accounts receivable

Nine Best Practices for Law Firms to Manage Accounts Receivable

New clients and additional work are the lifeblood of growing your firm’s revenue stream. But that stream can become a trickle when clients are slow to pay, or worse, don’t pay at all. There’s no magic bullet to getting paid faster. But the following are nine accounts receivable strategies to improve your cash flow.

Let clients receive emailed invoices

With just a few taps of the keyboard, you’re seconds away from getting the invoice into the inboxes of your clients.

To make email invoicing effective, be sure and include a click-to-pay link. When clients are ready to pay their legal bill, all they have to do is find your email, and click right through to their online invoice as well as a secure payment portal.

Speed up the billing cycle

Sending batches of bills more frequently is a surefire way to subtract from your A/R days. If you’re sending bills twice monthly, then transition to a higher cadence.  Improve your collaboration and communication with partners and paralegals. By working with these departments to establish procedures and deadlines, you can ensure on-time, prompt billing. Then, track your progress by running a monthly report.

Allow clients to pay with credit cards

Between 2015-16, credit card payments have increased 10.2%, while debit card usage increased by 7.4%, according to the Federal Reserve Payments Study. Meanwhile, commercial paper check payments have fallen by 3% during that same time period.

Clients like cards because they get more control over the payment, and they might even be able to acquire more rewards points they can trade in for travel and merchandise.

The best reason for accepting credit card payments is getting paid faster. Law Technology Today cites several studies showing that clients are more likely to pay by credit card because it’s more convenient. Credit card payments improve cash flow because there’s no check float time delaying access to your funds. Depending on your payment provider, a law firm can have access to working capital within one to two business days.

Make it convenient to make credit card payments

Without the convenience of online payments, credit cards are no more convenient than paper checks. A well-designed online payment solution should integrate with your billing system while making it easy to set up automated recurring billing and payments. These two features alone can subtract more time from your accounts receivable days.

Review accounts receivable regularly

To stay on top of the status changes in your accounts receivables, it’s always a good idea to run a daily A/R report. Then, task someone from your firm to review the data and designate which accounts need past-due emails, phone calls and letters, pre-collections notices or need to be escalated to collections. Staying on top of these changes will keep collections manageable.

Practice good record-keeping with late accounts

Maximize your billing software and log each contact with the client over past-due bills, and when and how reminders were issued by your law firm, as well as the client’s response.

Offer the early-bird discount

To loosen some locked-up capital, try this experiment on these up-against-the-deadline clients: Offer an early payment discount. It can be a percentage off billable hours or a specific dollar amount taken off the bill.

Establish collections policy and procedures

If your firm has no financial policy for clients (or if it’s woefully out of date), it’s time to make that a priority. A financial policy is an opportunity for a firm to define its collections procedures and let clients know what to expect. It also sends an upfront message that your firm is serious about getting paid. Things that should be included in your financial policy:

  • Payment methods accepted
  • Due dates after invoicing
  • Early payment discounts (if applicable)
  • Billing appeals
  • How clients can initiate a payment plan
  • Past-due notifications
  • When the account is turned over to a collections partner

Build and maintain relationships with clients

Positive interactions can add to a client’s satisfaction with the quality of their legal services. Go the extra mile when you can, such as sending a brief thank-you for the payment and provide clear answers to questions about their legal costs. Simple acts of consideration can go a long way in the minds of clients.

For more detail about these nine best practices, view the full ebook here.

About ClientPay

Based in St. Paul, Minn., ClientPay is an award-winning technology solution from Persolvent, a company with a mission to make life easier for professional service firms through innovations in digital payment processing. ClientPay has been acknowledged as an industry leader, having been awarded the Software and Information Industry’s (SIIA) Best Financial Technology Solution at the 2019 CODIE Awards in San Francisco. Through integrations with some of the legal industry’s top matter management platforms, ClientPay helps companies get paid faster and reduce write-offs all while eliminating billing errors.

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