The Most Frequently Asked Questions About Accounts Receivable Management New Jersey Law Journal

In addition to offering flexible payment methods, digital payment solutions also offer more flexibility with payment terms. Many unpaid bills are the result of clients simply not having enough money to cover the cost all at once. law firm accounts receivable management Electronic payments are easy to adjust and customize without disrupting your overall accounting processes. Adopting a more proactive and streamlined A/R management process has numerous upsides for law firms of all sizes.

Leveraging Technology for A/R Management

Many factors can affect your firm’s AR, but addressing payment processing is by far the most impactful. And as leaders in the legal software space, we’ve learned a thing or two about helping law firms process payments efficiently. Embrace technology by implementing an electronic invoice management system. This software streamlines the accounts payable process, automating tasks like invoice capture, data entry, and approval workflows.

Speed payment by using a client portal to invoice clients

If your law firm is juggling a range of clients and legal matters, it can be difficult to manage all of them simultaneously and track their respective expenses without a software solution to help. Along with an accounts payable management system to ensure accuracy and timeliness, you must have an approval workflow to verify invoices and authorize payment to vendors. Depending on your internal procedures, you may need to institute multiple levels of approval. The best way to prevent unpaid bills is to clarify your fees upfront. Clients who know what to expect are more likely to commit to paying for your services.

Case Management

Hardworking attorneys invest huge amounts of time in their clients, pumping hours and hours into every case. But sometimes, after all that hard work, you send out the bill and get no response. Non-paying clients not only cut into your firm’s cash flow, but chasing every unpaid invoice creates even more work. Do away with manually monitoring payments and sending clients reminders. With the Automated Bill Reminder feature, your attorneys can spend more time on billable work instead of chasing up payment.

This allows the firm to maintain a steady cash flow and the entire team to focus more on delivering high-quality legal services to clients. Having an easy way to store client details and payment information is an essential piece of increasing payment efficiency and streamlining your A/R management. https://www.bookstime.com/ When using manual processes or multiple pieces of disjointed software, this can be easier said than done. Convenient features like Quick Bill and Scheduled Payments help firms collect more payments while ensuring that money goes into either the correct trust or operating account automatically.

How to Calculate Collection Rate

Unfortunately, manual processes traditionally employed by law firms often struggle to address the unique challenges of legal A/R management. Every law firm is different, but nearly all of them share common accounts receivable challenges. To help firms address their collection problems, we have compiled a list of the questions we hear most frequently from law firms, and offer our answers. Interestingly, tax deductions can ease the burden when used correctly—yet not all lawyers are up-to-date on their tax deductions. Many lawyers go to one or the other extreme—they either claim everything (and possibly more than they’re allowed to), or they’re so afraid to overstep they miss out on tax deductions. An accountant who specializes in accounting for law firms is beneficial.

Communicate with clients proactively

You also have the option of setting up scheduled payments with clients, allowing you to stabilize your cash flow. As for businesses in other industries, standard law firm accounts receivables processes can be time-consuming, demanding work before and after the service has been completed. More than just invoicing, you’ll need to communicate pricing expectations before entering into an agreement, track payments received and payments due, and more. 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.

• Communicate these procedures to all relevant staff members to ensure consistency, transparency, and efficiency.
• Unpaid invoices not only disrupt the firm’s cash flow but also burden attorneys with the task of chasing payments, diverting their attention from their primary focus—practicing law.
• Legal bookkeepers and legal accountants work with your firm’s financials, with the shared goal of helping your firm financially grow and succeed.
• Digitslaw legal billing software makes it easy to set up payment plans, send invoices and give clients real time updates about their payment via the client portal.
• Electronic invoices can be calculated automatically, go out as soon as they’re ready, and can be paid instantly.

To ensure your firm’s financial statements are accurate, complete, and up-to-date, you need to use sound bookkeeping for attorneys. An online payment service provider will automatically generate invoices, send reminders for due payments, and provide detailed financial reports. A/R management technology is especially helpful in handling high volumes of billing and ensuring practices remain consistent across your firm. Writing off uncollectable accounts receivable can be an effective strategy for law firms to clean up their books while preserving client relationships. Here are some best practices around determining when and how to write off invoices that are very unlikely to get paid.