How to Improve Your Law Firm’s Accounts Receivable

Breaking payments into smaller, more manageable instalments benefits both firms and their clients. It’s easier for clients to pay their bills—meaning firms get paid for their hard work without needing to constantly chase up. It can be accessed from anywhere with an internet connection, making it convenient for law firms with remote teams or mobile professionals. If you have several unpaid accounts, December can be a tough month to do collections—clients are focused on the holidays and are spending money on gifts, travel, and festivities. Again, it’s best practice to stay on top of your collections all year round—but it’s not always possible to keep up.

Streamlining accounts receivable collection by supporting clients’ needs

You may have the extra funds to donate to a pro bono legal services agency that provides services to those in need — or another charitable cause. You can even donate some time to teach a continuing legal education seminar to help educate other legal professionals. From debit cards to eChecks and credit cards to ACH transfers, you can encourage your clients to settle their bills quickly and securely from the comfort of their homes (or wherever they may be). Also, consider building QR codes or creating click-to-pay links for faster transactions.

New Jersey Accounts Receivable Management Services

Files can become difficult to find as they’re stored across different computers and places across your office. Disorganized bookkeeping can lead to data discrepancies, payment issues, and other challenges. Law firm bookkeeping is a more traditional version of accounting that essentially lays the groundwork for incoming and outgoing cash flow. Bookkeepers summarize and organize all the firm’s financial transactions chronologically and systematically, which requires careful attention to detail. Many lawyers are required to set up Interest on Lawyer Trust (IOLTA) accounts depending on the state they operate in. Interest earned on IOLTA accounts is sent directly to local Bar Associations to support charitable legal services.

Next Day Payments

Clio Manage’s Automated Bill Reminder feature enables you to track outstanding bills fixed assets and automatically send outstanding Balances to clients and bill recipients based on a schedule. If you’re looking to offer client-centric, secure payment options, then Clio Payments is just what you need. Generally speaking, once firms send out an invoice, they’ll usually wait until their payment due date expires before contacting a client. Payment due dates vary from firm to firm—while some have 30-day payment due dates, others might be more lenient and extend this to 60 days. With electronic invoices, you can more easily build and customize each, send them out as soon as they’re ready, and provide clients with an instant way to pay. Take our continuing legal education (CLE) course about creating strong and effective client relationships to about the most common complaints against lawyers and how your firm can get ahead of them.

Step 2: Familiarize Yourself with Accounting Basics

Systems like Clio can help with invoicing and accounts receivable management efficiency by streamlining and automating processes that would typically be handled by you or your team. Relying on Bookkeeping for Consultants manual interventions can quickly bog you down in administrative work. By automating the invoicing process as well as all follow-up correspondence, you can dedicate more time to building your business. With tools like TimeSolv in your arsenal, this optimization process becomes a lot more achievable.

• They’ve now come to expect this same level of flexibility when paying for legal services.
• With thousands of money transactions are being made in a law firm, it is important to understand these exchanges.
• But by removing the unnecessary wait times from manual processes and accelerating invoice creation and validation to the speed of technology, you can get those payment requests out the door more quickly.
• These powerful tools allow legal professionals to easily generate invoices, ensure seamless client payments, and automate tedious tasks like payment reminders.
• Maintaining a high number of unpaid invoices can impact a firm’s finances over time.

Legal Accounting Experts

And 51% indicated that they would like this approach for individual activities within their case. It bears repeating that automating your A/R is one of the most straightforward, cost-effective strategies that you can employ to improve your invoice-to-cash (I2C) cycle. Client Connection is a team of experienced professionals who have the background and skills needed to help resolve law practice collection problems.

• Invoicing and accounts receivable encompasses all the details of your business’s cash flow.
• The relationship between accounts payable and accounts receivable is intertwined as both affect your firm’s liquidity and financial health.
• The traditional law firm accounts receivable process leaves a lot to be desired.
• However, cash accounting may not accurately reflect your finances since it does not account for accounts receivable or payable.
• 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.

Assess the effectiveness of your AR process regularly and implement changes as needed. By implementing these strategies, you can transform your accounts receivable. law firm accounts receivable management You’ll save time, strengthen client relationships, and ensure a healthier cash flow, allowing you to focus on what you do best – practicing law. With our extensive background in Creditors’ Rights, we offer comprehensive solutions and strategies to help you recover outstanding balances efficiently and effectively.

• By simplifying billing workflows, trust accounting, and reporting, LeanLaw helps firms boost cash flow and improve client satisfaction.
• Our research revealed that firms using online payments get paid more than twice as fast as those that don’t.
• However, our report also uncovered that software adoption was key for solving common problems (like getting paid).
• Understanding the different classes of law firm accounting software is crucial for making an informed decision.
• Now that you’re on your way to automating firm accounts receivables, consider setting up your law firm’s chart of accounts.
• For example, if you’ve billed $200,000 in the past year but only collected $160,000, then your collections rate is 80%.

To calculate it, divide the total amount you’ve collected by the total amount that you’ve billed. It’s up to the attorney to keep track of billable hours and communicate it to the client. When done by hand, this is incredibly time-consuming yet incredibly important. While hardworking attorneys invest countless hours in their clients’ cases, the effort can lose value if clients don’t pay their invoices.

• Sending invoices electronically, providing alternative payment options, offering online payment methods, and including click-to-pay links and QR codes will transform your firm’s accounts receivables process.
• QuickBooks offers tailored accounting software for lawyers, helping them streamline financial management and reduce administrative burdens.
• We ensure to build your client’s trust by incorporating seamless payment methods that they demand.
• Payment due dates vary from firm to firm—while some have 30-day payment due dates, others might be more lenient and extend this to 60 days.
• This meeting should include a detailed review of payment expectations and the billing process.

How To Choose the Best Small Law Firm Accounting Software

Paper bills can get lost in the post, and receiving an invoice months after the work has been completed is frustrating for clients. By carefully considering your needs, budgets, and preferences, you should select the one that will streamline your firm’s operations, improve accuracy, and provide valuable insight into your financial health. Financial reporting provides critical insights into profitability, cash flow, and overall financial performance, essential for partners and stakeholders.