Collections--Don't Just Leave it to Partners

Source: Possibilities for CPA Firm Leaders

Following are excerpts from a blog entry by Rita Keller, reproduced with permission.

A documented, widely published collection policy is the foundation for good cash flow, the life-blood of a firm.

• It must come from the top--all owners.
• They need to meet, discuss all of the options and arguments and come to agreement on what they can truly live with, for the good of the firm.
• Management drafts the document and all owners review and approve.
• The written policy is communicated to all team members and is posted on the firm's Intranet.
• Everyone involved--managers, staff, controller, administrative assistants, firm administrator--thoroughly understands and monitors compliance with the policy.
• AR statements should be mailed monthly to ALL unpaid accounts.
• A service fee should be applied for balances over 30 days.
• Collections should be performed by a part-time administrative person who is skilled in client communication and has no other priorities. This person's role is also defined in writing and they operate within certain parameters.
• They begin calling (not emailing) at 31 days. I used to say 45 days but during the current economic downturn it is better to do it sooner.
• When the collection specialist exhausts all avenues with a particular difficult client, or when it ages beyond 90 days, it goes back to the partner in charge of the client account for collection, along with Managing Partner involvement.

To read the entire blog entry, click here.
From Possibilities for CPA Firm Leaders, the blog of Rita Keller, president of Keller Advisors, LLC, [email protected], "Collection Policy," July 1, 2009.