An integral part of operating a successful law firm is ensuring consistent cash flow, yet billing can be one of the most frustrating and poorly managed tasks in law firms today.
The following practices can streamline your firm’s billing processes, boost your productivity, and ensure your firm is profitable.
Create Effective Billing Procedures
The first step of improving your billing procedures is to come up with standardized processes so everyone at your firm is aware of the guidelines and potential bottlenecks can be identified. You will want to consider how and when timekeeping should be completed, how often to bill your clients, standard payment terms, the bill approval process and how to automate as many parts of your billing process as possible.
Improve Your Timekeeping
The billing process all begins with recording your time throughout the day, but time tracking can be a complicated and often painful task for lawyers. For any law firm that charges by the hour, time is literally money. Even if you’re charging flat fees or on a contingency basis, knowing where your time is going, bottom-line, is the best means to ensure the profitability of your work. It “takes time to track time” and often in a busy day, that task will fall to the bottom of the pile. In fact, many lawyers leave logging their billable hours to the end of the day, week, or month (or even longer) and it can be difficult for the lawyer to recall how they spent their time. Legal billing software provides many ways to improve your time tracking by simplifying the steps required to convert events or tasks completed during the day into billable time entries and providing timers to run while working on billable tasks.
Timely invoicing will ensure timely compensation and a steady cash flow for your firm. Once you determine your billing schedule, ensure that you stick to that schedule. Irregular billing will make your firm look disorganized and may prompt more disputes from your client if they are unable to recall certain items on their bill because they occurred months ago.
Accept Credit Card Payments
In this day and age, clients expect convenient payment options, including accepting online credit card payments. Giving clients the option to pay electronically increases the speed and rate of collections and enhances the client experience. You will want to ensure that you choose a credit card processor that is tailored specifically towards lawyers, to ensure a compliant and ethical practice.
Offer Flexible Payment Options
Legal representation can be costly and allowing clients to pay their bills in instalments will make it more likely to collect fees and allow your firm to remain client focused. It also gives both the law firm and the client some predictability in terms of when and how much will be collected on the payment plan agreed to. When used correctly, payment plans are a great way to increase your collections, cash flow and overall growth of your firm.
Upfront Payment (Trust Requests)
Another great way to protect your firm’s cash flow is to accept retainer payments into your trust account for payment of your services once rendered. Taken one step further would be to enable evergreen retainers for your clients which sends you a reminder when the level of trust funds for a particular client or matter drops below a pre-determined threshold. From the client’s perspective, this makes payments more manageable and is a transparent process for everyone.
Finally, finding the right technology to make these processes more efficient and user-friendly is perhaps the most important part of improving your firm’s billing processes. The best practice is to choose technology that specifically caters to the needs of a law firm and will assist you in alleviating any problem areas or bottlenecks in your current billing processes. While technology can come with upfront costs, when you weigh that cost with the financial benefits to your firm, the true benefits speak for themselves.
Investing in legal billing software can simplify your billing processes by:
- Making timekeeping a seamless process;
- Allowing you to generate multiple bills at once with the click of a button;
- Allowing you set up automated invoice reminders on a customizable schedule;
- Providing the convenience of a set and forget payment plan;
- Setting up evergreen retainers to remind you when your clients need to provide further trust funds.
The more automated these processes, the more time you will free up for income generating tasks to boost the productivity and profitability of your firm.
Angie Calliou is the CEO of Advantage Virtual Services Ltd., a team of professionals that offer legal technology consulting, paralegal, and bookkeeping services, throughout Canada and the United States.
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