On top of this, poor management of ARs can sour relationships with clients and taint a firm’s public reputation. Accounts Receivable are the outstanding payments your firm still expects to receive for your services. Collecting promptly on A/R is critical for your working capital – which keeps your lawyers and staff paid and your firm operational. Law firm profitability and growth depend upon the ability to collect accounts receivable consistently. For modern firms, that means an automated accounts receivable system, such as MyCase legal invoicing software. Modernizing the collections process can help your law firm create a more efficient workflow while freeing up your billable time.
- Receivables automation increases your efficiency and productivity, and takes away any extra costs such as printing that may go into manual accounts receivable methods.
- MyCase will send invoice reminders automatically, so you don’t have to follow up with every client to receive payment.
- Attorneys deserve to be paid on time for the valuable work they do—and when you’re running a busy practice, you don’t want to waste time chasing down clients for payment.
- Clio Manage’s Automated Bill Reminder feature enables you to track outstanding bills and automatically send outstanding Balances to clients and bill recipients based on a schedule.
- More than 1 in 10 surveyed legal professionals from our 2024 Legal Industry Report said that getting paid is the most significant challenge their firm faced.
- Overhauling your client consultation process or improving the clarity of your invoices won’t affect the aged accounts already on your books.
The Unique Challenges of Legal A/R Management
Additionally, consider establishing clear procedures for managing retainer balances, including consistent communication with clients about their remaining funds. The traditional law firm accounts receivable process leaves a lot to be desired. Firms unknowingly lower their chances of being paid on time by including only a fraction of potential payment options. Additionally, relying on manual interventions from their staff to remind clients of owing balances can quickly become an administrative time suck.
Speed payment by using a client portal to invoice clients
This is to establish a more predictable cash flow and fuel the growth of your law firm. Sending reminders to one client about pending payments may not seem inconvenient, but think about manually tracking tens or hundreds of them and giving a slight nudge about owing balances. That’s why you need a well-organized law firm accounts receivable process. Do not worry if you’re only getting started; here are a few strategies to help you improve the accounts receivable process at your law firm. Now, payment law firm accounts receivable management due dates can vary from firm to firm; if one sets 30 days, others are more lenient, extending the due date to 60 days. However, once this period lapses and the clients haven’t yet paid your fees, you gently remind them about the pending payment by sending a message or calling them up.
Tailor Your Collection Method Depending on A/R Aging Reports
Use automation to make sending bill reminders an effective, efficient process rather than a never-ending distraction. Once this date has passed and the firm still hasn’t received what clients owe, they will then reach out to gently enquire/remind the client about their invoice. Effective financial management is essential for law firms to remain profitable and sustainable in today’s competitive legal industry.
Provide payment options
Proactively managing collections is essential to maintain financial stability and avoid letting unpaid invoices accumulate. First, you must make it as easy and attractive as possible for clients to pay. Second, you need to minimize the time you spend following up on late payments.
If you’re looking to offer client-centric, secure payment options, then Clio Payments is just what you need. That last topic—how the relationship will proceed—should include a detailed review of payment expectations and the billing process. They also provide legal, general, bookkeeping and medical transcription services nationwide. To achieve this, your firm has to thoroughly optimize the approaches you take to collect and manage accounts receivable.
- If not addressed immediately, ARs can make your cash flow unstable and unpredictable, even affecting your ability to cover expenses.
- She has a solid background in public health and legal services and knows the complexities of the legal world.
- So, the client has finally entrusted you with their case, and you’ve clarified the payment structure.
- Using succinct descriptions in the invoice can also help clients easily understand what you’re charging them for.
- Do not worry if you’re only getting started; here are a few strategies to help you improve the accounts receivable process at your law firm.
Educate everyone in your firm about your policies and procedures, and explain them to the client. Have clients review Legal E-Billing and sign a copy upon intake, and send an abbreviated copy home with them. Is Frontline Managed Services’ proprietary software used to analyze a firm’s performance. We use the insights gained from this assessment to begin identifying opportunities for increased revenue realization.
- This timeframe gives clients a reasonable window to make their payments while keeping your cash flow in check.
- Even with healthy revenue figures, unpaid invoices can significantly affect cash flow and overall business health.
- Second, you need to minimize the time you spend following up on late payments.
- The end-to-end nature of automation means that invoicing, chasing up payments and everything in between happens quickly and efficiently.
- Whether buying groceries or big-ticket items, consumers have become accustomed to selecting from various payment options.
What is Law Firm Accounts Receivable Management?
Big tech changed the game in how we run our everyday lives, so stay up to date with the latest available software solutions to keep clients happy. Do you need help with working through Law firm’s Accounts Receivable Management (ARM)? Do you want to master this process so it can significantly boost your cash flow? Managing accounts receivable is essential to maintaining the firm’s sustainability and success.
