Accounts Receivable with CollBox

Welcome to Accountants Law Pod, where accounting professionals and law firms converge, hosted by Linda Artesani, Sarah Prevost, and Steven Leibhart.

Welcome to the Accountants Law Pod. I'm Linda Artesani, and I'm here with my lovely partners in crime, Sarah Prevost and Steven Leibhart. I probably said his name wrong. Leibhart. And I've got— we've got a guest today. We've got Matt Donner and Cameron Degetel. Did I say it right? Desitelle.

You did.

And they're from Coalbox. And we are— we have a fantastic topic today. And the topic is about accounts receivable with attorneys. And if you are a legal bookkeeper or accountant or just a regular bookkeeper and accountant and you do work with attorneys, so first place our eyeballs go when we get our— well, second place, I shouldn't say that. So the trust account is the first. And the second place is we dive into looking at the accounts receivable that are— that's on the books. Kind of a big job. We have to validate that number, but it's also a place that we can become the hero for our client, because if we are able to help get them some money in, you know, that makes us— it's money that most of the time they think that they're never gonna collect on. So it's, it's a great topic this week. And I'm excited to have you guys. And I was just saying to Matt that I don't know if you remember the first time I met you. I had like, I think I had like 16 shirts on that day at the 17-shirt challenge at Scaling New Heights. So I'm gonna need a new shirt at Scaling New Heights because my shirt's way too big. So I need, I need a smaller one.

We need a 3X or whatever, whatever the biggest shirt you had.

Mine was a 3X. I was massive.

Scrambling to find one that would fit.

I was a medium.

No, I'm kidding. It was big.

There you go. Absolutely. That was really embracing layers.

Well, those, and those shirts, I gotta say, I got that shirt in San Diego at ZeroCon and that is my shirt. Like, I'm like that. I don't care if that tatters. I'm just gonna hold onto that thing.

It's a comfy one.

I love it.

It's so comfy. Yeah.

A lot of people don't know that about us. You know, we're actually more of a clothing company first. But we're kind of the underdog. Yeah, we're like that secret, secret accounting, uh, accounting tech app that has incredible shirts but doesn't get all the fanfare that you've heard from other companies, which are also nice. But we've got some pretty good shirts kicking around.

If you're going to be at Scaling, which is a conference that we're going to be going to, and this should air before it, But I'm gonna pick Steve next to give us a little bit of a conversation on what you think about when it comes to lawyers and accounts receivable or cash flow.

Well, thanks, Linda. I, I run into quite often with, especially with solo attorneys who are just fresh out of school, they're ready to conquer the world. They think they're gonna make $1 million the first year. They don't go out and get their retainers and they get in trouble. And Or the scenario where maybe a mid-sized law firm hires a junior attorney or an associate to join their team and they don't really teach them anything. And, you know, they find themselves in trouble with the accounts receivable. And while they may be great lawyers, they're not, they're not real good business people. And so they, you know, quite often it's the paralegal, it's the accounting department, it's the executive secretary, the receptionist. You know, having to collect the money, and it turns into a giant spaghetti. And so I'm really excited that you guys are here because this sounds like a solution, an answer, an option for them, and helps us help them. One of the workarounds that I've done in the past with law firms is work out a KPI for them on collections compared to retainer balances. And what does that KPI look like? And if you can start educating them that, you know, get that retainer money upfront, you're gonna have a lot less problems on down the line. And, you know, retainer doesn't always cover everything. A lot of things do end up flowing into accounts receivable. You know, maybe they get a $5,000 retainer, but they do $10,000 worth of work because it just grows and grows. And then they have this additional $5,000 in accounts receivable that all of a sudden the client Starts dragging their feet, the case is over. And now what? And there's no assets. There's, you know, there's nothing there.

It's just no leverage.

What is it? You know?

Yeah.

And these are the important conversations we want to have with our clients because sometimes something simple as, okay, you do your billing. We always ask that question in the discovery. When do you do your billing and your invoicing? And they always like the first or the end of the month or whatever. And then Sarah and I, you can sit and look at them and say, okay, well, what if we did it twice a month? Because if they're a bigger firm and they're stretching themselves out that thin, That they're upside down, kind of. It's not a great thing. And you could add in that invoicing. So it's not a big job for us too.

Well, part of what I was discussing about on that topic, Linda, that you mentioned was depending on your billing, depending on your AR aging, when do you pay your bills for the firm? When's payroll due?

Right.

So, and how does this all tie back? And when you're looking through that cash flow lens, that's where that Steve, what you're saying is just on point. But I feel like when you come in and you want to be that hero, but really what you're doing is also you're validating your worth, you're helping them drive at this point, right? And then on top of it, it's a way to be like, hey, it's paying back for the services I just walked in the door and gave you. So here's the value into that. And then you're also looking at workflow, I imagine. And When your own firm as an accounting professional, you're seeing this at the bird's eye view and you're coming up with tangible things, but we're not the implementers sometimes. I don't want to be your paralegal babysitter and like, hey, let me get your AR. I want to work with a firm that actually will do that and work in tandem with us and support that. And I feel like that's where Cameron and Matt— and I feel like Cameron, it would be nice to hear your story to help kind of continue this conversation.

