Getting clients to pay on time is a major issue for businesses and professionals everywhere. Lawyers are no exception. A LexisNexis survey indicated that almost three-quarters of all firms experienced past due accounts.
Here’s an Infographic from LN to explain the position.
Invoicing and billing present steep challenges for law firms. According to a recent law firm billing surveywe conducted:
- 73% of law firms report experiencing past due accounts
- 58% say they spend too much time on billing
- Roughly half of small law firms say about 4 in 10 accounts are past due
- 82% report client financial hardship as the root cause
We’ve pull together the infographic embedded nearby based on this survey data and it’s this week’s Friday Share.
Download a copy of the white paper based on this survey:
Nine Signs Your Firm May Be Its Own Worst Collections Enemy
How to Analyze a Past Due Problem
The infographic provides several ideas for addressing the problem, which includes for example, conducting a client analysis. The survey found that while the overwhelming majority of small law firms use software for invoicing and billing they may be overlooking reporting features in these programs for doing just that.
What sort of reports and analysis? Useful reports to consider:
- Time-to-pay. Which clients or types of clients are fastest to pay invoices?
- Outstanding accounts receivable (AR). Which clients, or types of clients, have bills outstanding and for how long?
- Time tracking analysis. Comparing work invoiced vs. actual work performed (this is useful for understanding the profitability of a flat fee).
- Client profitability. Which clients and what types of cases are most profitable?
- Top clients. Who are the top clients by fees billed vs. fees collected?
If a law firm understands its client base in this level of detail, it can begin to focus its business development efforts to finding more clients like this – and ideally avoiding this challenge altogether.
Click here to enlarge this infographic