Optimizing Accounts Receivable Management in Law Firms

Attorneys are highly skilled professionals, so they shouldn’t waste their valuable time following up on outstanding bills. Unfortunately, too many firms struggle to optimize their accounts receivable processes, meaning valuable fee-earners spend too long chasing up overdue payments. The term “accounts receivables” refers law firm accounts receivable management to money your law firm has earned and invoiced for but not yet received. Accounts receivables are listed as assets on law firms’ balance sheets. With LawPay, our sister company under AffiniPay, your firm can accept debit and credit cards, eChecks, and electronic payments while complying with ABA and IOLTA guidelines.

Learn More About Accounts Receivable Management

Attorneys deserve to be paid on time for the valuable work they do—and when you’re running a busy practice, you don’t want to waste time chasing down clients for payment. We specialize in legal practice management software, including accounts receivable tools. More than 64,000 law firms trust MyCase and LawPay to track time, generate ready-to-send invoices, send automated reminders, accept payments, and crunch analytics. As a law firm, having effective accounts receivable management processes in place is crucial for maintaining healthy cash flow.

Be Clear About Fees

The more consistent you are with these client updates, the more you can control the narrative as the case progresses. While you probably won’t collect it, it does show you’re serious about getting paid. And when you do get paid, forgiving it will make you look like a hero. Call them to explain when a big charge is coming instead of shocking them when they open their invoice. If you anticipate an unusually high charge, you should consult and discuss it with the client before even engaging in any of the work so they know what it may cost and why it is important.

• It involves a ton of inefficient, manual work—involving a lot of spreadsheets, paper invoices, inputting data entry, and struggles with collections.
• Strategically writing off uncollectables that meet firm criteria can provide tax benefits while cleaning up a firm’s accounts receivable.
• The more consistent you are with these client updates, the more you can control the narrative as the case progresses.
• It’s a win-win situation—your clients benefit from manageable payments, and your firm enjoys a steadier financial stream.
• Keeping close tabs on accounts receivable is crucial for law firms to maintain healthy cash flow.
• Additionally, Rocket Matter Pay boasts features like automatic deposits within 12 business hours and the ability to store client payment information securely for future transactions.
• For instance, instead of listing “planned mediation” on their invoice, explain everything that went into that planning, such as research, interviewing experts, and developing strategy.

Strained Client Relationships

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. So, in the legal world, accounts receivable indicates the payment clients owe the lawyers or the law firm. You might have sent an invoice to the clients detailing the due date and the amount owed, but if it remains unpaid, it constitutes a law firm’s accounts receivable. Want to include expenses and trust account transactions right on the invoice? MyCase allows you to insert these items with just a few clicks of your mouse. And by accepting digital payments through the MyCase-LawPay integration, you can improve your law firm accounts receivable management with the convenience of these payment options.

• Regular and timely billing is essential for maintaining a healthy cash flow.
• Clients typically appreciate what you just did for them—not what you did months ago.
• You’ll save time, strengthen client relationships, and ensure a healthier cash flow, allowing you to focus on what you do best – practicing law.
• Poor accounting practices, such as struggling to track billable hours or sending out invoices late, can lead to money leakage.

The invoice is an important touchpoint, where you give the client visibility into the work you’re doing. You don’t have to outline your time to the minute, but you should separate larger tasks and include a summary of each. Conducting a potential new client consultation effectively is an art form. Let’s say you’ve collected $90,000 in a given year, off of $110,000 in billings. Don’t be hesitant to take these steps, because you deserve to get compensated for your services.

QuickBooks Online: For streamlined legal accounting

• This all-in-one platform empowers legal professionals to focus on providing exceptional legal services while ensuring the smooth operation of their practice.
• If multiple people are working on the matter, add additional details such as their name, title, and hourly rate specific to the services they performed.
• Still not sure that an accounts receivable automation solution is right for your firm?
• Without the proper business bank accounts, you risk inaccurate bookkeeping, messy records, and potential compliance violations regarding trust funds.
• This way, your firm can stay compliant with ethics rules—and you can ensure you aren’t leaving money on the table.

It reduces manual errors, enhances efficiency, and provides better visibility into the payment status. One of the tried and true best practices for collecting accounts receivables is consistent invoicing. If your firm bills on a predictable basis, such as the first of every month, then clients know when to expect them.

Additionally, Rocket Matter Pay boasts features like automatic deposits within 12 business hours and the ability to store client payment information securely for future transactions. Finally, the real-time payment data provided by Rocket Matter Pay offers valuable financial insights, allowing you to track collection trends and analyze 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. See how Clio’s accounting solutions can help you stay on top of your accounts receivables today.

What legal bookkeepers do

When looking at the importance of solid accounting, you’re really talking about looking at financial data on a regular basis. And you can’t do that if you’re not gathering and sorting it on a regular basis. Double-entry accounting is a system of bookkeeping where every entry to an account (i.e., every financial transaction) requires a corresponding and opposite entry to a different account. A double entry system, therefore, has two equal and corresponding sides—or debits and credits—and creates a balance sheet consisting of assets, liabilities, and equity.

• Transforming your law firm’s financial performance starts with optimizing your accounts receivable.
• This allows you to focus on legal work rather than constantly chasing payments.
• Law firm accounts receivables automation is the process of digitally automating sales collections for a legal practice.
• Your firm may face delayed payments due to client disputes, scope creep, or clients’ financial constraints.
• Let’s say you’ve collected $90,000 in a given year, off of $110,000 in billings.
• Leveraging Rocket Matter Pay within your billing system empowers both your firm and your clients.
• Solicitors deserve to be paid on time for the valuable work they do—and when you’re running a busy practice, you don’t want to waste time chasing down clients for payment.

An accounts receivable automation solution prevents you from deciding between doing client work right now or making sure you get paid for work already completed. In addition, implementing legal software that allows you to automate accounts receivable minimizes the possibility of human error, such as inaccurate invoices, https://www.bookstime.com/ duplicate entries, and overpayment. The process of automated accounts receivable collections takes place via technological tools, such as accounts receivable automation software. MyCase billing and invoicing software, for example, improves the collections process by providing your firm with the following.