Strategies for Getting your Law Firm Paid Faster

Managing a law firm requires more than just handling legal matters; it also involves adeptly overseeing the business side of operations. A crucial element of this is ensuring prompt payments. The hard truth is that delayed payments can lead to substantial cash flow challenges — and even your law firm’s demise. Thankfully, there are many time-tested strategies you can leverage to accelerate the payment process and reduce payment delays.

We teamed up with valued partner Collbox to host the webinar, “How to Tackle Account Receivable: A Guide to Healthier Cash Flow.” Following this insightful discussion, we’re pleased to share some of the most effective strategies that law firms can employ to recover outstanding accounts receivable (A/R) and establish more reliable billing practices, ultimately leading to improved cash flow and overall financial stability for your company.

Document your Accounts Receivable Policy

Accounts receivable (A/R) plays a crucial role in not only a company’s financial plan, but also in its broader vision for expansion. While A/R is an asset that represents a future payment, in reality, it’s a debt. It’s important to clearly define and document your A/R Policy to ensure that your business deals with this debt obligation properly. Your organizational policy should also be well communicated across the organization so that your staff can execute it effectively.

Set Clear Payment Expectations

By explicitly specifying the payment terms on the invoice, you can prevent any potential confusion and disputes with your clients. These terms serve as a legally binding agreement, promoting transparency and minimizing the risk of misunderstandings. Below are some guidelines for setting clear payment expectations:

– Write an Engagement Letter: Draft and share an engagement letter that details the scope of work, the fee structure, the payment terms, and the resolution of disputes.
– Discuss Payment Terms: Engage in a discussion with the client regarding payment terms, including the timing of invoice issuance, the client’s payment window, and the accepted forms of payment.
– Obtain Written Agreement: After discussing payment terms, secure the client’s agreement in writing. This can be achieved through a signature on the engagement letter or a separate payment agreement.

Harness the Power of Technology

It’s commonplace for even the most skilled legal professionals to encounter difficulties when handling tasks like invoice management and trust account reconciliation on a daily basis. Utilizing AI-powered legal billing and invoicing software, as well as legal payments software, can greatly assist in establishing a thriving practice. Smokeball offers cutting-edge legal practice management software designed to help you operate a more well-structured law practice — enhancing your invoicing procedures to optimize cash flow.

Make it Easy to Get Paid

As billable legal professionals, it’s in your best interest to meet your clients where they are. Providing various payment options will allow you to cater to a wider client base and improve the chances of receiving timely payments. This high degree of flexibility increases the probability that they will select a payment method that allows for consistent and punctual payments. What’s more, utilizing legal billing software can simplify your law firm’s payment procedures and provide clients with the option to settle their invoices electronically.

Friendly, Consistent, Persistent Follow-Up

Define a smart multi-channel follow-up model (e.g. phone call, email, text, etc.) that includes a dedicated cadence and stick to it. Leverage technology like automated email reminders that are built into your existing systems. Be sure to never underestimate the power of tasking the right personnel with making consistent, friendly follow-up calls.

It’s important to humanize the payment request and provide assurance to the client that they have a helpful resource to consult. While there’s a need to be persistent, always avoid coming off as aggressive or harsh — even if you may feel inclined to do so at times. Remaining consistent in your follow-up communications can help improve your cash flow by 40%.

How Often Should I Remind Clients to Pay?

Sadly, late payments are a common issue for law firms and businesses across industries. Even the most well-intentioned clients can get distracted or need more time to submit payment. Regular reminders set the tone that payment will be required to continue to receive legal support.

Below are our recommended recommendations on when to send formal reminders.

– < 10 Days Late: Remind client at the time of invoice and then again 5 days later of the due date and amount due, always including a link to accept payment online or by text.
– 11-30 Days Late: Reminder client every 4 days until payment is received.
– 30+ Days Late: At this point, it’s appropriate to send reminder calls, emails, and text messages — as well as a warning letter for outstanding payment.

