Issue link: https://epubs.iltanet.org/i/30285
that the bill has become past due and should ask if there is any reason why the bill hasn’t been paid. If the client is unhappy with the results or the service from the firm, then that needs to be addressed. It could just be that the bill was overlooked and the reminder will help with that. It could be that the client is having financial difficulty and needs some more time to pay. It could be a million things, which is why you need to find out what the issue is so that it can be addressed. The sooner it is addressed, the more likely you are to get paid. The key is to keep the communication going. If you don’t do the follow-up, the client might assume you don’t care. Certainly, if you forget about it, the client will also. Time is money, and certainly that is true with accounts receivable. You have two things working against you. One, the longer a bill goes unpaid, the less likely it is to get paid. Secondly, there is a cost that most firms don’t recognize and that is the time value of the money owed the firm. Most firms do not charge interest on past due bills. But a charge could certainly be imputed on those bills left unpaid. Either way, it is a cost to the firm and affects the overall profitability of the firm. If you still can’t collect on the bill, it’s time to strike a deal. Something is better than nothing, and empowering the collections manager to negotiate is not a bad idea. Finally, stop the leak. Too often attorneys want to keep working for a client that hasn’t paid their bills. That has to stop. Unless you are in a situation where you can’t withdraw from the engagement, make sure you cut your losses and let the client go. The practice of law is a business. Establishing a comprehensive collections policy is vital to keeping cash flowing. Make sure your policy begins with a 10 Financial Management ILTA White Paper credit check, includes signed engagement letters, retainers and communications with the client, and ends with strong follow-up procedures and flexibility. Publish the policy and make sure all your lawyers are familiar with and follow the procedures. You’ll be in a better position to maximize your collections. ILTA nominations now open! ILTANET.ORG/AWARDS We are excited to announce ILTA’s 2011 Distinguished Peer Awards! This program allows you to recognize your peers, clients and vendors who have delivered great business value and transformational impact through their innovations and implementations, or have been champions in specific areas of focus for their organizations. Visit the website for all the details!