Law firms use their incoming payments to cover expenses, like overhead, payroll costs and software. Cash flow, the amount of payments coming in and when they arrive, is important in order to cover these expenses without needing to dip into the firm’s savings.
Send out timely invoices
Send an invoice as soon as work is completed. If you wait too long, the memory of the quality of work can fade, causing delays in payment if clients can’t reconcile the charges with the value provided. Keeping a regular schedule and sending invoices regularly will mean your clients will be faster to pay than if they received an invoice two months after work was completed.
Make it easy to track time
As part of sending out invoices, you need to have your billable time readily available. If you need to go back and try to calculate your billable hours, the time it takes to create and send invoices is going to take considerably longer – and wind up causing billing delays. Track your time as it happens, as well as expenses, to make the invoicing process more efficient.
Make sure invoices are clear
Vague invoices can lead to a lack of payment. Spell out what was done in terms your client can understand. For example, instead of putting “Review documents” put “Evaluation of medical records to determine relevance to case facts”.
Accept online and credit card payments
For law firms who want to get their clients to pay as quickly, making it easy can help. Accepting online payments means your clients can pay right then and there – and it also means you get money in your account faster. Sending and waiting for a check takes time, which can hurt cash flow. Online payments, either by ACH or credit card payment, can provide an alternative option that provides instant results.
When choosing a credit card merchant, be sure to look for one who is familiar with the compliance requirements for law firms.
Automate payment reminders
There are times when clients will receive invoices and will mean to pay them, but wind up either misplacing them or forgetting. In these cases, automated reminders can be useful in reducing the amount of time you spend on collection efforts and also ensuring payment is sent as soon as possible.