Avoid These Common Billing and Collection Inefficiencies (and Increase Your Cash Flow)

Money makes the world go ‘round—and that includes law firms. And that’s why billing and collection processes are a critical aspect of running a law firm of any size. Yet many small law firms and solo practices struggle with billing and payments because they operate with fewer resources than their larger counterparts.  

The result? Inefficient workflows and cash flow problems.  

Firms with billing and collection inefficiencies can accidentally spend more than they are bringing in and can end up with delayed salaries, account overdrafts, tax reporting issues, and late payments for overhead expenses.  

Fortunately, legal practice management software can help law firms improve their invoicing and payment processes. These tools are designed specifically to help law firms streamline their practices, including the all-important area of billing and collection. 

Let’s look at common billing and collection mishaps and how to fix them. 

Common billing inefficiencies 

If you aren’t getting your invoices out to your clients, you won’t be getting paid—so it should come as no surprise that many inefficiencies in the billing and collections process begin on the billing side. 

Drafting invoices individually 

Law firms can spend several non-billable hours a week drafting invoices for their different clients. This process can cause some firms to fall behind and make it difficult to send bills out on a consistent basis. (Not to mention, this strategy detracts from critical client work!) 

Save time and money by implementing automated billing. With one click, you can automatically generate individual or batch invoices. (But don’t think that automated tasks have to be cookie-cutter—you can easily personalize invoices with your firm’s branding and messages for key clients.)

Drawn out invoice review processes 

Drafting invoices isn’t the only time-consuming step. Many law firms choose to perform a thorough review of all invoices before they are mailed to clients. While this is a good way to prevent mistakes, it also adds to the amount of time spent on billing.  

Instead of wasting billable hours reviewing invoices one by one, law firms can increase their efficiency with legal billing software. The software automates much of its invoice generation, so there is little to no risk of human error. It also includes safeguards to flag duplicate entries or other mistakes. 

Failure to manage retroactive entries 

Firms that use general accounting software often have difficulties handling past-due balances. In this scenario, if a client fails to pay an invoice, you have to manually add the balance to their next invoice.  

Legal-specific payment processing software allows you to seek full payment from clients more easily, as the software automatically adds their total overdue balance to the next invoice you send. As a result, you can:  

• Decrease the manual effort involved in billing 
• Improve your accounts receivable by preventing past-due amounts from slipping through the tracks 
• Maintain transparency with clients about their account status 

Outdated delivery methods 

Though some clients might prefer to do business the old-fashioned way, snail mail is one of the most inefficient delivery methods modern law firms can choose. Not only do you have to wait several days for the client to receive the bill, but then you also have to wait longer to receive payment. 

Bring your billing process into the 21st century by sending out all of your invoices electronically.  

Sending invoices by email allows you to monitor whether the invoice was received, opened, and paid. What’s more, when you include a link to your online payment processor, you decrease the effort required for your clients to settle their balance, making it more likely that they’ll pay in a timely manner. (And that your cash flow will stay healthy!) 

Common collection inefficiencies 

Law firms may also find that the collections aspect of their business is causing delays. Outdated payment methods and a lack of collection reminders are just some of the reasons why your process may be flawed.  

Time-consuming collection reminders 

Some clients pay their invoices right away, while others put them in a pile of things to do eventually. These types of clients may require gentle reminders to collect payments, but following up with them just adds to the amount of time you’ve spent on the billing and collections process.  

With the right software, there’s no need to send out reminders manually. You can create automatic past-due reminders with your own personal message (so you can be as gentle or upfront as you see fit). The best part is that these reminder emails can be sent to all clients who’ve missed the deadline in just one click.  

Limited payment options 

Today’s clients expect law firms to offer multiple payment options so that they can choose the most convenient method. If you only accept checks, you’re going to see many delays in the payment process. 

These days, it’s easier than ever for law firms to accept credit card payments and bank transfers. Clients appreciate the convenience of online payments, and they can rest easy knowing that their funds and credit card information is secure when you use a legal-specific payment processor that prioritizes security. 

Insufficient client retainer funds 

Retainers can make it easy to get paid quickly and maintain a healthy cash flow for your law firm, but they only work if they have money in them. If you have clients that forget to refill their accounts, you’ll waste more time sending out additional reminders.  

Legal billing software makes it easy to add a retainer replenishment amount to every invoice before the balance gets too low, along with sending out automated low-retainer reminders. 

Streamline your law firm’s billing and collection process with CosmoLexPay 

Stop letting delayed invoices and late payments cause issues with your cash flow. CosmoLexPay is designed with your law firm’s needs in mind, so you don’t have to continue letting time and money fall through the cracks.  

Schedule a demo to see the invoicing and payment features in more detail, or test out the software with a free trial.