Profit First for Lawyers It’s Time To Take Your A/R Seriously
I know you don’t want to talk about your A/R, but you’ve got to talk about your A/R.
– RJon Robins, author Profit First for Lawyers
If you’ve ever looked at your accounts receivables (A/R) as simply delayed income, this episode will completely change how you understand what those unpaid invoices are really costing you. In segments pulled from the A/R section of Chapter 13 (pages 120-121) and the A/R section from Chapter 14 (curated from pages 133-138) in the Profit First for Lawyers book, you’ll discover why outstanding A/R isn’t just inconvenient, it’s actively sabotaging your profits.
From The Recording Studio
RJon breaks down the hidden mathematics of accounts receivables with a step-by-step demonstration that reveals how one non-paying client can force you to work two additional cases just to break even. But understanding the problem is only half the battle. RJon also lists the specific reports your bookkeeper should be providing you every month to stay on top of your firm’s A/R.
Key Takeaways:
- Every dollar you collect from A/R is pure profit since you’ve already incurred the costs to do the work
- A good bookkeeper will generate aged A/R reports broken down in 30 day increments, with client name, contact info, and lawyer working on client matters
- Unpaid invoices create a profit cascade effect that can force you to work multiple additional cases to break even on one non-paying client
- Movement tracking in A/R reports reveals when staff members are doing unauthorized free work
If you’ve ever wondered why your firm stays busy but your bank account doesn’t reflect all that activity, this episode will connect some dots you may not want to see, but absolutely need to understand. Because you can’t keep working for free and expect to have a profitable law firm.
Resource: Profit Leak Assessment
The Profit Leak Assessment is a practical, on-demand course to help law firm owners find thousands of dollars in potential profit leaks. Karli teamed up with Evelyn Aucoin, Financial Literacy and Strategy Expert with How To Manage A Small Law Firm to create this resource for law firm owners. Click the button below to start plugging the profit leaks in your firm. Your future self will thank you for it!
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