10 Best Billing and Invoicing Practices for Law Firm
Running a law firm practice is not a job of lawyers, but a profession that plays a very important role in the lives of their clients and their society. However, it is a business like other business industries and getting paid is what every lawyer wants. But, staying on top of law firms billing and invoicing is not a cake walk.
More so, in this industry, clients prefer to work with attorneys who straightforwardly talk about the fees and billing process. If your law firm has a structured and efficient system for the same, it enables you to build trust among your clients, drive business growth and boosts your bottom line.
We understand that streamlining law firm accounting is a daunting task and a time sucker, but the time you’ll spend will pay you off in the end. In this article, we’ve outlined the top 9 guidelines for law firms that will help you to keep invoicing and billing process efficient and seamless as per your firm’s needs.
- Create a minimum hourly rate-
Many people across the industry don’t understand hourly rates neither they want to pay a higher hourly rate. So it is crucial for you to know your hourly rate and you find it by applying this formula: Annual target revenues/ (realization rate x billable goal).
Annual target revenues: The addition of your compensations and benefits, contribution to firm profits and share of firm overheads.
Realization rate: The percentage of fees billed that you collect.
Billable goal: The total billable hours that you will dedicate towards law firm’s processes.
- Make sure to maximize the firm’s billing cycle-
Well, the period of when you send bills impacts how quickly you’ll get paid by your clients. To maintain smooth cash flow, divide your bills sending date. For instance, you can send half of the bills on 5th of every month and the rest of the bills on 20th in the same month this will ensure that your bills reach your clients before their payday.
Once your matter is closed, bill regularly and on time to your clients because seeing your bills on mails, clients will automatically remember the way you served them with your legal services. In this way, clients can manage their expenses accordingly, and you’ll get paid without any hassle.
- Keep your billing statements clear-
Don’t forget that your billing statements are not just for reminding clients about the money they have owed, but it’s a source of communication that will explain what you’ve done so far and promote your services by indicating the benefits of your job.
Usually, clients find it difficult to understand an invoice when it is not detailed. Always give your clients a brief description, which will help you indirectly as your clients will have fewer questions to ask. For instance, consider this statement “T/C/w/Edward/IP” will make no sense but writing it “Telephone conference with Mr. Edward regarding the investment portfolio” will make sense. And never forget to offer free or value-added services to your clients with the invoice that has been sent.
- Setup an easy way to pay-
Experts recommend that the more you make the payment process seamless, the more often you’ll get paid without spending much time. On your law firm’s website set up a private payment portal for clients that will save you time and costs involved with mailing invoices.
In this portal, provide a personal code for access and “pay here” button at just one click for expediency. In case, if your clients prefer to receive invoices via emails, add the link of this portal or your credit card processing service.
And if you have any of the clients that demand paper bills, always take their credit card information (with signature) first hand and secure permission that if they fail to pay you, you can charge through their credit card without any obligation.
- Setup simple invoice creation-
The time has gone when you need to create and send paper bills to clients that eventually was a time-consuming process. Thanks to advancement in technology that introduced legal billing software! Now generating and sending invoices to clients have become way easier than it was before.
With the legal billing software, you get innumerable ways to cut down billing incompetency, but the number one benefit of these tools is to create and send out invoices, reducing the number of steps.
Legal billing software like Bill4Time, Abacus Law, Clio, MyCase, etc., has in-built ability to customize invoices, allowing you to quickly establish what information of your law firm’s should be reflected on your invoice, such as time or expense entry column you want to add, and a lot more.
- Automate invoice reminders-
One more efficient way to keep your law firm’s billing or invoicing process streamlined is by using legal software that automates invoice reminders. With such an ability in your software, you can program your invoice reminders when you are about to send your first ever invoice to the client.
In case, if on the first invoice the bill isn’t paid by the client, a reminder would be automatically sent by the system with the entire outstanding amount. In this way, you can save a considerable amount of time and money for your law firm.
- Keep track of billable time-
For lawyers, the adage “time is money” is meant to be true. Tracking time of billable hours is vital whether lawyers are in the office or the courtrooms. If you are a startup law firm, make sure all the attorneys under you proactively keep track of their billable time and maintain the entries wherever they are- working on a case management software at your law office or on mobile devices.
One more way to boost the billing efficiency in your law firm is by streamlining the steps considered to convert billable activities into billable time on an invoice.
- Use advanced billing and revenue reporting features-
You should make sure that your law firm’s billing procedure is very effectual, which is possible by keeping track of your firm’s billing and financial information. One of the finest ways to perform this is to sprint reports that give you an outline of your law firm’s invoicing, billing and collected data.
Depending upon the software you use may get the following report features:
- Aging Invoice Report
- Accounts receivable report
- Case revenue report
- Fee allocation report
- User time and expenses report
- Trust account summary report
- Case time and expenses report
- Non-Trust Retainer & Credit Account Activity
- Non-Trust Retainer & Credit Account Summary
- Credit Card fees report
- Statute of limitation report
- Electronic payment report
- Use one central location for everything-
If you are using legal billing software, it will not make sense if you don’t utilize it for collecting and sorting through all the data associated with customer data, proposals, invoices and other information related to customer’s data. Every bit of billing information should be available at the fingertips of your people who need it. In such a scenario, using a work management solution for every business operation will save your time and money and enhance work efficiency.
- Don’t forget to send a Thank you note-
Whenever your client does the payment, always send a thank you not thereafter. This will create a long-lasting positive impression on your client. Say thanks to them for their timely payment because everybody loves this kind of appreciation, which will enable them to buy things from you more often.
For law firms, the billing process can be overwhelming, but it should not as you can implement the guidelines mentioned above and get paid faster!https://www.migramatters.com/10-best-billing-and-invoicing-practices-for-law-firm/Business