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RETURN TO MAIN Collections – A Full Time Effort Presented by: James A. Nitzberg, Executive Vice President Select* Associates, Inc. Don Williams, Collection.

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Presentation on theme: "RETURN TO MAIN Collections – A Full Time Effort Presented by: James A. Nitzberg, Executive Vice President Select* Associates, Inc. Don Williams, Collection."— Presentation transcript:

1 RETURN TO MAIN Collections – A Full Time Effort Presented by: James A. Nitzberg, Executive Vice President Select* Associates, Inc. Don Williams, Collection Consultant

2 RETURN TO MAIN The Value of Professional Services The Perceived Value of Services provided Today Decreases Rapidly with the Passage of Time Chester L. Karrass Author, Speaker, Negotiation Expert

3 RETURN TO MAIN The 7 Steps to Effective Collections 1. Timely Billing 2. Timely Collections 3. Create a Firm Collection Policy 4. An Organized Approach to Collections 5. Ask for your money 6. Document…Document…Document 7. Measure Results

4 RETURN TO MAIN The longer an account remains unpaid, the lower the probability of collection. Important Collection Fact

5 RETURN TO MAIN According to the Association of Commercial Collectors: The probability of collecting a payment 90 days past due declines 12% for each additional 30 day period. Based on a study by Dunn & Bradstreet

6 RETURN TO MAIN Probability of Collection vs. Time

7 RETURN TO MAIN Attorney Thoughts about The Collection Process The Top 10 Misconceptions related to Attorneys and their efforts to Collect Money from their Clients

8 RETURN TO MAIN Top Ten Misconception #1 We need more Time The Theory: If I give my Client enough Time, theyll eventually pay my bill In Reality: If you havent been paid in days, theres a reason for it – and its not likely to go away automatically

9 RETURN TO MAIN Top Ten Misconception #2 Dont Offend My Client The Theory: Dont YOU (the collection staff) call MY Client. Youll offend them and they wont pay. In Reality: Many A/R issues can be resolved quickly by the Law Firms Professional Collectors – provided theres no primary issue with the quality of work performed or a billing error

10 RETURN TO MAIN The Theory: Send them a 4 th reminder letter. Theyll pay after this one In Reality: If they havent paid after the first reminder, theres something wrong. Another mode of communication is necessary. Top Ten Misconception #3 Only Send Reminder Letters

11 RETURN TO MAIN The Theory: Lets not bill them this month. We dont want to add gasoline to the fire. In Reality: By delaying billing (and ultimately resolving the entire A/R) youre actually putting yourself in further jeopardy since your Client doesnt know the full amount of what they owe. Top Ten Misconception #4 Stop Sending New Bills

12 RETURN TO MAIN The Theory: Lets wait until we are COMPLETELY done with this project, then well negotiate. In Reality: Unless you have spelled out a settlement amount or formula in advance – this sets your Firm up for a large potential discount at the end of the project. Top Ten Misconception #5 Wait until we complete all work

13 RETURN TO MAIN The Theory: Eventually my client will recognize the true value of the services I provided several months ago and they will pay the bill. In Reality: The longer the gap between services provided and payment – the less likely your Client will remember how valuable those services were. (Remember the Chester L. Karrass Theory) Top Ten Misconception #6 Do Nothing: My Clients are Trustworthy

14 RETURN TO MAIN The Theory: We cant push too hard to collect the receivables. It will damage our relationship with my Client In Reality: True – you do have to be careful about your approach – however you need to resolve A/R disputes as quickly as possible. Not resolving the dispute can actually do more damage. Top Ten Misconception #7 Collection Efforts? Thats too pushy!

15 RETURN TO MAIN The Theory: I wont stoop to asking my client for money. I always let my collection staff handle that In Reality: There is a definite time when the Attorney needs to be involved – since they are providing to the actual work product. This is especially important with large A/R Balances. Top Ten Misconception #8 An Attorney should never ask for Money

16 RETURN TO MAIN The Theory: Im a busy Professional Attorney. I dont have time to stop and make collection calls. In Reality: At times, Attorneys cant afford to NOT make these calls – since unresolved A/R can affect a Client Reference and the Attorney/Client Relationship as well as stall consideration for future business. Top Ten Misconception #9 Im too busy to collect my money

17 RETURN TO MAIN The Theory: We cant possibly ask for our money now! Im working on closing a much bigger, better, more lucrative deal! In Reality: This is a dangerous thought process – ideally your Firm must clear up one outstanding set of issues prior to taking on additional matters. Top Ten Misconceptions #10 Im Working on the Next Big Deal

18 RETURN TO MAIN Whats Next? Your Firm is committed to creating a collection Policy You have buy-in from your Attorneys This could be the subject of another presentation by itself How do you get started?

19 RETURN TO MAIN Don Williams – Biography 28 years in financial services industries Worked at six different law firms as a consultant and employee Survived eight year ends: Hit list, Cattle drive, pledge drive, Target list and…the Bible. Has worked with four collection software applications Currently Credit/Collection Manager with international law firm

20 RETURN TO MAIN Business of Law vs. Laws of Business.

21 RETURN TO MAIN Provide the service and… Get paid for it.

22 RETURN TO MAIN Monthly statements are sent to all clients listing all open invoices. Have a formal written collection policy detailing exactly when clients can be contacted. And…have the support of managing and/or senior partners. Common collection strategies of successful firms:

23 RETURN TO MAIN Monthly Statements – an absolute must! From the cable company to the phone company to the electric company – everyone sends bills, and every one of your clients expects to receive them in the mail on a regular basis. Why not law firms?

24 RETURN TO MAIN The cover letter should be simple and to the point. Dear Client: Attached you will find an Account Statement listing all open invoices as of 08/20/2007. Please take a moment to ensure the individual or department responsible for payment of legal services has received all of the invoices listed. After review, if you have any questions or need additional information, please contact Don Williams at your earliest convenience by calling…

25 RETURN TO MAIN Invoice date Invoice number Matter # and name Amount due Total due for all invoices listed The Account Statement should include:

26 RETURN TO MAIN The First and Best Contact Firms Accounts Receivable Clients Accounts Payable

27 RETURN TO MAIN Collection policy Must set clear and simple guidelines for delinquency control. Example: A client will be contacted by the collections team when any of their invoices exceeds 90 days outstanding.

28 RETURN TO MAIN Ensure all collection contacts are documented. All s, phone conversations, documents faxed, etc. Track collection activities on a regular basis. Check payments daily. Push to clear unidentified payments ASAP. Switch assignments if stagnating. Never assume a receivable is too old to be paid. Address partial payments ASAP. Once statements are in place and policy is set:

29 RETURN TO MAIN Use first six months of year to clear older A/R once and for all. Promote use of credit cards for payments for chronic slow-paying clients. Assign one person to embrace technology and learn it inside and out. Ensure consistency – Client vs. matter vs. invoice level review Once statements are in place and policy is set:

30 RETURN TO MAIN In collections… Creativity Count$!

31 RETURN TO MAIN Largest balances Date last paid Date last billed Invoices over 90/180/365 Unapplied cash Short-paid invoices Days to pay Never left blocks ( no payments made ) Reporting vs. Results Use the collection technology available to slice/dice database

32 RETURN TO MAIN An experienced collection team is best. Ledger cards were great, modern technology is better, and …

33 RETURN TO MAIN Collections – A Full Time Effort Presented by: James A. Nitzberg, Executive Vice President Select* Associates, Inc Don Williams, Collection Consultant

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