Sure, absolutely. I also just wanted to add on to what you said. You know, it was a really good point about the invoicing frequency, right? And timeliness. You know, we see that kind of when you invoice shortly after the work, you create an expectation that you care about getting paid on that in a timely fashion. And I'm sure we've all had that invoice from a designer or somebody who shows up 3 months later and, you know, you kind of feel like, Yeah, the work happened 3 months ago, but you didn't care about getting paid. I mean, do I really care about paying you quickly? So you kind of set yourself up with how you want to be treated, essentially.

Totally hypothetical, but this exactly happened to us. I know exactly who he's talking about because we had some great work done that we loved the work, to be clear. We were thrilled with it. There was no issues, never mind disputes and all those other things. But yeah, I think 3 to 6 months, it was crazy. And then it finally showed up. We had forgotten about it, basically. And it created a really kind of— we're quite salty about it. Even this, this work we were very thrilled with at the time. And it's interesting that you can sour a relationship over just time, right? Nothing else has changed.

Absolutely.

Oh, that's a good point. I love what you guys are saying.

Yeah.

So as far as our origin story though, you know, we really kind of came up in the accounting space. I mean, we started in 2015 after winning a hackathon with Intuit for best new integration. So we won the grand prize there at that 2015 QuickBooks Connect. And at the time, And so at the time we were really focused on late-stage AR and, you know, really collections and trying to clean up that process and make it more efficient. And, and it was really along the way that accountant partners like, like you guys sat us down and said, hey, we have these clients that have early-stage AR and tons of it, and that's actually a bigger problem for us, you know? And so we realized we were just missing this important half, this really critical half of the balance sheet that really provides the liquidity, the cash flow that these businesses need to survive. So just, you know, 1 or 2 years ago, we really pivoted and we said, that's really where we need to focus our attention. It's great that we have this escalation path for the real problem accounts, you know, but we really need to help everybody, help our customers, you know, every week, every day, you know, all the time, right? And really just wanted to take on that whole AR pipeline. And to what Stephen was saying earlier, you know, about who's kind of doing the AR work within the firm, I mean, the other thing we see in legal in particular is that often the responsible attorney is the one chasing their own invoices and you just look at their billable rate and it's like, this, this doesn't make sense, right? There are, there are alternatives here that make more sense.

And they don't wanna do it. So they ignore it and then it builds. We actually, Sarah and I were talking about the other day, we actually had a lead come by our way, which was a while ago that they had $1 million in AR, which we said we, we gotta find that. Remember who, try to remember who that was.

We're gonna find that and refer it to you because we don't—

Name because we didn't end up working But yeah, I mean, that happens. Don't be surprised as a bookkeeper if you pull those records up. And part of our job, especially with a job with, um, with, with our scope, is we have to make sure it's real, those numbers real, right? We don't want to be connecting any, anything, any software that if it's not real. But once we've determined the right numbers, uh, it's something that you can help us with. And that's the big thing. So, um, Matt, why don't you explain what you're doing? Because it's totally different model than what you had earlier.

Yeah. Yeah.

It's interesting because I feel like with the pandemic and just how that all played out, we all, you know, not as many live events and things like that. A lot of the accounting community that we're good friends with, obviously those that we're close with, like you guys and a few other firms know about this change. And we've been, we've been pushing really hard over the last couple of years. But most people, I think, still think of, as Cameron mentioned, you know, oh, Callbox, they're like the collections guys. And that feature hasn't really gone away. Like, as Cameron mentioned, we can still help with really late-stage accounts. And help them find a good professional. But yeah, this is, this is wildly different, right? So I like to say it as we take over all of the follow-up associated with the invoicing of a business, and particularly now, and working with you guys especially, really focused on helping law firms in particular, right? And so what does that mean for us? You know, we, we integrate with either the accounting or the practice management system, right, where all the invoices and bills live. And then we really use a mix of some intelligent automated email reminders, generating of statements, resending of those invoices, relaying the payment instructions from the firm to the client so they know exactly how to pay. It sounds funny and very obvious, but a lot of the issues around cash flow are showing up on time in a persistent way and really just making it clear how to pay. Right. And making sure they have the invoice, whether it's true or not. The number one cited reason for not paying is, oh, I didn't get that invoice. Well, the first part of what I'm saying makes sure that that's never really true. So we take care of that. But critically, the big differentiator with us, right, and what I don't think you'll find anywhere else than Callbox is we went to work, as Cameron mentioned, a couple of years ago, and we started building a team of folks we call AR specialists. So they're on the Callbox team. We recruit from the accounting and AR industries, and we just have true blue human beings on our team, you know, that know AR, know how to have a friendly phone call, and but also are willing to be persistent. And it's a It's a very— it's a really nice way to take it from that just pure tech piece versus that pure escalation. Oh my God, you know, collections is such a big move. That's when you're done with the relationship, right? And now it's like having an extension to your office. It's— I like to frame it as almost like a fractional AR clerk, because what I find is most law firms or many businesses in many verticals, they have sufficient AR that it matters. Clearly, this cash flow is the blood of their business, right? It is critical. But then they also are caught in this, this chasm, right, where they feel Like, well, I don't have enough to hire someone for $40,000 or $50,000 a year, which is the going rate for an AR clerk right now, plus benefits and hiring and all the fun that goes with that. But so they do nothing, right? It falls to, as we already touched on, the office manager, the reception folks, the responsible attorney. Sometimes the managing partner of the firm is making— the name partner is making collections calls. And thus they're just caught up in this huge efficiency spaghetti. I think I like what Stephen said earlier. And it becomes a problem, right? So I think we really inserted ourselves at the right spot to help the small to mid-sized people who feel like there are no other options. And so, yeah, it's been honestly, it's been amazing since we did that. I feel like it's telling because it's one of those things you're like, well, I wish we'd started with that because that's gone pretty well, you know, like way better than the first thing. But yeah, it's been fun and we just help people get paid at a fraction of the cost.

