On top of that, the agency will charge 25% to 50% of any law firm accounts receivable management funds recouped. That’s a big income hit—something you didn’t build into your fee structure. If you send your invoices 2-3 months after the case is resolved, there is a chance that clients forget the value you brought to the case or what you did. Hence, it’s always best to send an invoice at a time when clients appreciate you and your work.
Commingling Funds
Pursue these receivables actively until they are paid or until you have determined that they are uncollectable. You must make consistent efforts, including status reports going to firm leadership to ensure progress is being made. Typically, firms focus their efforts on those clients that pay in a timely manner and avoid working with older accounts because they take time and are often not pleasant to deal with.
What Is Legal Debt Collection?
Clients typically appreciate what you just did for them—not what you did months ago. What’s more, a timelier invoice petty cash is more likely to reach them when they appreciate you and the work you’re doing. Otherwise, your clients will make judgments and conclusions on their own.
- By implementing effective strategies, firms can enhance their collection rates, reduce the time spent on administrative tasks, and improve their overall financial health.
- Speaking of payments, there are multiple platforms that allow you to accept payments online.
- Effective accounts receivable management is crucial for law firms aiming to maintain a healthy cash flow and strong client relationships.
- Receivables automation increases your efficiency and productivity, and takes away any extra costs such as printing that may go into manual accounts receivable methods.
- You can certainly go the “old school” way and keep a notebook log of your time and enter it at the end of each week.
- This makes accounts receivable management accessible for firms of all sizes, including solo practitioners and small and medium teams.
Choosing the right accounts receivables software
- Identify how many accounts they are handling and how many direct contacts they make daily with clients.
- Second, you need to minimize the time you spend following up on late payments.
- Data discrepancies related to invoices, bills, and other financial transactions can lead to larger issues.
- If I don’t receive a response or payment by deadline, I may choose to take further action to pursue this overdue payment.
- Clio’s 2022 Legal Trends Report found that offering multiple payment options is the fourth-highest-ranking factor for law firm hireability.
Also, consider building QR codes or creating click-to-pay links for faster transactions. Today, grocery shopping and movie ticket purchases can be made with a click from the phone. So, offering different payment options for your clients is appropriate.
Reviewing financial reports is essential to managing receivables, but read beyond the numbers and use the reports to understand clients’ stories and the relationships behind the numbers. Instead, devise a process for turning them over to a collection agency. This process should involve some actions on your part before calling the debt collector. Additionally, call every client who has not paid a prior month’s invoice and ask for payment. If you’re feeling reluctant, think about whether you’d rather ask for what you’ve earned or write off this client’s balance.
Complete Guide to Accounts Receivable Automation
Many clients prefer the convenience of online payments, which not only speed up the transaction process but also accommodate your clients’ diverse preferences. Maintaining good client relationships is a top priority for any attorney. Calling clients for payment follow-ups, sending snail mail, and other manual A/R processes can create a lot of unwelcome stress and tension. https://www.bookstime.com/ If a practice has limited or inflexible payment options that make it inconvenient or difficult for clients to pay, it can make the situation even worse.
