How to Decide When to Fire a Client
A while back, an email with the subject line Thanks to you I fired my client shot across Kurt Sund’s screen. An email like that is not to be ignored. He immediately opened it and was relieved to find that the reason being was a tool he built for Q-Law/E.
If you’re not already, you should be evaluating your own business performance. This means, taking a look at what clients are costing you. Q-Law/E can help you evaluate the performance of your clients. Here’s where that tool comes in, enter Business Snapshot.
Business Snapshot is a standard report in Q-Law/E that will show you not only the progress of your placements, but how efficient they are. In other words, are they making you money? Because Q-Law/E tracks time spent by every individual on every claim, you will know the cost to collect.
Let’s take you through how you can dissect which segment of your business (size, type of claims, etc.) is more profitable. First, it’s important to note that not all clients are created equal. What does this mean? By capturing how many staff hours were devoted, how many letters were sent, how many phone calls were made, etc., Business Snapshot is truly essential to assessing profit.
When you run Business Snapshot report you can see everything about a placement – dollar amount, adjusted placement, and liquidation percentage (Liqui%).
Click on image to view larger version.
One of the most important numbers in this report is the fee per file (Fee/file$). This number will show how much money you make on average for each account. In the example above, it would be 170.99 based on 151 accounts. The higher the better. Dividing your expenses for the same period into this will show you what your cost per account is. And by comparing the two you can then see your profit – or loss.
The report also breaks down the placements by claim size. Smaller claims = less money, but they may be easier to collect. Larger claims may be harder to collect but have a bigger payoff. The report will show the liquidation of both types as well as current status and how many claims have been closed.
Taking Business Snapshot One Step Further
A placements query run by client code will produce a list of all placements across all clients for any desired date range and then export to Excel. You can look at it by Forwarder List, Receiver, Collector, Attorneys, Department, File type, or Salesperson and get an immediate comparison between clients. Are they liquidating at high or low rates? You can also compare fee per file and if it gets too low, you’ll know you’re not making money, you’re spending money to support a client and that gets expensive.
So, should you fire a client? Business Snapshot is great for finding clients who might be losing you money. If it costs money every time you get a claim from them, you probably don’t want to service that client.
The same client that emailed Kurt, was able to run the numbers and factor out the clients that were more timely and less profitable. He was also able to enforce new standards within his practice for new clientele. He increased his rates based off the time it would take for each specific case.
Business Snapshot helps to make the decision to fire a client or perhaps renegotiate with them. It can also help determine commissions for salespeople or collectors and understand how to operate your business financially. It will also make you appreciate the clients making you money that much more.
While you’re thinking back to how you had to skip lunch to work that case today, you should consider how you can implement Business Snapshot into your process.