Getting paid is an essential part of any business. But for law firms, the billing process can get particularly unwieldy—until it’s eating into your capacity to get paid.
Many firms know that their billing process absorbs valuable, billable hours. But because it still needs to get done, they can fall into the habit of treating it as a necessary evil—the task that takes too much time but can’t be dropped.
Fortunately, your billing process doesn’t have to be a slog. These five proactive billing tactics can help you get paid faster.
1. Track what you want to get paid for
If you’re putting off tracking billable tasks because there are so many to keep track of—well, that “so many” part probably means you do not remember to jot them all down. Yes, even if you just wait until the end of the day.
Human memory is fallible. Don’t believe us? Ask a spouse or sibling if your memory’s perfect—and get ready for some laughs.
If you put off tracking time because you don’t like data entry, here are a few hacks:
- Integrate your billing software with daily tools like your calendar, email, or task management tool
- Use a billing tool with a mobile app to more easily track entries
- Passive time tracking tools—which track everything, then let you review and decide what to bill for—make an excellent last resort for those who struggle with tracking
2. Streamline to stay on top of client costs
Law firms often need to cover client costs out of pocket—and remember to bill for them later. This holds true with hard costs, like filing fees, and soft costs, like printing and photocopying.
With client costs, both accounting and billing entries need to be made, and if there’s a lag between the two processes, it’s easy for an item not to make it onto a bill.
But there are a few ways to circumvent this problem.
For dropped costs in accounting, use transaction imports. They allow you to cross-reference a bank statement and can help your firm stay on top of a large number of client costs—especially if those costs are going on to several different internal credit cards.
To make sure the costs then make it from accounting to billing, you can create a strict, procedural checklist, which must be done every time. Or you can use a practice management tool with integrated billing and accounting—allowing you to send transactions straight to a client’s bill.
3. Automation saves time
Automate what you can in your billing process to save time. It can create space for more billable hours.
For instance, invoice templates and batch billing increase efficiency. Generating 100 bills in five to ten minutes versus several hours makes for a significant change.
Likewise, opt for email delivery and online sharing. Many tools can let you track how often an invoice was sent and if it’s been read.
4. Get out ahead of collection issues
Stressing about following up with a client wastes valuable energy—and time. Instead, taking a proactive approach to collections can reduce the number of clients with outstanding bills.
Use these forward-thinking steps to get ahead before getting paid becomes an issue:
- Bill consistently and on time. Clients will have an easier time paying if they know the bill is coming.
- Use clear, straightforward invoices so that clients can quickly review and understand the charges.
- Make bills easy to pay. Offer online payment options and use a legal-specific merchant so that you can accept credit card payments without any trust account slip-ups.
- Know where balances stand on client matters, even ones that haven’t been billed for yet. If a balance is getting too big—say, larger than the retainer—bill the current amount now.
- Use billing tools to keep retainers evergreen. You can even designate a minimum threshold that prompts an automated reminder to the client for replenishment.
- Take advantage of your practice management system’s ability to send out automated reminders for overdue accounts. This one’s a time-saver and a stress-reducer.
5. Know where you’re at with billing metrics
Metrics can help you know where your firm stands financially. They paint a picture of profitability and productivity.
The more integrated your billing and accounting systems, the easier this information is to track.
With a modern practice management system, you can easily track the following metrics:
- The proportion of billable to non-billable time
- The financial picture of what funds are available, what will be billed for, and what’s overdue
- Client costs that make it onto the bill, versus those that don’t
- Utilization, or time that makes it onto a bill, versus realization, or the amount of the invoice that gets paid
- Billing and collection by party
Tracking metrics also opens the possibility of being able to measure the success rate of the firm’s goals.
Change your billing habits with better tracking, integrated billing and accounting, automation, and metrics—and get back your time for billable tasks that can better sustain your firm’s health and growth.