Right now, we’re all dealing with uncertainties and changes but one thing remains the same – a firm’s need to stay profitable.
Billing can be a sore subject for lawyers, especially ones who have had their share of clients who don’t pay. Trying to get billable hours in while staying on top of billing and running a practice can be daunting. For many, it often leads to a last-minute rush to get invoices out the door once you realize cash flow isn’t where you need it to be to pay the bills or a feeling of “I’d rather do any other task” when you think about billing.
It doesn’t have to be this way though. The path to better legal billing is just ten steps away.
1. Don’t overcomplicate rate structures
You need to create a rate structure that makes sense for your firm, but it also needs to do just that – make sense. If you have custom rate structures that make it complicated to figure out billing, it’s going to take more time and also make it more likely that you’ll want to put it off. If you’re having someone else handle your billing, a straight-forward rate structure will make it easier for them to take on the task and less likely for there to be errors.
While you may have different rates for different types of matters, make sure not to overcomplicate it. You, your staff, and your clients will thank you.
2. Put thought into your invoice templates
Many billing systems come with a standard invoice template. While that can help you get something out the door quickly, take some time to put some thought into what your invoice template should have on it.
Possible items to consider and include:
- The billing cycle
- Who completed their matter work
- Ability to add specific details about the work completed
- A clear section for expenses rather than billable hours
- Details on hours, rate and final amount – don’t make them do the calculations
- Previous balance and current balance
- Courtesy discount wording appropriate to your firm and rate structure
- Details of when exactly the work was done
- Who should be the contact with any billing questions
Your invoice should make it easy for clients to read, making it more likely you’ll get paid quickly.
3. Leverage mobile access to track time and costs in the moment
Not recording time as it happens is one of the biggest revenue losses for lawyers. Otherwise, you’re relying on your memory, or a pen and paper, to keep track of the details that are what bring money in the door. Studies show that failing to record time in real-time costs you at a minimum of ten percent of your billable hours – which can add up to thousands and thousands of dollars in a year.
Make it simple to record time by using mobile apps to track time and costs. Many cloud-based practice management programs come with an app designed to help capture time. This method also ensures time entries are automatically tied to the right matter, saving you one more step down the road.
4. Use timesheets for bulk time entry
If you have bookkeepers or of counsel who don’t have access to your practice management program or the timekeeping tools – or just prefer manual tracking – you can easily upload bulk time entries into your system. This saves you from having to upload entries one by one.
As long as the spreadsheet is set up to tie in correctly to your program’s data fields, you can bulk upload these time entries.
5. Set up default tasks or shorthands for efficient entry
With certain programs, you can automatically have particular tasks marked as billable or expenses. This ensures they make it on an invoice and reduces the risk of missing that step – and losing out on the payment.
If you’re manually recording tasks, then having them marked with a special shorthand can help you determine if they are billable, non-billable or expenses.
6. Be proactive with retainer replenishment
Don’t wait until a retainer is empty to contact your client. You want to make sure there are always funds available to cover upcoming invoice amounts. Either automate the process using your practice management program to send notifications once a retainer balance hits a certain minimum or schedule a time on your calendar to manually go through matter retainers to see which ones are running low.
No matter how you complete the process, this step will reduce the time you spend on collections and help your cash flow.
7. Offer flexible payment options for invoices and retainers
We live in a fast-paced, digital world. Keep up with expectations and make it invoice and retainer payments for clients by accepting credit cards. Think about how long it takes someone to write a check and mail it – then think about how long it takes to make a credit card payment online. An easier method means a higher chance of getting paid fast, especially if you’re dealing with consumer (rather than corporate) clients.
As long as you’re using a merchant who understands the compliance requirements that come with trust accounts, such as LawPay, you’ll be able to incorporate this payment method into you
8. Leverage batch billing whenever possible
Still sending invoices one at a time? Depending on how many clients you have that can take up to an hour or more. Cut that time down to seconds with batch billing. One click and, voila – every client has their invoice in their inbox.
If you’re manually sending invoices, batch billing can still take a considerable amount of time. Which leads us to the next tip…
9. Deliver invoices electronically
Take advantage of technology and send your invoices electronically. Not only does it cut down on postage costs, it also means clients are getting their invoices directly and 2-3 days sooner than they would be mail. Digital delivery is a very common and widely accepted method for invoice delivery these days – use it to your benefit.
10. Follow an efficient, routine collections process
Even if you send out timely, clear invoices, there’s always going to be people who don’t pay them. While usually not intentional, it’s helpful to have a plan in place for follow-up as a reminder. Sometimes all it takes is one reminder email to push it to the front of someone’s to-do list.
If you don’t make it part of your routine, whether weekly or monthly, those follow-ups are likely going to be sporadic, which is going to impact your bottom line. Find scheduled time for the collections process and where possible automate it to save time and keep it consistent.
Even if you follow all ten steps above, you’re still going to run into issues if you don’t have a clear plan for how and when you’re going to run your legal billing. Make sure both you and your team know what the process is, when it should be completed and how and then start working on putting these tips into place. Better legal billing equals better cash flow – and higher profits!