Modernizing your practice’s A/R processes is essential to meeting today’s client expectations and increasing revenue. The reality is that law firms are businesses, and businesses need cash flow to survive and thrive. The efficiency of a law firm’s accounts receivable process is fundamental to profitability. Accounts receivable (AR) represents the total amount of money clients owe to the law firm for services provided but not yet paid. This includes all outstanding invoices that have been issued to clients, ranging from legal consultations to representation in court.
Streamline Your Law Firm Invoice Process With Digitslaw
Now, payment due dates can vary from firm to firm; if one sets 30 days, others are more lenient, extending the due date to 60 days. However, once this period lapses and the clients haven’t yet paid your fees, you gently remind them about the pending payment by sending a message or calling them up. That’s where efficient accounts receivable management works wonders for law firms. Attorneys deserve to be paid on time for the valuable work they do—and when you’re running a busy practice, you don’t want to waste time chasing down clients for payment. By implementing these best practices, your law firm can optimize its accounts receivable collections process, improve cash flow, and foster stronger client relationships. Embrace technology, maintain clear communication, and prioritize proactive intervention to reap the benefits of streamlined AR management.
The Unique Challenges of Legal A/R Management
To maintain trust account compliance, an attorney can’t actually pay themselves from that retainer until the client reviews and accepts the bill. Added to that, with heavy workloads and multiple clients, it can be easy to miss when a retainer balance is getting low. Hardworking attorneys invest huge amounts of time in their clients, pumping hours and hours into every case. But sometimes, after all that hard work, you send out the bill and get no response. Non-paying clients not only cut into your firm’s cash flow, but chasing every unpaid invoice creates even more work. Our MissionQuickFee helps professionals manage receivables and get paid for their work faster.
- Additionally, relying on manual interventions from their staff to remind clients of owing balances can quickly become an administrative time suck.
- Consistency is key to establishing a routine and helping clients pay invoices on time.
- You don’t have to outline your time to the minute, but you should separate larger tasks and include a summary of each.
- Conducting a potential new client consultation effectively is an art form.
- With LawPay, you can accept bank transfers via ACH plus credit card payments online or in person.
- More than 1 in 10 surveyed legal professionals from our 2024 Legal Industry Report said that getting paid is the most significant challenge their firm faced.
- For this metric, using a longer timeframe to calculate (such as one year) will give you a more accurate idea of your firm’s financial health long term.
Invoice Factoring
- This guide covers the main challenges of managing a law firm’s accounts receivables and steps to improve your process.
- Ideally, you’d accept eCheck and credit card payments—so clients can choose to pay with cash or credit.
- Ready to see just how seamless managing your billing, payments, and accounting can be?
- Invest in comprehensive training programs for staff to help them become proficient in using your accounts receivable automation software.
- Let’s say you’ve collected $90,000 in a given year, off of $110,000 in billings.
With these strategies in place, your firm can navigate the complexities of billing and collections with greater efficiency and confidence. Law firm accounts receivable is the money clients owe after a law firm delivers legal services. The process can be as simple as executing the work, sending the bill, and receiving payment. However, some law firms struggle to receive on-time payments and may not receive payments until well past the due date. You might be familiar with the term ‘accounts receivable,’ which simply refers to the money customers owe a business for the goods or services it provides.
- Clio’s 2022 Legal Trends Report found that offering multiple payment options is the fourth-highest-ranking factor for law firm hireability.
- When clients fail to pay their invoices promptly, it can create a sense of uncertainty and frustration, making it difficult for attorneys to maintain a positive working relationship.
- Law firms lose clients by doing poor work or by failing to deliver client service, not by asking clients to pay their bills.
- When using manual processes or multiple pieces of disjointed software, this can be easier said than done.
- Better yet, digital legal accounting solutions allow even small firms or independent attorneys to take full advantage of the benefits modern A/R management has to offer.
Key Strategies for Improving A/R Efficiency
Educate your lawyers on various techniques and strategies for gross vs net contacting clients that will keep their relationship strong. In today’s economy, and in the face of changing law firm economics, it has become a best practice to contact clients about unpaid bills. Use of reputable legal billing software that supports online payments and scheduled payments can streamline this process for you and your clients.
Best practices for implementing AR automation
Using our proprietary software to assess your current billing processes and analyze opportunities to create efficiencies. We work directly with your attorneys and staff as an extension to your department. Whether that means outsourcing departments entirely or law firm accounts receivable management partnering together, we will create a cohesive team that drives measurable improvement for your firm on every front. Clients routinely complain that they receive law firm bills 90 days or more after the work is done. By then, the client likely doesn’t remember what you did, and therefore doesn’t remember the value you provided. In that scenario, your client probably doesn’t feel motivated to pay your bill.
- So, prepare to get paid for your services and grow your law firm with accounts receivable.
- Offer flexible payment plans or negotiate alternative arrangements to facilitate timely payments while preserving client relationships.
- A modern and streamlined A/R management strategy can help law firms of all sizes increase efficiency, drive revenue, and improve client relationships.
- That last topic—how the relationship will proceed—should include a detailed review of payment expectations and the billing process.
- Firms can employ trained professionals in-house who work specifically for the legal profession to perform accounts receivable management functions.
- By implementing automated billing and offering convenient payment options, a mid-sized law firm specializing in corporate law saw a significant reduction in overdue accounts.
It handles all trust-related transactions in compliance with rules and uses the payment industry’s most advanced security measures. Your firm may face delayed payments due to client disputes, scope creep, or clients’ financial constraints. You’ve likely dealt with the headache of https://www.bookstime.com/ managing billing across multiple clients and services.