I love it. You've gone through an evolution yourselves. Which is what all business owners go through, which we see in our own firms like Steve's. I have personal conversations. He's shared so many different types of firms that he's seen through his tenure of evolution. But the thing that you said earlier, which I was like, oh my gosh, why? So it's all too common that this is happening. Like, obviously you have a bigger perspective lens than just law firms.

Oh yeah.

That's crazy. Like that, like we work so hard to not get our money.

Yeah.

Yeah.

So a couple stats worth throwing out, and you'll find these from some industry reports that come out every now and again. But, you know, pre-pandemic, right, I think we're all still kind of waiting for some data, and there are some things going on in that, and we look at it on our side as well. You know, before the pandemic, you know, the average SMB, and I think that would include some law firms as well, many law firms, right, kind of small to mid-sized company, carries about $80,000 in AR at any given time. And that's tip— that's average. That's typical, right? And when you just think about what that means to growth, ability to execute and things like that, it's a, it's to my mind an insane number. There are much larger numbers. We, uh, Linda, I think you mentioned you saw someone come through and chatted with them. They had $1 million in AR. I wish I could say that was uncommon for us. We see that all the time because whether they were coming through the door to take advantage of like using our service to help with like 1 or 2 Really difficult accounts to escalate to collections, things like that, you know, but they connect their books. That's how we do what we do. And we can kind of give them some great reporting and guidance on, hey, this is a problem. You know, just awareness I think is important. But I just wish I could tell you that that wasn't all the time. Hundreds of thousands of dollars, sometimes millions and millions of dollars. It's, it's extreme. I feel like it's, it's like a— it's a walking catastrophe for business in America. I'm sure in other countries as well. But like, no one really talks about that, right? We talk about a lot of other things in business and efficiencies and things like that. But law firms, I got off a phone call earlier today and, you know, there was someone, it was a firm I was chatting with about our services and they basically said, well, you know, at first they're saying, well, I think we're okay. You know, we usually get paid within 90 days. It's not so bad. And I'm like, we need to have like a reframing kind of moment here. Like, you've normalized something awful.

You pay your bills in 90 days?

Like, come on.

Like, really?

We've—

they—

it's not just law firms. I don't want to pick on them either. It's like formalized some very bad behaviors. Right. And really just poor expectations of how people are going to treat us. Right. As businesses. And it's just unacceptable.

There's that psychology, too, of the sales process with a client. And a lot of times, excuse me, whether it was a good transaction or maybe a negative transaction, which happens a lot in law firms, Of course. They're afraid of pissing off their client at that point in time. They're like, oh my God, no, I don't want to call them. I'm going to upset them. I might get future business from them. Can you talk about how you handle that?

Sure.

When you guys get involved?

Yeah, for sure.

Yeah, absolutely. Yeah, I think I can add a few things there. You know, I think part of it is sometimes that anxiety is actually what stops you from taking the action you should take rather than—

It's the psychology of it.

Right. Rather than kind of being appropriately scared from doing it, you know, you're kind of inappropriately scared from doing what you need to do, right? But as far as, you know, making sure that like what we do is what they need and handled professionally and appropriately, you know, we take a lot of care to log everything we do, be extra transparent with our customers about here's exactly what we're saying to your clients, right? I think that's very important. I mean, beyond that, you know, whether you're doing it yourself or you're using a service Like us, you know, it's as long as you're professional and just kind of sticking to your script. I mean, you're, you're pretty unlikely to run into any trouble there, right? It's when you're working with somebody who is either not close to the firm, doesn't have a close relationship, or understand what the legal industry needs. And you know that you need to be professional and gentle, right? And not kind of forceful in those follow-ups in a way that might, might lead to some kind of backlash. You know, we, we really believe it's It's not as big of a problem as most people anticipate. And it's just, it's that fear coupled with the fact that, like, asking for money is never fun, no matter who you are, that leads people to just put it at the bottom of their to-do list, right? I'll get to it next week. I'll get to it next week. You know, and then 90 days go by before you're even asking for it.

