Donald A. Downey, Executive Director of minisoft Worldwide, is interviewed by Ed Poll about collecting both WIP and AR. Don suggests that WIP (work in progress) that is not quickly converted into AR (accounts receivable) becomes sediment that needs to be cleared out.
Where the law firm uses the accrual method of accounting, there is an economic motivation to clear it out; where the law firm is a cash basis taxpayer, there is little motivation to do so ... but the law firm merely fools itself into thinking that there is still value in the amount that isn't quickly converted to an account receivable and then paid by the client.
Listen now to the full interview.
25 minutes, 12 seconds
5.9MB
