THOMSON REUTERS ELITE

SPRING 2015 EDITION

Forefront
 

Improving Firm Collections and Profitability with Accurate Cash Receipts Forecasting

The following observations and suggestions may be useful regarding the prudent management of accounts receivable and the successful execution of collection campaigns.

Collection campaigns are not just year-end events.

Collection campaigns are time-span specific collection drives intended to maximize a firm’s cash collections during a specified time period. Campaigns often occur for a month end, quarter, or the firm’s fiscal year end. Campaigns are one of the most effective means for a firm to improve cash realization.

Successful collection campaigns require the collaboration of a firm’s lawyers and finance professionals.

Lawyers are closest to their clients, and therefore they are often the first to know if there are issues with regard to a client’s willingness to pay open invoices. A reliable system for gathering information in order to develop collection projections is fundamental to the successful conduct of a collection campaign.

Collection forecasts and revisions should be available from a single shared database.

Law firms often rely on a variety of back-office systems, e.g., spreadsheets, e-mail, word processing notes, etc., to create collection forecasts. A more efficient and reliable system based on a shared database technology will enable lawyers and professional staff to develop, communicate, and share collection expectations and results.

Unbilled time and disbursements are part of the equation.

Depending on the duration of a collection campaign, unbilled time and disbursements may be a significant consideration in developing a forecast of collections. Therefore, it is important to facilitate their inclusion in the derivation of a campaign’s targeted goal.

The law firm / client relationship does benefit from well managed receivables.

A client that is current with its receivables is likely to be a satisfied client, and therefore most likely to engage the firm for additional work. On the other hand, a client with unresolved receivables issues may be hesitant to request additional services, and a firm may be hesitant to provide them. Keeping the cash flowing and the receivables paid is ideal for both the client and the firm. A regimen of periodic collection campaigns is a proven path to achieving this goal.


Select Associates

Select* Associates is an applications software and professional services company specializing in the technology and information processing needs of law firms. With more than 100 law firm customers, including many in the National Law Journal's top 250, the company continues to distinguish itself as a leader in the law firm marketplace, delivering innovative software products and professional services. Click here for more information.

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