Law firms have always faced a unique landscape when it comes to billing and invoices. Legal fees are not rendered or billed the same as retail or even field services. Instead, a law firm must build invoices from billable hours and pre-arranged fee structures. Client relationships also lend to late payments and more diplomatic collection methods.
Many law firms face routine invoicing challenges that get in the way of a steady and sustaining stream of income. Fortunately, there are many tools and solutions at your disposal to overcome these challenges and stabilize your invoicing results. We will explore the many billing and payment hurdles a law firm might face and how to achieve effortless invoicing with the help of advanced legal time and billing software.
Irregular Cash Flow Balancing
The biggest invoicing challenge for any law firm is the irregular influx of cash. Clients do not all pay on the same schedule or even the same pay structure, so it can be difficult to line up a predictable income stream. Law firms, like any business, have routine expenses such as rent, utilities, and wages, but must make plans with non-routine payments for legal services.
Billing software can help you arrange client payments on a more predictable schedule. You can guide clients toward paying their legal fees in monthly installments or paying their retainer on a subscription basis to create a steady cashflow.
You can also line up a stream of client acquisitions for smaller cases so that there is always new cash and a potential for new clients who will pay on time.
Accurately Tracking Billable Hours and Fees
Tracking legal invoices can be complex because they are tabulated both from billable hours, service fees and expenses. It can also be challenging to get your legal team to accurately track their billable hours for each specific client. Working a full day can involve doing small amounts of work for several clients and switching between work tasks without noting exactly how much time is spent on each client’s case.
Fees can also be difficult to track because of the diverse fee structures associated with the diverse needs of each legal case.
Fortunately, time tracking and expense tracking are made easier with the right software. Using an easy app-accessible timer system, lawyers and legal support teams can more easily ‘clock in and out’ of individual case work with a single tap, creating time-stamped records of exactly when and how long each case was worked to create accurate billable hours.
As for tracking fees, creating a place for quick notes with each case can more easily help to track what tasks and expenses accumulate in working a case.
Late Payment Collection vs Customer Satisfaction
One of the greatest struggles of any law firm – big or small – is late payments from clients. Unlike other industries, legal firms would rather be diplomatic about asking clients to fulfill their financial obligations to maintain a cordial relationship and receive cases in the future. However, late payments can also put the firm’s financial stability in jeopardy.
It is important to carefully balance collection methods and customer satisfaction.
With time and billing software, you can let the automated system provide a layer of computerized diplomacy. Sending timely automated reminders is not the same as personally asking clients to pay their bill, and most people today are accustomed to receiving automated messages without evoking an emotional response.
Offering Diverse and Accessible Payment Options
One way to help reduce late payments is to make payment more accessible. However, offering diverse payment methods can be challenging for any law firm because it involves building a complex payment portal integrated with several different types of payment processing. Most law firms operate internally with a basic website and may not even have online client accounts to support a payment portal.
With advanced billing software, the payment portal is built in. Clients can access a payment page through a link in their email that automatically offers a diverse set of payment options. This will make payment easy for clients and therefore increase the likelihood that they will pay promptly upon receiving their invoice without frustration or delays.
Clear and Accurate Invoice Design
When every lawyer is drafting their own invoices, billing becomes chaotic and disorganized. Clients today are well-informed and expect their legal invoices to be uniform, accurate, and transparent.
This can be a challenge if every invoice comes primarily from a lawyer or legal team’s personal notes on hours worked and fees accumulated. Especially if there is not a universal template and policy for billing that is implemented across the firm.
Here is where billing software truly shines. By first tracking billable hours and fees, your law firm billing platform can arrange attractive and uniform invoices that are accurate and clearly itemized for the benefit of your clients. Clear invoices are more likely to be paid because clients can be confident in what they are paying for.
Sending Invoices on Time
Of course, you can’t be paid if your invoices never go out. Lawyers are busy people and sometimes, sending an invoice email will slip through the cracks. This puts the firm’s income stream at risk and allows legal services to fade in a customer’s memory before they receive the invoice. Fortunately, automation is the natural solution.
With good software, it’s easy for your billing platform to automatically send the invoice for completed cases (or ongoing fees for continual cases) to clients in a timely manner. In fact, clients will get used to receiving invoices like clockwork and may even be willing to set up automatic payments.
Billing Software Compatibility and Integration
Billing and accounting software must get along. A law firm thrives on careful financial management which includes balancing of income and expenses. Billing software provides data about predicted income and invoice tracking to your accounting software stack. Of course, this means you’ll need a solution that integrates well with your existing accounting software and any other financial tools used by your firm.
Solve Your Legal Firm’s Invoicing Challenges with LawBillity
LawBillity is a time and billing software solution designed for the unique needs of law firm invoicing. Each feature is tailored to the billing complexities of a legal practice. Timesheets and timers help to tabulate accurate billable hours while approvals ensure that every hour and fee is in alignment with policy and contract. Legal expense tracking makes it easy to add fees and expenses to each invoice.
Automation simplifies the matter of both building and sending timely invoices to clients, while the payment portal makes it easy for clients to pay on time online. We even offer a mobile app and GPS tracking so that your legal team can manage hours and expenses on the go. Find out for yourself how effortless invoicing can be with LawBillity and sign-up for our 14 day free trial.