Practically all professional firms rely on efficient legal billing. Without it, there’s a negative impact on the firm’s cash flow and profitability. Over time, it becomes impossible to thrive.
While slow invoice payments can happen for a number of reasons, inefficient billing is usually at the root of the problem. Invoices go out randomly or contain information that makes it hard for the client to understand what they are paying for. Without strong internal processes, you’ll constantly run into issues with past due accounts and frustrated clients who simply refuse to pay the bill.
While this is a big problem, there are convenient solutions.
Tip #1: Keep Detailed Records
Record all work you do for clients in a log that you can easily refer to when it’s time to send their bill. Be as specific as possible. While it may be more convenient to group all tasks under a few main categories, clients may have a hard time understanding exactly what they are paying for.
Providing detailed descriptions of the individual steps that make up larger projects will lend credibility to the items on your bill. For example:
- 15-minute phone call to defendant’s counsel
- 1-hour discovery
- 2-hour appearance at court
To ensure the accuracy of your records, enter tasks into your timekeeping software as soon as you finish them. Logging tasks later in the day can lead to mistakes.
Tip #2: Use Clear Language on Invoices
Invoices to clients should contain as little jargon as possible. You want them to clearly see what work you’re doing for them, and using too much “legalese” or technical jargon can lead to confusion and questions. Make the task descriptions detailed but easy to understand.
Tip #3: Send Invoices on a Predictable Schedule
Send invoices at roughly the same time every month, unless individual clients have specifically requested a different arrangement. They will know when to expect their bill and have the chance to budget for it accordingly.
If you wait too long or send invoices out randomly, you’re less likely to get a prompt payment and more likely to encounter questions or confusion. Fortunately, most billing software can be programmed to include reminders that keep your invoicing on schedule.
Having said this, there may be times when you can’t bill on schedule due to circumstances beyond your or the client’s control. In these situations, send a quick reminder to the client that their case is still on your radar and you’ll be invoicing them as soon as the way is clear to do so.
Tip #4: Make Payments Easy
Not too long ago, professional services were paid exclusively by check (unless a retainer was required upfront.) Nowadays, people prefer to have a variety of payment options at their disposal, such as credit or debit cards. The easier it is for clients to pay your bill, the more likely they are to pay on time.
Solid Billing Strategies Mean Strong Payment Flow
When you make your payment processes easier, predictable, and transparent, the chances of your invoices being paid on time goes up. While late payments and collections are an unfortunate reality in the legal industry, the likelihood of them disrupting your cash flow is much lower.
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