Optimizing Accounts Receivable Management in Law Firms

This allows clients to choose the method that is most convenient for them. Invoicing and accounts receivable encompasses all the details of your business’s cash flow. Your invoicing and accounts receivable workflow practices have a substantial law firm accounts receivable management impact on your internal accounting systems and are essential for understanding your profitability. Accurate bills start with proper timekeeping, so your firm’s time-tracking software should integrate with your billing and invoicing technology.

• When using manual processes or multiple pieces of disjointed software, this can be easier said than done.
• This can be particularly problematic for firms that rely on repeat business or referrals from satisfied clients.
• The client will expect this kind of follow-up since you explained your policies and procedures (and they signed off on them) during client intake.
• An accountant who specializes in accounting for law firms is beneficial.
• You also have the option of setting up scheduled payments with clients, allowing you to stabilize your cash flow.

Automate Invoicing and Payments

When it comes to accounting for law firms, there’s no one “right” method (though you may be required to take on the accrual method). Some software platforms allow you to use accrual-based books for monthly management of the firm while also creating cash-basis statements for preparing tax returns. Look into the pros and cons of both methods for your firm, then be consistent going forward to ensure your records are accurate and easy to track.

Strategies for Law Firm Accounts Receivable Management

Digital payments are also easy to schedule in advance, making it easy to set up future or recurring payments. Electronic invoices also help firms save costs, by eliminating time spent on preparing bills and reducing the use of paper and stamps. Accounts receivable automation is also hugely beneficial to maintaining good client relationships. Since automation makes invoicing more consistent and eliminates uncomfortable personal reminders, it takes the stress out of payment reminders and other client follow ups. Great attorneys often go out of their way to serve individual clients. Therefore, it’s perfectly reasonable when a lawyer tailors billing arrangements to fit each client’s unique circumstances.

Use easy, click-to-pay links and QR codes

Accounts receivable management is also a critical component of customer relationship management. Timely and accurate billing and professional communication regarding payments https://www.bookstime.com/ build trust and confidence in business-client relationships. Read to learn about common accounts receivable management processes, challenges, best practices, and more.

Send Easy-to-Understand Invoices and Follow Up

That is why regular communication is one of the most important best practices for accounts receivable collections. If you don’t prioritize collecting accounts receivable, you end up working for free—unpaid invoices will sit on your books until you turn them over to a debt collector or you write them off. Integrating your time tracking and billing software with your invoicing software can also speed up the process by allowing you to automate the process even further. In this day and age, your clients anticipate being able to do everything digitally, from researching a law firm to scheduling a meeting and signing intake forms. In their minds, paying with plastic isn’t a “perk” anymore—it’s the expectation.

Firms unknowingly  lower their chances of being paid on time by including only a fraction of potential payment options. Leveraging Rocket Matter Pay within your billing system empowers both your firm and your clients. This secure online payment portal simplifies the collection process by offering clients a convenient way to pay invoices with credit cards, debit cards, or e-checks. Additionally, Rocket Matter Pay boasts features like automatic deposits within 12 business hours and the ability to store client payment information securely for future transactions. Finally, the real-time payment data provided by Rocket Matter Pay offers valuable financial insights, allowing you to track collection trends and analyze cash flow.

Areas for Improvement

• With one convenient platform, professional service firms can accept online payments, offer financing, and manage client invoices.
• To meet your clients’ expectations, having an efficient A/R system isn’t just an option; it’s a necessity.
• With MyCase time-tracking software, you can keep track of billable or non-billable time spent—for flat fee and pro bono cases.
• If you’re looking to offer client-centric, secure payment options, then Clio Payments is just what you need.

This strategy involves setting up recurring, automatic payments, either via ACH transfer from a bank account or with a credit card. Many factors can affect your firm’s AR, but addressing payment processing is by far the most impactful. And as leaders in the legal software space, we’ve learned a thing or two about helping law firms process payments efficiently. Accounts receivable, or AR, represents the money clients owe your firm for legal services you’ve already invoiced.

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Prolonged payment delays can strain relationships with clients, leading to dissatisfaction and potential loss of future business. When clients fail to pay their invoices promptly, it can create a sense of uncertainty and frustration, making it difficult for attorneys to maintain a positive working relationship. This can be particularly problematic for firms that rely on repeat business or referrals from satisfied clients. Attorneys may find themselves spending valuable time chasing payments instead of focusing on client work. This not only affects productivity but also detracts from the quality of legal services provided.