Improving your accounts receivable process is not just about collecting money; it is about creating a smoother, more reliable system for both your firm and your clients. By adopting electronic invoicing, offering flexible payment options, and leveraging automation tools, you can build a process that supports your firm’s growth and financial stability. A powerful online legal billing and payments solution prevents you from deciding between doing client work right now or making sure you get paid for work already completed. Implementing a solution that automates accounts receivable processes minimizes the possibility of human error, such as inaccurate invoices, duplicate entries, and overpayment. It also allows you to keep invoicing and accounts receivable in-house rather than needing to fully outsource. The term “accounts receivables” refers to money your law firm has earned and invoiced for but not https://www.bookstime.com/articles/law-firm-accounts-receivable-management yet received.
Offer a Variety of Payment Options
Collection agencies may not take your past-due accounts until they’re at least 60 days old. That’s a big income hit—something you didn’t build into your fee structure. By integrating TimeSolv into your operations, your firm can streamline payment processing, boost profitability, and drive stronger financial outcomes that get you closer to achieving zero AR. To achieve this, your firm has to thoroughly optimize the approaches you take to collect and manage accounts receivable.
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You can track the effectiveness of your A/R improvements by monitoring your collection rate trends over time. Do that and you essentially fund the cost of the client’s legal services out of your pocket. Lawyers experience this all too often—on cases that no one intended to be pro bono. Sadly, collecting law firm receivables may be one of the more challenging aspects of your legal career.
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- You schedule follow-ups two weeks after an invoice is sent and escalate the frequency if payment is not received promptly.
- Therefore, you must ensure your clients receive these invoices as quickly and easily as possible to increase the likelihood of them paying promptly.
- A variety of companies, from lenders to streaming subscription services, use these strategies to ensure payment for all types of transactions, services and products.
- So, the client has finally entrusted you with their case, and you’ve clarified the payment structure.
- It’s one thing for clients to pay late, but it’s another matter entirely when they dispute a transaction.
- If possible, break down large tasks into summaries non-experts can digest.
Promptness will let you have payments in advance while courtesy will help you in maintaining long-term relationships with clients. It is important to assess the payment ability of the client in advance to avoid any delays in accounts receivable. For this, it is important to set a standard price of your case and not negotiate at all. If the client is asking for negotiations, he might be facing a Bookstime shortage of funds and may be unable to make timely payments. Modern Family Law is a domestic law firm with offices in Colorado and California that successfully reached a 97% collection rate. In a recent webinar, shown below, the firm’s CEO, M. David Johnson, explained the firm’s evolution from traditional retainer agreements to more modern billing practices.
- These are short-term liabilities that a firm pays at a later date, according to their agreement with the suppliers or creditors.
- Implementing these strategies can transform your legal firm’s accounts receivable process from a headache to a well-oiled system.
- Automation can make a big difference in how law firms handle accounts receivable, saving time and improving efficiency.
- If accounting for law firms is not managed efficiently or ignored in some way, it paves the way for considerable losses for the law firms.
- By integrating TimeSolv into your operations, your firm can streamline payment processing, boost profitability, and drive stronger financial outcomes that get you closer to achieving zero AR.
- Offering online payment methods isn’t the only way to make your clients’ lives as easy as possible.
- Accounts Receivable (AR) represents outstanding revenue for legal services that have been invoiced but not paid.
Send invoices electronically
This is where the financial relationship begins your hard work is now officially documented and ready for payment. Today, grocery shopping and movie ticket purchases can be made with a click from the phone. Relying only on cash or checks might incur unwanted delays in client payments.
Optimizing the way you manage your accounts is essential for preventing cash flow problems and ensuring smooth operations. By reducing manual errors, your firm can consistently meet financial obligations and invest in growth opportunities. While larger firms have the resources necessary to chase down gross vs net non-paying clients, solo and small firms are at the mercy of whether their clients decide to pay or not. Non-paying clients can have disastrous effects on your productivity, realization rates, and firm cash flow. You set the tone for collecting accounts receivable at your first meeting with a client.