This includes invoices that have been sent but aren’t yet due—as well as overdue bills. By modernizing your AR management with Rocket Matter, you can elevate your law firm into a more efficient and profitable practice. The American Bar Association’s Model Rules of Professional Conduct require attorneys to safeguard client property, including unearned fees. A high AR balance complicates this responsibility, increasing the risk of mismanaging funds or failing to deliver payments promptly. This helps you prioritize follow-ups based on how long payments have been outstanding. So, if A/R management is so essential, why do many attorneys wait until the last minute to collect bills or let invoices go unpaid all together?
Optimizing Accounts Receivable Management in Law Firms
This all-in-one platform empowers legal professionals to focus on providing exceptional legal services while ensuring the smooth operation of their practice. As your law firm expands and you’re busy running a practice, you do not want to mourn over the pending payments from clients. These effective law firm accounts receivable strategies can transform your financial landscape. From sending invoices electronically to setting up multiple payment options, we’ve seen various ways to improve your law firm’s accounts receivable process. Implementing a comprehensive legal practice management solution can significantly enhance the efficiency of your law firm’s accounts receivable management. Such software can automate various aspects of billing and collections, freeing up valuable time for your team.
- That’s a big income hit—something you didn’t build into your fee structure.
- Clio’s 2022 Legal Trends Report found that offering multiple payment options is the fourth-highest-ranking factor for law firm hireability.
- Data analytics enable firms to benchmark performance against industry standards and identify areas for improvement.
- Plus, with our Smart Time Finder, your firm can capture billable time you may have missed via a passive time-tracking feature.
- This can be particularly problematic for firms that rely on repeat business or referrals from satisfied clients.
- Call them to explain when a big charge is coming instead of shocking them when they open their invoice.
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Law firm accounts receivable (AR) refers to the money clients owe your firm for legal services you’ve already provided. It’s essentially the outstanding balance of invoices issued law firm accounts receivable management for completed legal work. A low AR is desirable for law firms because it means clients are paying their bills promptly and in full, ensuring healthy cash flow and financial stability.
Be Timely With Your Billing
Offering more options can help improve collection rates and positively impact your law firm’s cash flow. For example, our 2024 Legal Industry report uncovered that our customers collected 33% more from clients who paid online. When looking at dollar amounts, we learned that more than one-half of legal professionals collected $3,000 or more each month on average when offering online payments. When busy practices don’t have an effective law firm accounts receivable management process, unpaid client bills can get out of control in a hurry. Your collection time will naturally improve when you move from manual processing to efficient automated accounts receivables.
- Some clients may still struggle to make payments, refuse to pay, or file a chargeback if they disagree with the charges.
- On top of that, the agency will charge 25% to 50% of any funds recouped.
- Unfortunately, the accounts receivables process isn’t always smooth sailing.
- Some law firms consistently maintain a high A/R, whether due to strict payment terms, unresponsive clients, or a myriad of other potential reasons.
- You might be familiar with the term ‘accounts receivable,’ which simply refers to the money customers owe a business for the goods or services it provides.
- This not only affects productivity but also detracts from the quality of legal services provided.
- Instead, devise a process for turning them over to a collection agency.
The end-to-end nature of automation means that invoicing, chasing up payments and everything in between happens quickly and efficiently. You also have the option of setting up scheduled payments with clients, allowing you to stabilize your cash flow. Effective accounts receivable management is crucial for law firms aiming to maintain a healthy cash flow and strong client relationships. Here are six actionable strategies to optimize your law firm’s accounts receivable management.
What is law firm accounts receivable automation?
Data analytics can identify spending patterns, forecast future expenses, and guide resource allocation. Periodic variance analysis highlights discrepancies between budgeted and actual expenses, prompting timely corrective actions. Clients receive email invoices and follow-ups on schedule, so you can bookkeeping and payroll services reallocate your time to more critical tasks. Clients can also freely access their outstanding balances, payment histories, and upcoming expenses when they log into the client portal.
With tools like TimeSolv in your arsenal, this optimization process becomes a lot more achievable. We help law firms automate invoicing, billing, retained earnings and payment collection with features like TimeSolvPay and our in-app client portal that offer convenience and transparency. Clients who know what to expect are more likely to commit to paying for your services. A good client intake process for law firms can help you establish expectations early with prospective clients.