The 2003 Financial Management in Law Firms Survey revealed that, on average, 85 per cent of firms surveyed took more than 60 days to collect fees.
The 2003 report revealed that an unnecessary strain was being placed on firms’ finances and cashflows due to inefficient working capital management. PwC found that last year 65 per cent of the top 100 firms surveyed had average debtor days that exceeded two months. But instead of addressing the problem with receivables management, firms have let their averages slip further.
The report also found that the delay in collection was exacerbated because firms tended to delay sending invoices to clients. Instead of prompt billing, 45 per cent of the firms surveyed issued more than 30 per cent of their yearly bills in the final quarter of their financial year.
Peter Buckle, head of PwC’s receivables management group, said: “Escalating staff costs are squeezing law firms’ profits, so in order to remain commercially competitive they need to improve their financial management.
“There are easily identifiable ways of cutting costs through better billing, collection and general cash management, which law firms need to implement this year.”