Optimizing Accounts Receivable Management in Law Firms

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. Instead, leading law firms around the country are increasingly turning to digital accounting and payment solutions to increase cash flow and boost productivity. Not only is legal software helping to overcome age-old A/R challenges, but it’s also creating new opportunities to modernize billing processes and improve the client experience. The traditional law firm accounts receivable process leaves a lot to be desired.

• By establishing a consistent billing schedule, you create a routine that clients can anticipate.
• Implementing these collection practices can dramatically improve your payments experience with new clients, but what about the old ones?
• Join lawyers from over 15,000 firms who trust MyCase to grow their firm while managing their caseload.
• In fact, in the MyCase 2021 Legal Industry Report, 73% of surveyed lawyers stated that their firm struggles to get paid.
• Accounts receivable are the payments that you haven’t collected from clients.
• Moreover, the software provides valuable reporting and analytics capabilities, enabling you to track payment trends and identify areas for improvement.

Key Strategies for Improving A/R Efficiency

For modern firms, that means an automated accounts receivable system, such as MyCase legal invoicing software. Invoicing and accounts receivable encompasses all the details of your business’s cash flow. Your invoicing and accounts receivable workflow practices have a substantial impact on your internal accounting systems and are essential for understanding your profitability. Generally for law firms, when they send out an invoice, they usually wait until the payment due date expires before contacting the client.

Improving the accounts receivable process for your law firm

At the heart of our approach is a deep understanding of the unique needs and goals of our clients in the financial industry. We recognize that maintaining a healthy cash flow and minimizing delinquencies are critical to your success. Our team of experienced attorneys is dedicated to providing tailored legal services to protect your interests and optimize your collection efforts.

Communicate with clients proactively

Unfortunately, too many firms struggle to optimize their accounts receivable processes, meaning valuable fee-earners spend too long chasing up overdue payments. Transforming your law firm’s financial performance starts with optimizing your accounts receivable. By implementing the strategies outlined above and leveraging Rocket Matter’s suite of tools and features, you can streamline your AR process, improve cash flow, and drive your firm’s growth. Balancing the timely collection of outstanding payments with maintaining customer relationships poses a significant challenge in accounts receivable.

Client Trust Accounting in California: A Lawyer’s Guide

Manual handling of payments is a thing of the past; innovative technologies and software are up and running to facilitate smooth transactions. Even legal firms can adopt billing software to manage accounts receivable. These tools allow you to create detailed invoices in a flash, easily manage client accounts, and send automated payment reminders. So, the client has finally entrusted you with their case, and you’ve clarified the payment structure. Establishing open communication with your client is important to ensure your law firm’s accounts receivable management is smooth. Managing invoices and payments is labor-intensive work that your law firm’s staff can probably do without.

• That last topic—how the relationship will proceed—should include a detailed review of payment expectations and the billing process.
• Collecting promptly on A/R is critical for your working capital – which keeps your lawyers and staff paid and your firm operational.
• According to ABA Journal, one of the more common complaints against lawyers is a lack of client communication.
• They’ll give you and your work greater value, and they’ll make you a higher priority.
• Challenges such as increasing transaction volumes and evolving payment methods will drive the need for more adaptable and efficient systems, ensuring better debt recovery and reduced delinquencies.
• Now, our robust team of CPAs, controllers, bookkeepers, and industry specialists partner with engaged lawyers who want to scale their practice and improve the efficiency of their business.

With the accrual method, you record revenue when it’s earned and expenses when they’re incurred—whether they’re paid right away or not. This creates a better matching of costs to the revenues earned in a given month or year. It allows for more meaningful financial management that isn’t influenced by the ups and downs of cash flow. Just as your clients rely on your expertise with the law, there comes a point when you need to call in accounting professionals.

This is a list of all your firm’s financial accounts, giving you a framework for where to record every transaction. Including payment details on every invoice can also shrink the payment timeline—and your AR. Our world is more connected than ever, law firm accounts receivable management yet effective communication remains a significant differentiator. Law firms that communicate well benefit from greater client satisfaction and loyalty. They may struggle with frustration on both sides—and risk their profitability because of it.

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. However, simply throwing more manpower at the problem isn’t the answer – and frankly, unless you are part of a large practice that can afford a dedicated accounting team, that isn’t an option anyway. Leveraging Rocket Matter Pay within your billing system empowers both your firm and your clients.

Accounts receivable automation is also hugely beneficial to maintaining good client relationships. Since automation makes invoicing more consistent and eliminates uncomfortable personal reminders, it takes the stress out of payment reminders and other client follow ups. The American Bar Association’s Model Rules of Professional Conduct require attorneys https://www.bookstime.com/ to safeguard client property, including unearned fees. A high AR balance complicates this responsibility, increasing the risk of mismanaging funds or failing to deliver payments promptly. While any change in how you operate your law office can feel overwhelming, there’s never been a better time to start migrating your office structures online.