Jun 29 2009 Posted by

If your firm is like most right now, you are likely facing some challenges in collecting from your clients.

Law.com ran an article last summer titled "Nine Steps Law Firms Can Take to Get Paid."  While the article was directed at established firms rather than start-ups, it did provide a few good pieces of advice that can be applied to the start-up firm environment.

First of all, understand how important it is to collect your bills within the first 30 days of sending them out.  The longer the bill goes unpaid, the more likely it is that you will never get paid.  So, stay on top of the collection issue.

Second, it is an excellent idea to use professionals to help you collect your bills.  If they get more than 90 days past due, you will likely never see the bill, so at that point, it makes sense to bring someone else in to help you collect.  Having said this, bringing in the right help is more difficult than it seems.  Since I've started my firm, I've gone through quite a few vendors, and I've only recently found one that I'm happy with.  Having said this, I recommend that you start working on finding the right vendor sooner rather than later, since finding the right partnership can be a huge asset for your firm.

Third, learning how to run accounts receivable reports is a worthwhile thing to do--it is helpful to see where your firm stands in writing, even when you have the contents of your reports imprinted across your brain.  I recently started running regular accounts receivable reports and find it very helpful to have them in front of me on my desk, to remind me where the firm stands at all times. 

I have one other piece of advice: make sure your clients know that you do not intend to write-off your bills, if you are serious about collecting them.  I have found over the last few years that many clients are aware of the fact that firms often write-off unpaid bills without seriously pursuing them.  If, like many start-up firms, you can't afford to write-off client bills, then you need to make sure your past due clients understand this sooner rather than later.  In my experience, communication can be very helpful in speeding up the payment process.

All in all, like the article suggests, the best way to collect on your bills is to be proactive.  When businesses are short of cash, they tend to pay the most pressing bills first.  It is your job to make sure that your bill falls at the top of the "most pressing" category.