And then they write it off. Honestly, they go for the least friction, which is writing it off. They've earned it.

Absolutely.

Absolutely. The whole thing is that they've earned it. And yeah.

That's a good point. That's a very good point, Linda. And law firms, You know, they're notorious for getting their pre-bill during the billing process and they're like, you know, it could be $10,000. And the attorney goes, well, courtesy discount, $2,000. And then 90 days later, there's still $8,000 sitting out there that's owed. And then they're like, oh, just write it off.

I feel like courtesy discount needs to have a caveat. Courtesy discount if paid within—

Yeah, there you go.

Exactly.

You know, that's great.

Build in the time. And one thing I wanted to add to what Cameron said that I think is really important for particularly the smaller firms because they, they do so much, right? You don't have as much administration and other help in these areas. I think that something that is critical is, um, kind of divorcing yourself from the billing process, the collecting process at least, right? And there's this thing that happens where, uh, so lifetime, you know, sales and business development guy here, right? So I, I sell for a living most of the time. I love talking, and Linda and Sarah know this. Well, all of our meetings go twice the allotted length, so— but I'll try to keep this point brief. But it's— it's the relationship, right? It's in law is the same. And in many of my past jobs in my career, it's like, it's that— that's my— that's my relationship. That's my guy. I'm their guy. Like, here we go. We're really good friends. We've gotten to this amazing place. They're so excited about the service. Obviously, it depends on the situation in the matter for law firms, right? May not be excited, but happy to have a solution. It's a relationship. And what happens is Particularly in professional services, when your job is to regularly provide value, whether it's following up on a matter and the continued work there, or if you're a marketing agency and I'm just developing your website, if you, the person who's delivering the value on a regular basis, are then becoming associated with the collection of money, and that's never fun, even for the one paying.

Yeah.

There's a, there's a mental connection that happens. And I, and I think that somewhere intuitively, the The firm owners or whoever has to do this knows this. They're getting lumped in as the bill collector type person, and then there's actually a real danger. I think that when when your number pops up on caller ID, they're going to go, "Ooh, he's looking for money. She's looking for money. I'm going to let that one hit voicemail." Then you then you're actually running into trouble providing value, which creates this sort of snowball effect of well, you never really did done anything for me, and then I don't want to pay. Like it really can create this. It doesn't happen all the time, but you don't want to be associated with the the administrative. administrative burden or the process really of following up on invoices. And so I think, you know, obviously I'm biased for what we do, but even if this is a team member, it's not you, you the responsible attorney, not you the managing partner, certainly, right? You know, someone else's job is to do that and to only do that and not drive value either. My relationship is with the attorney or the paralegal or whoever might be helping me, right? And then my financial relationship, my administrative relationship is way over here. And the cool thing that happens when you do that, Again, not even if you use us, just set your firm up that way. You get to say, oh, that's the process. Like, that's just the policy. I know that sounds really silly, but you get to say something like, oh, that's it. It's as if it weren't in your control. If you're like the owner of the firm, you're like, oh, it's just the policy. It just happens. I don't know. And it sounds funny, but there's this plausible deniability and this separation. And then you go, oh, I don't have to be the bill collector. I can just focus on the work, which I love. And then you get paid though, right? And that's so critical to that.

Man, I love that. I mean, I don't know about you. I can see Linda and Steve are both like, yes, because you're right. You delineate yourself. I mean, if you're the reception, I mean, we do it in small business, right? You strap yourself, your marketing, receptionist, sale, everything at some point, right? And even just even in our own space, and we're going to gravitate Steve into this at some point. We— Tira handles all of our scheduling and I can't, I just can't do it anymore. I just don't want to. It's just too much. And I like that I can show up and I can trust that somebody can be that. One thing I wanted to ask specifically is, and Cameron, you said this and Matt, you kind of alluded to this too, is you do have staff. So when you're hiring an accounts receivable management service, whether it be in-house or not, you really kind of want to kind of not dictate, but as a partner, as a managing partner, you really want to be able to be careful depending on the relationship. Obviously, you don't want to walk out the door and have this person just harass somebody every day, right?

Absolutely.

Like, so is there space in what you're doing to be able to customize or tailor an approach Because you're gonna have to do that anyway with an employee. So by having a service that specifically does it, take that overhead factor off you. I mean, we're looking at mitigating higher expenses, not because we want to replace jobs, but because it helps us get the work done. And it's a service. We need to think of it like a service is what I'm hearing.

Yeah.

It's a service that is intended not just for, I mean, it sounds like you could do small things and big things. You could do project work or you could do big things. Which means manage the whole firm, which for a small firm, that's huge in that AR management.

Yeah.

Yeah.

