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Collection Best Practices – Solutions

I am very happy to welcome Loretta Ruppert, from LexisNexis Practice Management, as a guest writer.  As Senior Director of Community Management, Loretta works to bring together the community of product users, consultants and technology leaders and to create a resource to facilitate better communication and cooperation between these groups.  I have extended an open invitation to Loretta to guest post on this blog on any topic related to Law Firm Practice Management.  Today, she writes the second part of a two post series on what has become a growing problem for law firms and almost every other small business, expanding accounts receivable.  Jeff Krause

Collection Best Practices – Solutions

For the firms who have developed collection processes, here were some common best practices:

1. Revise fee agreements with language and actions for non-payments.

2. Establish a multi-touch collection process i.e. letter, then phone call and perhaps fax or email with a note and a copy of the bill. Timing of each of these client touches need to be structured into the process as well.

3. Track the reasons for non-payment. How can you fix something when you don’t know what’s causing it. Do qualitative research to find the root cause for this behavior. Examples usually fall into a couple of categories, something wrong with the bill or financial difficulty.  The following are standard reasons for nonpayment; only two are irreconcilable:

• Services on the bill are not descriptive enough for the client to understand
• Services on the bill are not something the client is willing to pay for, or the client thinks they did not get what they hired your for
• Costs on bill do not have enough explanation or copies of vendor invoices are not being sent with the bills
• Costs on the bill will not be paid per agreement
• Interest was charged and entire bill is being held for payment until corrected
• Client doesn’t have the money to pay
• Other: You don’t know because you cannot get a hold of the client, they are not taking your calls and not responding to your letters or other communication

4. Map out ownership within the firm. Assign certain tasks to individuals and request for status reports often. Some billing solutions will work with you to establish a system of reports which alerts each individual of the collections action they own.  Management can eliminate noise by focusing more on exception reporting, or addressing significant accounts or accounts that have fallen through the cracks, rather than feeling obligated to pour over voluminous collections detail.  Do not wait until the end of a month to see who has not paid. Execution and consistency are the keys to a successful collection process.

5. Provide scripts for employees so there is no doubt in your mind what was communicated. This will also help in the event the employee is not comfortable doing this task; most educational programs do not include “how to perform collections.”

6. Set up payment plans for clients who cannot pay. Make this a formal signed agreement between you and the client with clear actions if payments cease.

7. Modify your billing intake form to ensure the agreed upon services and bills are clear and noted by the billing staff, and have a different person in the firm double check it against the agreement. Many applications have billing templates that can accommodate most items. Consider having the client initial it.

8. Accept Credit Card payments. This is becoming more common. It is so bizarre when I hear attorneys say they don’t want to pay a 2% fee for taking credit cards, yet they lose so much from staff productivity following up on collections, or from having to personally lend their firm money to stay afloat. Would you give a customer a discount for paying early? Great segue to the next point.

9. Provide positive feedback or rewards for paying bills. Consider providing a service discount for paying early. Rewards don’t have to be costly. When I worked for a CPA firm, we periodically sent out chocolates and thank you notes to the person responsible for processing payments or approving payments.

10. Client relations – know your clients. When you are a trusted advisor and take time to personally connect with your clients, you will feel more comfortable approaching them for payments and ultimately get paid.

Some of the collection best practice items may have been implemented in your firm while others are ones you want to implement. This topic is an important one and many of the best practices could be a post of their own.  For that reason, you will see a separate post in the near future talking about some of these topics in more detail, i.e. the multi-touch collection process and the collection scripts for yourself and your employees.

Loretta Ruppert
Sr. Director – Community Management
LexisNexis Practice Management


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