invoice. Do you have a few minutes?”

More important than what you say is HOW you say it. Lead with kindness and go overboard with customer service to lessen the stress on the client. Active listening is an important skillset for you’re A/R team to have – it can often help identify if a client is in distress or if you need to call back at a different time.

Latrice pointed out that calls during the COVID-19 pandemic are taking longer. What used to be a 2-minute phone call is now closer to 5 minutes. Latrice often calls on clients up to twice a week – so whoever is doing your firm’s A/R may be the biggest or most lasting impression of the firm.

Documenting Conflict

Because these calls are sensitive and involve someone’s finances, conflicts can arise. It’s important you have a process in place to document any issues that may arise on a phone call.

Putting a note in the client’s file on what was said, when they expect to pay or any other issues that they bring up with the firm is a CRUICIAL part to the A/R process.

Once a case is a closed and your main A/R contact hasn’t been successful in collecting, Latrice recommends bringing in a “second voice” or another person to contact the client.

Because the customer may have a negative impression of the first person, or may not respect their authority, introducing a second person into the collection process has been effective in collecting overdue bills.

Stock Legal Case Study

Legal Back Office started working with Stock Legal in Fall of 2018 in their Accounts Receivable process. When we started on the process, they had about $200,000 out in receivables.

LBO’s first task was to not only chip away at that amount, but to create and implement a new process so that this problem wouldn’t be recurring in the future for collections.

By the end 2019 we were able to get the total amount owed down to $60,000, which included not only the outstanding amount but also the ongoing collections accrued over that year.

Her collection rate went from 91% to 98% just by defining the process and having the right person in the A/R roll. You can read the full case study and it’s results on LBO’s Case Study page.

Join future LFLCC’s by RSVPing one time here. Set up a consult with Legal Back Office to learn how our can help you improve your firm’s A/R process.

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