Mistake # 2 – Not Having an AR Management System:
Accounts receivable management is essential in a well-run company. Without it you are guaranteed to reduce your cash-flow, which is the lifeblood of any expert witness consulting practice. As in your forensic analysis, a consistent and dedicated AR system yields superior results to an inconsistent or haphazard approach. In my practice I have come to recognize several critical components in any successful AR management system. Below are a few of the most important:
- Consistent Sending of Invoices – Sending invoices at the same time each month is very important. It allows your clients to know when an invoice should be arriving. It is best to invoice twice a month rather than once a month, as it is proven that smaller invoices get paid faster than larger invoices. Convert your invoicing to twice a month and watch your cash-flow grow.
- Invoice Confirmation – Contact your client within a week of invoices being sent to them to confirm receipt. If they have not received your invoice, this allows you to present them with it again before the invoice becomes past due. If they have received your invoice, this will give your client an opportunity to ask any questions they may have based on the invoice you are calling about (and confirm there are no issues that will hinder payment later). It also allows you to remind them of the due date.
- Invoice Follow Up – If you have not heard back from your client, it is important that you continue to follow up with them. A continued follow up lets the client know that you have an eye on their invoice and they will continue to hear from you again if the invoice is not paid on time.
- Recording Your Clients Payment – As soon as you receive a payment, mark that invoice as “paid”. You want your records to be current. It is easy to irritate a client by contacting them regarding a payment that has already been made. If your records are not current, you will spend more time wasting time than serving your clients and making money.
- Consistent Contact with Clients – Having an AR consultant that represents your firm and is in consistent contact with your clients helps to develop an ongoing relationship with them.
Healthy cash-flow is essential to the health of your consulting practice. With it you have options and the ability to hire the right people, purchase the right equipment and expand with your success. By utilizing a dedicated AR management system, you will give your business a solid foundation for growth.
Stay Tuned Next Week For #3, Leverage!