Let's see. There's a couple interesting things. So there's a question around customization. You know, what I find is most businesses of any kind, law firms too, like everyone's in this bucket. They don't really know what to do, you know, around AR. Like who knew? Like before we, I mean, we've been at this a long time and we've developed these skills over a long period of time. And also we've hired the right people to continue to level up our knowledge of AR best practices here. You know, so, but yeah, who knows before that, you know, if you'd asked me 15 years ago, what's, what are AR best practices? I, I wouldn't have been able to tell you. I really would not. I'm just gonna be, I'm gonna come clean on that. We had to do a lot of learning ourselves over this, but I think you recruit great talent and you build up from there. And, and then the, the internalized knowledge of that is now high over here, right? And we feel great about that. But, you know, it, it's not rocket science. I think that you need, You need an underlying cadence, which is pretty much like I keep referring to, like clockwork persistence showing up. It is that you don't— the big issue is like if you're not top of mind, it's like in Cameron's example, joking example that was real for us, you know, it was like if you don't show up every once in a while, I'm going to forget about that bill. If I don't know it's there, I never received it is like the gravest sin, right? If you don't invoice at all, but then, you know, if you don't follow Even just gently and regularly, it just falls off, right? And so top of mind is huge. So we have a pretty standard basic cadence that we do for almost everybody and it's not crazy. I'll give it away, but like, it's, you gotta hire for it, you gotta staff for it. So like, we're not hiding the knowledge because it's not anything crazy, but, you know, we do weekly email reminders. They're very friendly. It functions like a statement and that's on an initial outreach and I'll kind of put 2 buckets there. And then by day 10 to 14 days past due, that's plenty of time to have like sat on that email. A long weekend's happened, your cat was sick, you know, something's happened. Okay, they couldn't do it. It's fine. You know, it's no worries. You know, most people, we want gentle, right? It's not about harassment, as you said, is a very good point. And then we escalate to a human, right? Because at the end of the day, like I said, the big deal with us is trained AR experts jump on the phone for you because calling people for money is not fun. And so they They pick up the phone and it's that friendly reminder. But ooh, now we took it from clearly an automated email. It's evident that it's automated to, wow, this friendly person just reached out. Okay, they're paying attention. I think Cameron said it well. It's like you're demonstrating that, hey, we're friendly, we're good, but I do care about being paid for my work. I value my work and myself and our business. But it's subtle. You're not saying any of this, but you are, right? In some ways you're communicating it still. And then we use when it's, when I call it the initial phase, which is establishing contact, particularly for those where there's not like a, they're not already paying, they're kind of as of now, it's kind of in, it's a big question mark. Are we, are they going to pay? Have they received it? So we use a pretty automated series of calls and emails or not automated, but I should say scheduled, you know, cadence to get in touch and then it just gets very dynamic after that, right? Well, Sometimes they pick up the phone and say, call me on Tuesday, I'm going away for the weekend, you know, like, okay, great. Like, and then, you know, you got to be persistent. So you need tracking, you need something like a CRM, you need to be able to schedule that. Depends on your volume, but you can't keep it up here. You know, going back to the sales guy thing, you know, we use HubSpot as our CRM over here. I've used Salesforce, there are plenty of others. Any— in my career, any sales guy, and this goes for any role where there's task-based follow-up, if you You think you're going to remember it all, you are not going to. Not if you achieve even a tiny bit of scale, right, and volume. Like, you have to have good systems in place to remind yourself. And we do that, right, for our agents. There's a whole queue system and it's very easy for them to follow up. But you could do that too. You know, you got to have some tracking and just persistent follow-up. There's nothing too crazy about it. What we do like to customize is like, you can get a little bit of customization on the emails that go out with us. You can customize when we begin service. Like if you invoice and it's due on receipt, because that's just the way you bill, you might build in a couple-day buffer for us to like start our thing. Give them a minute, you know, to pay that bill and not just, wow, past-due invoice went out or a reminder went out 30 seconds after I invoiced. That's not fun, you know. So little things like that. And then how we represent ourselves on the phone and little things like that. We do a little onboarding phase, takes about 30, 45 minutes, and then we can begin pretty quickly. But Yeah, I think it's not too crazy, but it's about the systems, right? It's, it's not dropping the ball no matter whether you go for a service or build it in-house. Just make sure you— your brain will fail you at some point. Too much is going on in these businesses.

So as you're saying that, I'm thinking about how workflows, when it came out in QuickBooks Online Advanced, and we had a lot of clients that thought this was a great thing and they clicked it, set it up the wrong way, and it sent out A boatload of invoice from—

Oh, it's our nightmare. That's the series thing.

It was like 25 cents and it was like, and you got these angry phone calls. And it's the thing with your personal touch though. If I have a client that's in it and we didn't get into the Clio integration yet, but when I have a client in this system and say this person was not paying me as an attorney and you're trying to collect it, you've done the series and you've started the phone calls. Is there a section for notes where I can see what's being said in case there is a conflict? Like maybe I made an error billing.