Case Cost Financing

You’ve probably noticed that “buy now, pay later” options are everywhere. So it’s no surprise that legal services are also witnessing a surge in these types of common demands. Legal case financing is a crucial resource for law firms, providing the financial freedom required to confront the numerous obstacles of litigation directly.

As part of the initial consultation with potential clients, proactive law firms request them to apply for what is known as a “pay later” account to better understand their credit limits. By granting instant access to the funds essential for case preparation and implementation, this financing model enables firms to not only handle more cases but also allocate resources more effectively.

In today’s society, where American consumers are accustomed to financing all aspects of life, the influence of automatic payment plans cannot be overlooked. Based on our research, 81% of consumers would prefer to pay via payment plans while 76% are more likely to buy if a payment plan is offered. That’s why Smokeball offers Smokeball Payments, an integrated payment solution that offers seamless integration, customizable payment pages, and more. Unlocking the power of these different payment plans can yield increasingly higher conversion rates.

How Smokeball Can Help

Backed by a mission to help law firms run a successful business to better serve our communities, Smokeball offers top-notch legal billing software solutions. These offerings can help you reduce time spent on tracking time and expenses, accelerating the review process of bills, and simplifying the sharing of client invoices — so you can get paid faster.

As the top cloud-based software for legal practice management, our premium product enables you to efficiently manage your firm according to the requirements of your unique legal specialization. Unlike other legal billing software options, Smokeball has the ability to revolutionize your firm and improve your business, no matter the focus of your practice.

Legal Software Solutions to Help You Get Paid Faster

Receiving payment is a crucial — yet frequently overlooked — element of successfully managing a law firm. Beyond the efforts associated with client intake, legal research, drafting contracts, handling lawsuits, and sending out invoices, it’s common to neglect the final step.

In fact, a Chicago civil litigation firm increased their revenue by 40% with Smokeball. Prior to this partnership, attorney Michael Perez lamented, “I had gotten so busy working, that I didn’t have time to bill.” Upon reviewing a single file that was nearly dismissed, Michael’s paralegal stumbled upon $5,000 worth of unbilled time. It became evident that the existing system was ineffective, triggering the search for a more efficient system.

Efficient accounting software solutions are paramount in not only keeping your law practice afloat, but maintaining long-term law firm growth. Both Smokeball and Collbox are recognized as elite powerhouses in serving as trustworthy resources for law firms to improve the collections process.

Smokeball stands out by providing industry-leading legal practice management software and support, dedicated to revolutionizing legal firms with innovative tools. Our valued partner, Collbox, helps legal professionals avoid the hassle of pursuing overdue payments. Instead, your practice can receive timely compensation for your legal assistance — time and time again.

FAQs:

1. How can law firms improve their cash flow?
Law firms can improve their cash flow by documenting their Accounts Receivable Policy, setting clear payment expectations, harnessing the power of technology, making it easy to get paid, and implementing friendly, consistent, and persistent follow-up strategies.

2. What are the benefits of legal billing software?
Legal billing software can help law firms streamline their invoicing processes, track time and expenses more efficiently, and improve overall cash flow by ensuring prompt payments from clients.

3. How can law firms effectively follow up with clients for payment?
Law firms can effectively follow up with clients for payment by defining a smart multi-channel follow-up model, leveraging technology for automated reminders, and maintaining a friendly and consistent approach to communication.

4. What is case cost financing and how can it benefit law firms?
Case cost financing allows law firms to provide clients with the option to pay for legal services at a later date, enabling firms to handle more cases and allocate resources effectively. This financing model can benefit law firms by improving cash flow and client retention.

5. How can Smokeball and Collbox help law firms with their collections process?
Smokeball and Collbox offer innovative solutions to help law firms streamline their collections process, improve cash flow, and ensure timely compensation for their legal services. By leveraging these tools, law firms can enhance their financial stability and business growth.