Today, law firms can improve their AR collections by subscribing to the firmTRAK reporting solution. This automation can outsource business processes, designed to translate the payment behavior of individual client accounts into KPIs useful for tracking and profitability reporting. A unified approach to doing business accounts receivable (AR) key performance indicators (KPIs) reflect client account payment responsiveness in the billing cycle. With automated reporting of client accounts receivable, law firms can proactively break the cycle of mounting debt, by understanding how to fast-track, outstanding client billing, into operations liquidity.
A General Theory of ‘Risk’ Reduction
Risk theories shared by the field of accounting and consumer psychology, suggest that loss mitigation is typically an iterative process requiring notice of issues along the way. A core priority for law firm operations, the risk of outstanding accounts within the billing cycle may be both a short-run and/or long-run threat to operational liquidity. AR aging reports, when regularly reviewed, enable law firms to identify and track risky client payment behaviors affecting the billing cycle before it is too late.
Once client responsiveness to the billing cycle is established with payment (or non-payment), figuring out what motivates them is the next step. Empathy is always an important lever for client relations management and can help firms by collecting information about a client’s income, circumstance, and ability to pay on time. An effective B2C communication method is to reach out to clients automatically with template reminders from your billing or accounting system. These auto-reminders can assist clients to stay on track during the billing cycle. The inclusion of AR aging report KPIs in letters, billing notices, and email reminders provide summary information to the client about the invoice term and schedule of their payment.
Proactive Solution to An Age-Old AR Problem
Changes in customer behavior can be an indicator they are avoiding billing notices and related communications because they have late invoices or other issues with payment. Sometimes a drop off in quality client communication is merely a matter of systemic confusion. The use of your AR aging schedule to monitor accounts approaching 0-30 days, 31 – 60 days, and later in the billing cycle, is a proactive solution for early communication with clients and can improve cash flow.
By staying on top of the billing cycle and individual client accounts, a law firm can analyze payment responsiveness, communicate about invoices or an outstanding balance, or address any issues the client may have with your service. Many customers have unforeseen challenges and would be willing to make payments according to a schedule. AR aging reports provide firm reliable data about the status of outstanding invoices on record. Reach out to clients with incentivized or convenient methods for payment (i.e., electronic payment options or discounts). These solutions to cash flow problems might not otherwise be evident without an AR aging report.
‘Break the Cycle’
firmTRAK automated suite of law firm reporting tools with Clio and Xero integration provides law firm subscribers the real-time analysis and KPIs they require to interpret billing risk. Break the cycle of client late payments with firmTRAK AR aging reports. Visit: https://www.firmtrak.com/