Oh yeah, this is— that's huge, right? And so the cool thing, what I really like about it, um, I don't know if I'll get, uh, get in trouble for this later, but it's like when you talk about tech companies, especially those that take investment money, it's very sexy to be pure tech, right? And that's awesome. And so far as you can, you maybe even should for margins and for all these things, right? There are lots of great reasons. I'm not like going to war against Silicon Valley here, right? Like, there's— it's obviously smart. But there's things that we can't do with technology yet, you know, around these sort of nuances. And some of that is phrasing our, our tone of voice, right? Emails get misinterpreted all the time. I don't care who you are. I get a text from my wife, I'm like, wow, I'm in trouble. And it's like nothing happened. No, I'm just kidding. Love you, baby, if you ever see this for any reason. But it's like, you know, but it's human, right? And so email reminders, no matter how well-crafted, could always be, you know, someone has a bad day, they're just looking for something negative. Yeah. And so that friendly voice on the other end of the phone Though, it's like, hey, well, just for example, what we coach the AR specialist to do here is not actually state as clearly if they can avoid it, unless it's like so unavoidable. But like, we don't even have them say things like, this is past due. We say things like, oh, you know, I'm just calling on behalf of ABC Law. I'm just checking in. From our records, it looks like this one was billed back in February.

Right.

I'm not seeing a payment receipt on that one. I just wanted to verify with you any updates you had for me on that. And that's so— this is a little nuance there, but I didn't see it.

What a wonderful way to approach it. I love that.

Right? We're not accusing you of anything.

It's not that scary phone call, like if you get a collection agent after you. That's just— this is not what this is. This is people and it's people-centric, which hopefully we will get back to. That's the only thing part of the artificial intelligence or intelligence some of the machine learning that kind of scares me because I don't think we need to, as humans, we need to have that human touch. And especially in something so delicate as something to do with money, I think you need to have that piece of it and it's so affordable. And I'm thinking of maybe a lot of bookkeepers and accountants don't know these services exist and you can, the client will pay the fee. But is there a way that the bookkeeping firm could pay the fee and bundle it up and the client just doesn't know that we have this side business that's not really— we don't actually have a person sitting, but we have this.

I like that.

That's an interesting idea.

It comes up every now and again. It's not something we do a lot of, but we have done it in the past for firms that are really excited about that. So particularly accounting firms that want to offer AR management. I mean, this takes it— you all know this as well, Cameron. I feel like this is a little bit funny, but we'll poke a little bit of fun at our friends in the accounting space. When we first started this, right, we were at QuickBooks Connect. We had our little like baby kiosk We were in Startup Alley. We're like, yeah, let's learn. You know, we're going to be like, we were like really like in learning mode. That was like drinking from a fire hose and all the different ways to think about AR as it relates to your all's workflows. But we had several accountants come by and like, oh, well, because remember back at the time it was like helping escalate things to collections, right? And so it was late stage AR back then. And they were like, when should my client send someone to collections? And it's like, Hmm. You know, it's funny, I actually thought maybe you would tell me and we would write a blog about it, you know, like in the early, early days, you know, it was like, oh, so the— but that kept happening and still actually happens even to this day. And I'm not— that's not a big accusation or any sort of negative. It's like, it's the information is just not common knowledge and it's not AR as a, as a service, as a line item and anything else. And the accounting firm side of things, I think, has historically just been like that one critical accounting function. that has just been just kicked to the curb. And the reason why is because I think, and I totally get why firms do this, every firm we talk to when we get into these great conversations about how are we helping clients with AI today, what are we doing? They're like, at the very most, maybe I'll do some invoicing, right? I'll invoice for them, which I even find it very— must be very difficult from the firm's perspective of like, I don't know when you did your work or what exactly happened, but they do some invoicing.

Yeah.

And then, but even most of them still are afraid of doing that because what really happens is the immediate psychological follow-up from the client's perspective is, well, you're doing the invoicing or you're doing anything AI related. Surely you'll make those phone calls for me, right? And then it goes back to the human psychology piece that Cameron talked about. It is, there's something like visceral about this, this process, this thing, this activity that I think we really tapped into here. And so all that to say, I think most accounting firms by and large, and I, I'm willing to put it at like 85% at least, are sleeping on AR as a massive revenue source, right? Whether you partner with us or not, we, the goal is to make that effortless, right? And not so you don't go hire a bunch of an army of people to make phone calls because that's not why you're running a firm.

It's an advisory service too. So we, we, you know, we hear that little word, right? But it's a way to get that service out to, you know, your clients and you really will be a hero. That money's sitting there and it's not collected. and it might not ever be collected. What better way to help your client? And it pays for itself. I mean, it's going to pay for itself after you collect it. So it's not even that expensive. And the fact that you integrated with Clio, now you're integrating with their billing software. You've married the 2 things together. I think that's fantastic. I mean—

I really wanted to riff on this for a second because it's something Sarah said earlier. You know, I mean, AR is the easiest revenue you're going to get. The work's already been done, right? As compared to, you know, new growth revenue where you got to go out and do it all. So, It's just sitting there and I just feel like it's a huge opportunity for accounting firms to just give a little advisory or be a little more involved there and, you know, drive significant revenue kind of with leverage, right? Like, you know, it's sort of when people, when we talk to our customers about what we've done for them, it's like, hey, we put $100,000 back in your pocket. We didn't have to go do the hard work of, you know, of you know, working these matters. But the impact of that is still that financial impact, right? And I think it's the same way on the accounting firm side. You know, it's traditionally accounting firms have seen AR as a compliance thing. It's, can I write this off so I can do your taxes, right? And as we see the accounting industry move more towards client advisory services, like Linda was saying, you know, that's a huge way to contribute to the health of a business. That's exactly what we want to do in those advisory services, right? Guide those business owners. And like, this is just an area where I think there's not enough knowledge and there aren't enough firms that have found a way to kind of monetize getting value out of that. It's something we hope to see happen.

