If you’re still printing out invoices, stuffing them into envelopes, affixing stamps and addresses, then sending them in the mail, you’re doing business the same way law firms did 100 years ago.
Unless your clients require actual paper, why continue this archaic practice when the alternatives are so much easier and profitable for your firm? Is it inertia? Does it seem daunting, or perhaps, you do not know where to begin? Or is it because you have an office administrator, concerned about their relevance, who blocks attempts at automation?
The law has a rich and storied tradition, but by way of analogy, there’s no sense in clinging to 8-tracks when streaming music is available. Below are six solid reasons your firm should prioritize a transition from this ancient practice to online invoicing this year.
Your competitors are doing it.
To facilitate online payments, you need to either accept credit cards or e-check. And if you don’t accept either, odds are there’s a law firm in town who does. We are in a post-cash society where credit cards are the most common method of payment, and it’s senseless to lose a client to a competitor because of how the bills are being paid.
If you primarily represent consumers, you may be especially vulnerable to issues of this nature. But credit card processing is not limited to consumer-facing law firms: business clients try to charge as much as possible since they can accumulate rewards points.
Moreover, it’s entirely possible that businesses and consumers with strong credit may find themselves in a cash-flow shortage. As Jim Calloway of the Oklahoma Bar advises, “One would hate to find oneself in the position of declining representation of a cash-poor client when the client was sitting in your office with a credit card in their wallet with a $5,000 credit line.”
If you’re looking to get started with online invoicing, here’s a free cheat sheet that gives you all the things you need to know.
Online invoicing decreases collection time.
When you email out invoices, a robust online invoicing system like Rocket Matter will allow you to customize that email and include a link to a payment page. The client clicks on a link, enters payment information, and without any work on your part, your bank account is funded and your ledgers are updated.
Consider how much less friction is involved with online payment than with cutting a check: your client does not have to cut a paper check or set up a profile in their online banking software. Additionally, your client is likely accustomed to paying increasingly more invoices in this manner. Do you really want to be that one vendor that’s still doing things the old-fashioned way?
You’re also saving the round trip with mail. Those three or four days of sped-up collection, not to mention the speed at which credit cards fund your bank account, get money into your hands much faster.
Online invoicing increases the odds you will get paid.
Since online payments can be made with credit cards, your clients can pay you even if they have a temporary cash flow issue. If you set up automated billing or payment plans (covered below), you have another tool in your belt to whittle down an outstanding balance.
Furthermore, you can store your clients’ payment information securely on file (provided this is specified in your fee agreement). If a client then defaults on a payment, you can charge them the balance owed electronically. It is critical to note that any payment information must be stored with a PCI-compliant payment processor like LexCharge.
Generating electronic invoices is quick.
An online invoicing system generates bills electronically and emails them, getting rid of the need to transform the law firm into a mail center for a day or two. The “print, fold, stuff, stamp, address, and send,” days are over for firms that move in this direction.
Instead, when an invoice is ready to be sent to a client, you merely have to click a button inside your billing software. The bill is then instantly delivered to your client’s specified email address.
Additionally, many legal billing applications allow for batch billing, which allows you to process all of your invoices at once. Instead of generating invoices one-at-a-time, you can instantly send invoices to all of your clients simultaneously. Law firms that have embraced this technology have reported reducing their invoicing time from two days to an hour or less.
Online invoicing is less expensive to maintain.
Electronic bills do not require printed stationery. They don’t require envelopes or stamps. Nor do they need labor to procure these supplies, send the bills out, and process the payments once they arrive.
You can automate billing entirely with payment plans and recurring billing.
If you accept credit cards and e-checks as well as keep payment information securely on file, then you can automate your invoicing and collections. You don’t even need to actively create invoices.
Payment plans, for instance, allow you to charge a client $5,000 for legal work that is paid off $500 a month for 10 months. You are gaining a client who can fund your fees through their cash flow but cannot afford an up-front payment. This setup is common in criminal defense and immigration matters.
Recurring (also called subscription) billing, is another fee arrangement allowing for automated invoicing. Law firms providing ongoing services can charge clients a set fee every month for access to legal services. This is a common setup for law firms serving small businesses.
Check to see if your legal billing software can set up payment plans and recurring billing. If so, you can set-and-forget your monthly invoices.
To learn more about all of the basics associated with online invoicing, download this free cheat sheet. It will help you plan your transition and ensures you think through the major issues related to the subject.
Larry Port is the CEO of Rocket Matter. He is the author of the upcoming book “The Lean Law Firm” published by the ABA.