Accurate billing is an important aspect of running a successful law firm. However, law firm billing can be extremely complex, as a single law firm invoice may have several pages. This can lead to mistakes that can prevent your law firm from being accurately compensated for the services it provides, or it could even lead to clients being overcharged. Small discrepancies can add up and cost your law firm significantly. It is then essential that you take care to ensure that you provide accurate and fair invoice statements to your clients. To help you maintain accurate billing, let’s look at the most common invoicing mistakes law firms make, as well as solutions to help you avoid them.
Using Vague Descriptions on Invoices
Using vague descriptions or providing insufficient details in invoices can make it much more difficult to keep track of how your time was spent, and whether all services have been accounted for. Simply putting “for services rendered” will not only make it harder for you to track how your time was spent, but it could also frustrate your clients as they will not understand what they are being charged for. If an invoice line has no context, how can they be sure that they are not being overcharged?
To clear up any confusion, and to make sure that you are being paid properly for your services rendered, it is essential that you clearly articulate what each line in an invoice is for. Including specific dates, information about what the exchange was, and how much time was spent on each task, can help clients understand what they are being charged for, and it can help ensure that you are accounting for your time properly.
Block billing refers to the practice of putting multiple work segments on multiple dates into one line-item description. This is another billing practice that can cause confusion with clients, as grouping multiple tasks into a single entry can make it impossible for them to determine what exactly they are being charged for, and whether their bill is actually accurate. Additionally, block billing can make it harder for you to accurately track your billable hours.
While it may seem overwhelming or time-consuming to create separate invoice lines for each task you previously block-billed, this will improve transparency and ensure proper accounting. To simplify this process, you may find it helpful to send invoices more frequently before they become long and unmanageable. This has the added benefit of creating smoother cashflow for your law firm.
Improper Coding of Invoices
While coding invoices often seems like a simple task, you’d be surprised how frequently improper coding can happen in a single day. Unfortunately, human errors happen, and a biller may make as simple a mistake as selecting the wrong code on a drop-down menu.
When work is attributed to the wrong billing code, this can lead to a host of problems including improper invoicing, or an additional review could be triggered, costing your law firm time and money. This is why so many law firms are choosing to invest in automated billing and invoicing software, as it removes much of the potential for human error from the invoicing process. This ensures that your law firm’s time is properly tracked and coded so that you are paid for all your billable hours, while also reducing the risk of your clients being overcharged.
Not Having a Clear Billing Policy
To avoid potential billing disputes, it is essential that you communicate your billing process clearly with your clients from the beginning. Set up clear expectations of how your billing policy works and how your interactions are billed so that clients are not caught off guard when your invoices arrive. If you are upfront about your billing practices, customers are much less likely to dispute an invoice or line item.
Of course, to ensure that this strategy is effective, it is imperative that you set a firm-wide billing policy. One of the biggest billing mistakes law firms make that can cause client confusion and lost billable hours is not having a firm-wide billing policy. If each attorney charges differently, such as one billing each tenth of an hour while others use quarter-hour blocks, this can lead to confusion and potential billing mistakes if several attorneys using differing billing practices work on the same case. Setting a clear billing policy will prevent confusion and ensure accurate invoicing.
Not Tracking Time as You Work
Another significant invoicing mistake law firms make is not tracking time as they go. Many lawyers will wait until the end of the day to invoice their hours; however, this can make it difficult to accurately account for all your time spent working with clients. While it may not seem like a big deal if fifteen minutes are forgotten and not accounted for, these little mistakes can add up to great losses for your firm over time.
The best way to ensure you accurately keep track of your billable hours is to use law firm time tracking software like LawBillity. This will remove much of the confusion from time tracking and invoicing, as this software will help you accurately keep track of your billable hours throughout the day as you work. This will help you meet your billable targets, bill clients in real-time, prevent billing mistakes, and improve cash flow.
Our software automates many invoicing processes, reducing the likelihood of errors. It can also help keep your law firm get organized by allowing you to create and track invoices from a centralized system. This helps prevent duplicate hours, lost hours, or potentially costly invoicing mistakes. With LawBillity, you can ensure that invoices are accurate, and submitting invoices becomes as simple as clicking a button. Try it for free for 14-days!