By implementing a few key strategies around invoicing, collections, and write-offs, legal professionals can dramatically improve their accounts receivable management. This process refers to the series of steps your firm takes to manage the money clients owe for legal services they’ve received. It starts from the moment a service is completed and an invoice is sent, all the way through to collecting payment and updating your financial records. If your law firm’s aging receivables are not in the best shape right now, there’s still hope.
Improving Your Law Firm’s Accounts Receivable Process
- Law firm accounts receivable is the money clients owe after a law firm delivers legal services.
- Collecting from clients may feel daunting now, but a few changes can help streamline the process and make things easier for everyone.
- This makes accounts receivable management accessible for firms of all sizes, including solo practitioners and small and medium teams.
- Since the heavy lifting is done in the backend, you can easily customize every invoice to a client’s needs in a fraction of the time.
- We specialize in legal practice management software, including accounts receivable tools.
By automating the invoicing process as well as all follow-up correspondence, you can dedicate more time to building your business. Imagine if a lack of communication lets the clients assume that you’ve withdrawn from the case or, worse, think you’ve failed them. So, maintain regular communication with the client, even if you have no new updates. Keeping them in the loop will build your law firm’s integrity and trust, thus improving the chances of timely client payments.
- Follow up on all outstanding bills from one place—it couldn’t be simpler.
- Automating invoice and payment reminder sends through software ensures consistency and timeliness.
- This guide covers the main challenges of managing a law firm’s accounts receivables and steps to improve your process.
- Automating A/R management has a number of distinct benefits for law firms.
- Firms unknowingly lower their chances of being paid on time by including only a fraction of potential payment options.
Accounting for lawyers made approachable
Now that you’ve made a great first impression, it’s important to maintain that level of service by keeping clients up-to-date on their case, billing, and account status. Calculating your collection rate for the past year can give you an idea of how your law firm is performing. To calculate it, divide the total amount you’ve collected by the total amount that you’ve billed. Auditors will recommend that the business reconcile its accounts regularly, at least once a month so they can catch any problems early. Sometimes, the auditor will send letters to customers to confirm how law firm accounts receivable management much they owe.
- For this metric, using a longer timeframe to calculate (such as one year) will give you a more accurate idea of your firm’s financial health long term.
- Law firm accounts receivable (AR) refers to the money clients owe your firm for legal services you’ve already provided.
- Clients can also freely access their outstanding balances, payment histories, and upcoming expenses when they log into the client portal.
- Moreover, strive to maintain this level of open communication throughout the case.
Centralized Financial Data
InvoiceSherpa offers a comprehensive solution to help businesses streamline their AR processes, improve cash flow, and reduce overdue invoices. Monitoring accounts receivable metrics is essential to keep your collections process efficient, maintain steady cash flow, and improve overall financial health. Tracking the right KPIs provides actionable insights into your AR performance and helps identify areas for improvement. Below are key metrics every business Bookkeeping for Veterinarians should monitor, along with their significance and how to calculate them. Law firms must maintain meticulous records and comply with trust account regulations.
And those are not conclusion may or may not be be flattering to your firm. Conducting a potential new client consultation effectively is an art form. Let’s say you’ve collected $90,000 in normal balance a given year, off of $110,000 in billings. Get a 25% discount on one year of MyCase Advanced with LawPay and a $250 Visa gift card!
