Billing and invoicing are typically not tasks that firms think of as getting easier over time. The more a firm grows, the wider its service offerings, and the more complex your accounting becomes.
However, billing and invoicing don’t have to be complicated or tedious. When it comes to billing and invoicing, taking the time to adjust your strategy and standard operating procedures can set your firm up for success and streamline your billing process.
Five billing and invoicing tips to improve your law firm’s payment process
There are a number of strategies to optimize your firm’s billing and invoicing, from how you communicate with clients to the systems you use to process payments.
1. Set clear payment policies and communicate them with clients from the start
No one likes a surprise, especially when it comes to billing.
Communicating your payment policies with your clients before signing them on or completing any billable hours can prevent conflict or disputes down the road. Establishing clear payment terms and conditions also establishes expectations for how the payment process should unfold and define obligations for you and your client.
Your payment terms and conditions should include:
- When payments are due
- What types of payment are accepted
- How late or missed payments are handled
These expectations are vital for building long-term trust between you and your client. When clients understand their obligations, they can:
- Clear up questions before they become an issue
- Understand their payment options
- Budget for legal expenses
- Inquire about alternate arrangements for fees
- Avoid late fees
All of these steps will prevent drawn-out disputes and negative client experiences. Your team should also be looped into payment terms and conditions so they can answer questions confidently. In addition to training staff, it can also be helpful to add this information to any internal knowledge base you may have.
2. Track time in detail to provide transparent and complete invoicing
Tracking time is imperative for billing your legal services, but not all time-tracking methods are created equal. With manual time tracking, data entry can be time consuming and lead to serious errors. In turn, this can create tension with clients who need to trust that their bills are accurate. If you don’t get it right, you may risk compliance violations.
On the other hand, time-tracking software can save attorneys a great deal of time and stress, allowing them to easily capture billable time in full detail so there are no questions about what goes into each invoice. Some software solutions can also connect to your phone or tablet, so you can track time on the go without missing a beat.
3. Send invoices on a consistent schedule
Consistency is the key to building habits, and this goes for your firm and your clients alike. Internally, if your team establishes a consistent schedule for invoicing, it can quickly become a standardized and, with the right tools, automated workflow for your billing staff.
At the same time, clients are more likely to pay their bills when they know what to expect. Receiving bills at the same time each month creates an established pattern: receive invoice, submit payment, repeat. Consider scheduling your invoices to go out following common pay days so clients are more likely to receive your invoice when they have sufficient funds to pay your bill without a second thought.
Look for accounting systems that allow you to create batch invoices with easy editing capabilities. Automating batch invoicing can make staying consistent much easier for your firm.
4. Use legal-specific payment processors for easy online payments
The less convenient it is for clients to pay your invoices upon receipt, the less likely they are to do so. Making the payment process as simple as possible for clients to pay will not only get you paid on time, but it will also cut down on the time and overhead required to follow up with delinquent payments and manage law firm collections.
Convenient online payment options help your firm eliminate cash flow and collections issues. One survey of legal professionals found that firms that accept digital payments by card get paid 39% faster on average. That’s a significant improvement for legal professionals looking to collect payments.
Quicker payment turnarounds also make it easier for your firm to budget by taking the guesswork out of your forecasted monthly revenue. These insights allow for more accurate financial planning and allow you to invest in the growth of your practice with less worry.
It’s key, though, for law firms to work with legal-specific payment processors. While there are many payment processors on the market, generic options don’t provide the compliance safeguards that ones built for legal professionals do, such as compliance with ABA and IOLTA guidelines.
5. Be proactive about reporting so you can spot problem areas in advance
Taking a proactive approach to problems is vital for a thriving law firm. But proactive strategies work best when they are paired with data, especially when you’re evaluating your accounting processes.
To optimize your accounting system, look at reports that help you:
- Identify your most valuable clients and practice areas
- Spot unbilled transactions and hours
- Review clients that may be causing repeat issues
- Identify any discrepancies or pain points in the system
- Stay on top of compliance
- Assess processes and look for opportunities to improve
By staying proactive, automating where it makes sense, and creating consistency for all parties, your billing and invoicing can become a well-oiled machine.
Improve your billing and invoicing with Tabs3 Software
Tabs3 Software offers a fully integrated suite of billing, accounting, and practice management tools designed to help law firms run more efficiently and profitably.
Tabs3 Software delivers:
- Compliant online credit card payment processing with Tabs3Pay
- Easy-to-use time-tracking functionalities
- Advanced reporting
- Calendaring and matter organization tools
- And more