Why Your Firm's AR Is 90 Days Out — and Five Fixes That Work

Every firm with a receivables problem believes it has difficult clients. Almost none of them do.

What they have, nearly always, is a billing process that runs late and a follow-up process that does not exist. Both are fixable without a single awkward conversation, and both respond faster than most attorneys expect.

The pattern

Here is the sequence we see repeatedly.

Work happens in January. Time gets recorded, some of it reconstructed on a Friday afternoon. Prebills are meant to go out in early February but the attorney is in trial, so they go out on the 20th. Review takes another week. The invoice reaches the client in early March.

The client’s accounts payable runs on a 30-day cycle from receipt, so it is scheduled for early April. It gets paid mid-April.

That is January’s work collected in April. Nobody was difficult. Nobody chased anything. Nothing went wrong, exactly — and the firm waited three and a half months for money it earned in the first week of January.

Now let the same firm have a busy February, so March’s billing slips too. Within two quarters there is $90,000 sitting past 90 days, and the assumption sets in that clients are slow payers.

Why 90 days is the line that matters

Commercial collection data across industries shows the same shape: recovery falls as receivables age, and it falls sharply after 90 days. The precise percentages vary enormously by industry and client base, but the direction is consistent and well established.

There are practical reasons behind it. Memory of the work fades, and so does felt obligation. The person who instructed you may have moved on. Disputes surface — and they surface far more often at 120 days than at 30, because a client reviewing an old invoice is reviewing it more critically than one who remembers the work.

The implication is uncomfortable and useful: the older bucket is where the money is disappearing, and it is also where effort pays off most. Chasing a 30-day invoice is largely wasted energy. Chasing a 100-day invoice is not.

Run your own aging through the AR aging calculator to see what your buckets suggest.

Five fixes, in order of impact

1. Bill on the same date every month

This is the single highest-impact change available to most firms, and it is entirely within your control.

Pick a date. Prebills generated on the 1st, reviewed by the 5th, invoices out by the 7th. Every month, whether or not you were in trial.

Irregular billing does two things. It delays every downstream step. And it teaches clients that your invoices are not part of a rhythm — which means they do not become part of theirs either.

2. Bill smaller and more often

A $22,000 invoice arriving quarterly gets scrutinised, queried and escalated. Three monthly invoices of $7,000 each get approved.

This is not about the total. It is about which approval threshold the invoice crosses at the client’s end, and how much of the work the client still remembers when they read the description.

3. Follow up at 30 days, not 90

By the time an invoice is 90 days old, it has been ignored twice already. A short, entirely neutral note at 30 days — confirming receipt, offering to answer questions — resolves a meaningful share of what would otherwise age.

Much of what sits in your 60-day bucket is not refusal. It is an invoice that went to the wrong person, or sat in an inbox during a holiday, or is waiting on a query nobody raised. A reminder surfaces all of that while it is still easy to fix.

4. Take payment the way clients want to pay

If paying you requires writing a cheque and posting it, expect to be paid at the speed of cheques.

Online payment through a legal-specific processor removes a real point of friction. Use a legal processor rather than a general one: they are built to keep trust and operating payments separate, and to avoid deducting processing fees from client funds. That distinction is not a preference — a general processor taking its fee from a trust deposit has used client money to pay a firm expense.

5. Fix it at the engagement letter

The most effective collections work happens before the matter starts.

Clear fee terms. Payment due on receipt, not on some unstated convention. An evergreen retainer requirement where it fits the practice area, with a defined minimum balance and automatic replenishment. Agreement on who is paying — particularly where a family member or a third party is funding the matter.

None of this is a collections technique. It is scope-setting, and it prevents most of what collections work exists to recover.

The part that is genuinely a client problem

Some of it is. There are clients who will not pay, and no process fixes that.

The point of the five fixes above is to shrink that population to its true size. Most firms believe their bad-debt problem is much larger than it is, because slow-by-process is indistinguishable from unwilling-to-pay when you are looking at an aging report you have not worked in months.

Get the cadence right and the follow-up consistent, and what remains in the 120-day bucket is the real problem — usually far smaller, and now visible enough to make an actual decision about.