The Practitioner: Do partners realise Cash is King?
The Practitioner talks credit control - and hopes that the firm's other partners listen
JANUARY AND FEBRUARY have historically been pretty poor months for cash collection. I started the month determined to try to reverse this trend in 2012.
Part of the problem is that certain partners are unwilling to chase up some of their clients for the outstanding amounts, regardless of how old the debt is. In fact the older the debt, the more reluctant they seem to want to do anything about it.
Having been put in overall charge of credit control six months ago I have been determined to be ruthless when chasing debts in and not be influenced (or put off!) by the other partners.
A large amount of our debt over 90 days old is owed by a couple of clients who are experiencing financial difficulties. In fact they seem to have been having difficulties for the past four or five years. During this time we have basically acted as a credit line for them, taking ad-hoc payments when it suits them while continuing to do work for them when the deadline approaches.
While not totally against helping clients in times of need, by allowing them to spread the payment of our fees over a reasonable period of time, there has to be a realistic prospect of getting paid at some point in the near future. Just because a client happens to be a longstanding friend of favorite of a partner within the practice shouldn’t mean that they automatically receive special treatment when it comes to credit. Or does it?
There probably is no right or wrong answer and every client situation needs to taken on individual merit. Having worked with a few partners in my time they have each had different philosophies relating to how to deal with this problem. I have devised my own methodology for dealing with such cases, as follows:
1. Is the client a good referrer of work?
2. Does the client have a good history of paying on time?
3. Where does the client rate on our ‘client rating’ chart?
I’ll share the secret of our ‘Client Rating’ chart next time…..
Happy January.
The Practitioner’s uncensored thoughts come from the coalface of a regional firm in the heart of England
