Legal billing can be complex. With billing done in fractions of time for some clients and as a flat fee for others, there are a number of moving parts and a high possibility of mistakes. Filing fees must be kept separate as well. And federal regulations may dictate how you handle a trust versus an operating account.
Just getting a legal invoice delivered is a complex process and, if done manually, can mean an inordinate amount of time may be spent just running the business of the firm. This means that more time is spent sending and collecting invoices and less time is spent helping clients.
It doesn’t have to be like this, however. Automating your accounts receivable (A/R) process simplifies a complex system and maintains order and predictability for your billing processes. Automated A/R removes much of the burden of billing and collection, which reduces overhead costs and better serves clients.
How A/R automation helps your firm
Automation benefits any size of firm, from one-man shops to global conglomerates, and any kind of firm, from family to corporate law. No matter if you’re a one-man shop or global operation, the challenges are the same. Clients will always have unique billing needs that require clear and regular communication.
So, how can A/R automation impact your firm?
1. Getting paid faster
Getting paid on time is the most tangible benefit of automated billing. Instead of manually sending out bills or late payment notices, an A/R automation platform can do this for you. This gets bills paid and improves cash flow, which comes with definite advantages.
This has the added benefit of growing the firm. It enables firms to increase headcount, expand office space, or take advantage of other growth opportunities—which means an expanded client list.
2. Streamlining workloads
Similar to cash flow opening up growth opportunities, a reduced workload means your administrative staff is freed from the more mundane tasks to do more impactful work. The old way of doing things meant working by hand or across multiple platforms. One client of ours was tracking payments with sticky notes and two software programs that didn’t always work well together. It was needlessly slow and stalled growth.
Instead, a quality process means they can move from simply maintaining the firm to growing it by improving other processes or researching new best practices. With the time given back, your staff can improve hiring practices or identify areas for cost-saving. These types of improvements have an ongoing and permanent impact on your firm.
3. Reducing human errors
As we discussed above, legal billing comes with a unique ruleset. What might be true for one client may not necessarily be true for another. This level of complexity increases the possibility of human errors—if not makes them likely. This only increases if you’re processing a large volume of transactions. The firm discussed above experienced multiple errors because the software they were using didn’t always sync correctly. That meant slowed responses or even wrong billings.
A/R automation takes much of this out of the equation. Removing the human factor reduces errors and helps ensure accurate bills are sent, all the time. This means better cash flow and happier clients.
4. Improving communications
An A/R automation platform can send out regular messages to clients letting them know what is owed and when it is due. This kind of steady messaging reduces uncertainty and keeps your bill top of mind. Clients don’t get a surprise bill and your firm’s cash flow is improved.
This also applies internally. Frequent communication and reports about account balances are necessary and shouldn’t be dependent on one person completing a task. The firm discussed above had reports delayed weeks because attorneys failed to close out a day. Automation removes this barrier.
5. Reducing administrative costs
Money spent on envelopes or postage is money wasted. These are outdated methods of billing that are slow and expensive. They also eat up staff time that is better spent elsewhere. This is an easy cost-saving move that also has a wider benefit to your firm. One law firm we work with slashed the time spent on billing by 70% after adopting an automation platform.
How to maximize the value of A/R automation
Despite the set it and forget it nature of automation, some steps do need to be taken before integrating a platform. The client must be at the center of this process. Using a solution that features a self-service payment portal lets clients service their account on their own schedule and doesn’t require your firm’s involvement. Every decision you make and feature you use should be viewed through the lens of the client and what’s best for them.
You should also determine what should be automated—and what shouldn’t. Standard things like invoicing, payment processing, and reporting should absolutely be automated. However, some communications need a human touch. Following up on past-due payments or working out payment plans should be handled with direct communication. An impersonal touch is less likely to develop or maintain a long-term relationship.
Lastly, there will be some growing pains. This is a change in process for your firm and the initial setup will require training and patience. Switching to a new platform requires buy-in throughout the organization, training, and creating new workflows. Processes unique to your firm must be created.
Don’t automate everything you can on day one. Start with a single process and then grow from there. Your staff will move from novices to experts and grow into the platform with time. To fully take advantage of A/R software, you should also embrace data science. You’ve been given a large amount of data to help inform your business decision-making. Take advantage of that and leverage customer insights.
Automating your A/R operation improves how your firm does business and how your clients interact with you. The process improvements have a lasting impact on the bottom line and enable administrative staff to grow the business instead of just running it. It’s a win-win for staff and clients.
About the Author
Jared King is co-founder and CEO of Invoiced, a category-defining company in the field of A/R automation.