And I think too, if you're a bookkeeper or an accountant, if you go to your client and say, look, I see this on your books, tell me the story behind it. So you open up the door for the conversation. And I know this because it's happened to Sarah and I. They'll say, you know, I've had other bookkeepers. No one's ever talked to me about that and, or had a solution for it. And those are the things I think that puts you above that higher tier of service. You're servicing your client in a way that they never— they look at us as after-the-fact kind of people, and they don't realize that we can help them be proactive. Don't you think, Steve?

I agree. And I like what you said a while ago, Linda, about do you value your service? This is part of it. You know, do you— is there something that's holding you back as a business person from collecting your AR, from getting help when you need help? There's no right or wrong here. There's no need to be humble. It's nothing to hide behind. It's like you said, Cameron, it's a valuable tool. The work's been done. It's cash. It's money waiting. It's money waiting for you to put in the bank.

And you can't lose much of your AR before all your profit margins are just wiped out, right? I mean, think about what your margins are as a percentage, right? I mean, and then compare that to how much like revenue sitting in AR. I mean, It's, it's a big deal to lose all of even, you know, 1 or 2 bills, right?

Plus those courtesy discounts that we talked about earlier, and there's that willingness to, to, to kind of throw it away in some regards. Now, sometimes that's a relational move, and that can be very tactical. I'm not saying the whole practice is wrong, but if you do it a little too willingly, right, um, then yeah, you may just be— I think most business owners do not think about their profits very often, right?

And—

Well, that's a good point, and great point. And, and, you know, it takes you into that conversation with them of what is your average hourly billing rate? You know that I love to get that out of them when I see that problem on their AR that they're not collecting. I'm like, well, what are you charging per hour? And they'll go, oh, $175 an hour. And I'll go, do you know that in our market you could probably, and for as long as your tenure is, as long as you've been an attorney, you should be billing at $400 an hour. And guess what that's gonna do?

It's gonna bring in a whole different type of client for Or give them their realization rate, what they actually got paid on. That's the biggest eye-opening, right?

Yep, yep.

I think so.

Accounting firms have this too for pricing. I mean, there's a whole conversation we could have and maybe should have another time.

Yes, yes.

You know, pricing and, and what that does and, and who that actually— I had a great conver— very quick story if I could, if I could jump in on this, is like I spoke with a firm out of California and there's big restructure happening. All the partners are realizing that like, hey, we're working ourselves like crazy. It's a boutique firm. And this was just so eye-opening for me. But I drew this parallel to our friends on the accounting firm side as well. And a new COO had been in for maybe a year or 2 years now. Basically what they realized after finally forcing themselves to take the time to look at where most of their profits and revenue were coming from as a— in relation to how many of their customers they were getting it from. And it wasn't even an 80/20 situation, right? It was like a 90/10 or a 95. It was like, oh my goodness, we— I think 18% of their clients were driving 85 to 90% of their revenue. And then, you know, look at all the rest of the work they were doing and they were like, wow, we could literally just turn that off right now, have almost all that revenue and then go golfing, whatever. I mean, obviously go find more of those right clients, but whatever you want out of your business. And I think as advisors, we need to be the ones asking, what do you want to achieve with your business? Because not everyone's the same. Someone wants to grow it to, you know, to the moon and, you know, sell it or someone do this or just run a very comfortable life and have that balance. It just— there's no wrong answer in that either. But I think the analysis phase is critical. And if you don't have time to do it because you're working in your business, you'll never work on your business. And then you wonder why 20 years goes by and you're like, I'm just— I'm dead tired of this and I don't have as much to show for it as I thought I would.

Right.

You know what, Matt, to your point, if If you happen to be an eat what you kill firm and 18% of your revenue is coming, you know, or most of your revenue is coming from that 18% of your clients and that attorney, that's probably 2 or 3 attorneys doing those top accounts. And if they leave and then you've got this giant AR, what have you done?

Well said.

That's a great point, Steve.

That same firm said that they, when they started the analysis, their DSO was 150 days. And I asked him, well, where are we at now? About 90. Well, what did you do? That sounds— that's a big drop, obviously. Yeah, much better. She said, I wrote it all off. I was like, oh, that solves it. So we lowered the average by throwing out all the big ones.

They just wanted to look good to you guys.

