The use of credit cards when paying for goods and services is something that is no longer just acceptable, it’s becoming closer to the norm. Let’s be honest, the legal industry has been a little behind the rest of the world when it comes to accepting credit cards. Regulations and requirements associated with credit card payments that are specific to the legal industry have scared many attorneys and firms away from accepting credit cards in the past, but the benefits have started to change the industry’s way of thinking.
Firms who have the capability to process credit card payments make it easier for clients to pay invoices through online payments that can be made any time, and in many cases, credit cards are the preferred method of payment for your clients. Industry statistics show a 30-40% improvement in cash flow for firms that accept credit cards from their clients.
But as we have already covered, there are several rules and regulations that attorneys have to consider when they decide to accept credit cards. Failure to comply with all the rules and regulations could turn into ethics violations and mismanaged finances for your firm. Here are some helpful tips your firm should consider when implementing and managing a credit card processing system for law firms.
Tips for Selecting a Credit Card Merchant Provider for Law Firms
The first thing your firm needs to do is find a credit card merchant provider that can meet the specific needs of a law firm. Make sure to find a credit card merchant that:
- Ensures that all credit card fees are not deducted from your trust account. We all know how dangerous mismanaged trust accounting can be for a law firm. You need to know that your credit card merchant provider understands and respects the trust accounting rules and regulations of your jurisdiction. When bank processing fees are deducted from a trust account it means that funds are being commingled. Your clients aren’t responsible for your bank fees. Your credit card merchant needs to deduct these fees from an operating account.
- Is able to process large deposits. Many merchant providers do not process large deposits. As an attorney, you are going to have larger deposits from your clients. You can’t rely on a credit card merchant provider that puts a hold on deposits of $10, $20, or even $30,000. Make sure you find a legal-specific merchant provider that has the knowledge and experience to handle these types of charges.
- Make sure the credit card merchant provider makes FULL deposits into trust accounts. Most merchant providers remove their fees when making a trust deposit. This will result in an inaccurate deposit. This will complicate the 3-way reconciliation process and create compliance issues for your firm. Be sure to find a credit card merchant provider that understands how deposits need to be made into trust accounts.
Tips for Managing Credit Card Payments
Finding a legal specific credit card merchant provider is an extremely important first step in managing credit card payments for your firm, but it is equally important that your firm takes the appropriate steps to manage these payments internally as well. Here are some tips on what steps your firm needs to take on their own to successfully manage credit card payments.
- Bridge the gap between billing and accounting. When clients pay an invoice, both your billing and accounting are affected. Invoices are handled by your billing system. If your billing system doesn’t speak to your accounting system, it will be difficult for your firm to understand which bills are being paid. Couple that with the fact that credit card merchants tend to batch deposits, meaning that funds from multiple clients and multiple matters will be included in a single deposit. Your firm needs to be able to identify the different clients and invoices that are included in each deposit.
- Integrate credit card processing with both your billing and accounting systems. When your firm can integrate credit card processing with your billing and accounting systems you’ll significantly reduce the work you’ll need to do on the backend related to credit card payment processing. A client will be able to make a payment online and the merchant provider can quickly process the payment and have it recorded to your billing system all while your accounting system recognizes the income for your firm.
Use CosmoPay powered by LawPay to Manage Credit Card Payments
Recently we released CosmoPay. This is a seamless integration between CosmoLex and LawPay with no fixed monthly cost. CosmoLex has all the legal-specific tools you need to manage the different aspects of your firm. Make it easy for members of your firm to record billable time, invoice the client, accept payment, and handle the accounting with no more than a few simple clicks. Check CosmoLex out for yourself today with a free trial. Qualified users are eligible to have LawPay’s $20 monthly fee paid by CosmoLex.