What can you do to help your law firm maximize receivables?
The quickest way to improve your law firm’s cash flow is to introduce technology solutions to streamline your firm’s billing and accounts receivable management processes. You’ll help your firm save time and money and give your accounting team the tools to maximize their efforts to collect receivables.
Hourly billing and monthly retainer agreements have long been standard billing arrangements at law firms. But as times change, law firms need to support more alternative fee arrangements such as blended, flat, capped and split fees. Firms must also manage more flexible payment schedules.
An automated billing and payment system, such as APX, Abacus Payment Exchange, enables firms to manage diverse payment arrangements more reliably than using manual efforts. Electronic payments shorten the collection timeline and significantly increase visibility into cash flow. Revenue becomes more predictable, and your law firm’s accounts receivable projections are even more accurate
Send invoices electronically
Emailing invoices and e-billing clients help you free a significant amount of time for accounting staff to dedicate to other case priorities. Billing data is handled digitally, eliminating redundant data entry, scanning, sorting, mailing and filing activities and making information retrieval easier.
A 2020 poll of accounts payable (AP) and finance leaders found that almost a quarter of all AP staff time is spent dealing with inquiries. In manual AP departments, it can take days to respond to questions. Digitizing billing processes results in fast, easy access to billing information to speed inquiry response times and eliminate payment delays.
Clients also appreciate enhanced transparency and increased efficiency. Many business clients expect to receive electronic invoices that comply with their specific billing guidelines and include LEDES designations to help them understand their legal spending. These clients will prefer to partner with law firms that have already embraced technological solutions to meet their billing needs.
In comparison, mailing paper invoices and insisting on payment by checks can make your firm appear out of date with the times and out of touch with recent technological developments. That hardly bodes well for inspiring confidence in delivering top-notch legal services in the modern age.
Allow clients to pay via credit card, ACH, and other electronic payment routes
Credit cards have become an essential tool for clients to manage their finances, and they give clients the increased payment flexibility they need in fast-changing business environments. According to a Total System Services, Inc (TSYS) survey, 75% of people expect to pay for services with a credit or debit card. A separate survey found that as much as 79% of today’s clients expect professional service providers such as law firms to let them pay with their cards.
Allowing your clients to pay by credit card is good for your increasing your firm’s cash flow, too. One survey of legal industry professionals found that those who accept online credit card payments get paid 39% faster on average.
With a legal practice management solution, you can set up electronic payment options via a client portal or include one-click credit card or ACH payment capabilities on digital invoices. Clients appreciate the ease and convenience of automating the payment process. It reduces their administrative workload as well as that of your firm.
Firms that remain reluctant to accept credit card or ACH payments lag behind in a competitive landscape. They risk alienating clients and harm their ability to weather economic uncertainties. The simple truth is that if your firm doesn’t allow credit card payments, other firms will, and clients will prefer to partner with firms that match their level of technological advancement.
Keep client contact details, case and matter information, and bills in a central location.
To streamline the logistics of all your cases and to increase transparency, keep all data in a centralized, integrated location. Software, such as APX, Abacus Payment Exchange, integrates directly with AbacusNext practice management software to ensure billing and payment details sync automatically. You can process credit card payments and ACH transactions securely from within your practice management software. The same system that tracks workflows, project statuses, and client details is the same system that processes payments—all on one platform.
The interconnectedness helps keep firm data consistent. Descriptive dashboards allow leaders to generate reports that provide visibility into the law firm’s cash flow and aid in developing more reliable revenue projections. Instant updates help to ensure accounting staff members see and pursue delinquent payments immediately rather than waiting until the end of each month. Faster follow-ups accelerate revenue gains.
Speed your firm’s accounts receivables and boost cash flow.
As technology transforms how people pay for services in the outside world, law firm accounting systems must also evolve to support digital payment options. It takes days to print paper invoices and paper checks, which then spend more days in the mail and sitting on desks. Your firm doesn’t receive payment until weeks after billing. Electronic payments are far faster and much more convenient, often resulting in immediate or near-immediate deposits in your firm’s bank account.
If you are ready to learn more about how you can automate and speed your law firm’s management of accounts receivables to keep cash flow strong, read more about APX, Abacus Payment Exchange here.