I was like, we need to do way better than that. And, you know, it was— I think it was a while ago, and I was like, oh, Well, I just left in pain from that call. But I was like, and 90 is still bad. Let's not normalize that behavior either, right? But I was like, oh my God, you did a really good job. What happened? I was like, no.

I like Sarah's comment. Do you pay your bills in 90 days?

Yeah. Well, that's actually what I say, Cameron, too. I'm not shy about what I think when I'm talking with— but what I feel like is the hindrance too. And I know Steve and Linda could speak to this too, is you're asking me for a cash flow projection. You're asking me for future things. You're asking me to look in the rears and look at what you've got. Where's the ownership in this too?

Right.

Totally.

Very true.

I mean, we can only do so much at some point. And so, yeah, I feel like I love the idea of you have a tool And to look at it in this lens, this is a space that needs to have more light shined on it to drive. I mean, you're spending so much time on payables. I can't tell you how much time we spend on payables, conversations, payables, payables, payables.

It blows my mind. I'm biased, but I have maybe a slight resentment there of like, look at how big the company— I won't name any names. We know who they are. But look how big those companies are that enable you to pay other people's bills. It's like very easy. It's so easy to pay someone else's bills. And those are multibillion-dollar public companies now. And of course, wow, that's okay, good. Let's solve that. We need to solve that. I'm not diminishing what they do in any way, but it sure seems a little bit upside down and backwards for me of like, but we don't put any points or time into getting ourselves paid for what we're worth, right? Yeah.

Well, so that leads to this newest integration that I want you guys to talk about, and I'll let you guys talk about this. This is such a cool thing. Specifically for software that we use.

Right.

Right.

Well, and big thanks to you too for, I think, guiding us here. And look, if it wasn't for, for the chats we've had already and just knowing each other over the years, and there were a couple other firms, you know, as well that focus on legal. But, you know, again, just like our move to AR done for you, as we call it, you know, it was accounting firms by and large that gave us good feedback, were great partners to And we're, I guess, smart enough to listen. That's all I can take credit for over here, right? Is, oh wow, this is, yep, okay, that sounds really smart. Let's look at that. And so, yeah, you know, Cameron, if you want to talk about it, but our newest integration that we just launched last week.

Woo!

Yeah, yeah, is Clio. So yeah, we're very excited to be, we're in the Clio App Store now. So look for us, we're right at the top right now. They've been very good to us by listing us there. So thank you to Clio. But yeah, we're, we're really excited. We just feel like, you know, legal is this important space to be in just based on the AR challenges we've heard. We keep having partners. We had a partner say, you know, I don't know if this is literally exactly true, but he said legal's the only industry where we have to do, we have to individually do the marketing, we do the sales, we close the deal, we do the work, and then we have to chase the bills. And it's like, yeah, I don't know about you guys, but I know some corporate attorneys who charge $600 an hour. Like, what are they doing chasing bills? You know, so we're hoping to help out there. And I want to say thank you too, to you guys for having us on. We really appreciate it. It's been a great time.

Thrilled to have you. It's really cool that we're part of it. We'll see you at Scaling New Heights. And if you're there, if anybody's going there, make sure you take a minute to stop at the booth and get your shirt. I don't know if you have shirts.

That's if they're having shirts.

I don't know if they have shirts. Yeah.

Yeah.

Yeah.

Oh, he just got an order all of a sudden. I don't know.

Now he's going to order them. But yeah. So, Sarah, do you want to take us away?

Sure. Yes. So thank you so much for everyone joining in today. This was such a lively and important conversation. So be sure to subscribe to the Accountants Law Pod on the YouTube channel. If you have any questions, topic requests, any suggestions, any follow-up on this conversation that we want to continue, an email at info@accountantslawpod.com or a message through one of our website. Um, I'm presuming we'll also have lively conversations on any of the social media networks. Um, if you want to join us in the Accountants Law Lab, which we just had moments ago with a great conversation early this morning, uh, by our fellow member presenting on 1099s, that is www.accountantslollab.com to sign up. And And follow us along. Now, Steve, we didn't kick this off, but you're in your Airstream. We always were going to follow you around in your Airstream on your adventures, but your Airstream moment today had something else going on. And I just love that you're in it. So, we're kind of staging right now in your own backyard. Is that right?

Well, I'm out in a carport off of my house.

Okay.

I wouldn't have guessed that one.

An exotic locale.

Yeah, exactly. In a couple weeks, I'm going to be at the Airstream International Rally up in Rock Springs, Wyoming. There will be 1,300 Airstreams together all at once. And I am percolating. I need ideas here. I'm percolating on going out and finding the attorneys that are there.

Oh, I love it.

Yeah. So let's get some ideas and maybe I can snag one when we do, because we record our pod. I'm in the Airstream a lot with the podcast. Yes, I can drag— I could drag an attorney in and bring them into the pod.

Drag one in.

We can ask some questions.

I love it. Big thank you to Matt and Cameron for coming today, and we will have connections to them as well in, in the notes. So until next week, bye everybody.

Bye-bye. Thank you.