How to Improve Your Law Firm’s Accounts Receivable

A strong, well-written (and adhered to) credit policy is one of the best ways law firm chart of accounts that you can protect your accounts receivable. Whether buying groceries or big-ticket items, consumers have become accustomed to selecting from various payment options. That last topic—how the relationship will proceed—should include a detailed review of payment expectations and the billing process.

Understanding Law Firm Accounts Receivable Management

Either billable hours haven’t been invoiced yet, or the invoices have gone out, but the payments aren’t coming in timely. And the longer it stays locked up, the more your firm struggles to meet day-to-day financial demands like payroll, rent, or vendor payments. Effective law firm accounts receivable management is essential for preventing these cash flow bottlenecks and ensuring steady revenue streams. The challenges of maintaining an effective A/R management strategy at law firms are by no means new. However, the rapid expansion and popularity of digital payments have transformed the way modern businesses manage payments. The convenience and speed of digital accounting solutions has provided legal professionals with an easy way to implement the latest best practices for accounts receivable management.

Establish Clear Billing Expectations with Clients

Friendly payment reminder email templates are available to take the stress out of collecting money. A thank you email is also automatically generated after payment to help improve relationships. To ensure clients receive timely payment reminders and invoices, it may be worth looking into specialized law firm billing software. If your client is facing financial troubles, you can further bookkeeping ease their burden through lawyer payment plans, where the client pays you in smaller, more manageable installments.

Follow Up on Late Payments

One of the biggest challenges in law firm accounts receivables processing is that the work is manual and often lacks standardization. By automating end-to-end accounts receivable operations, you could overcome these issues and more. TimeSolv allows law firms to do this to help them achieve zero ARs and get paid instantly. The software securely stores key client information that gets readily added to automated invoices for a quicker billing process.

How to Track Your Firm’s Financial Performance in Firm Central

This amount of money is set aside to cover debts that may never get paid. Internal controls are the rules and procedures a business uses to make sure everything is done right, and risk management is how a company tries to avoid problems. When auditing accounts receivable, it’s law firm accounts receivable management important to check if the business has strong internal controls to protect its finances. Automation eliminates the manual effort required to send invoices and follow-up reminders, ensuring consistent communication with customers. Consistent follow-ups on overdue invoices ensure that payments aren’t forgotten.

• By automating your invoicing process through tools like QuickBooks, you can streamline how and when invoices go out.
• Added to that, with heavy workloads and multiple clients, it can be easy to miss when a retainer balance is getting low.
• Generally speaking, once firms send out an invoice, they’ll usually wait until their payment due date expires before contacting a client.
• As a law firm, having effective accounts receivable management processes in place is crucial for maintaining healthy cash flow.
• If you’re looking to improve your law firm’s accounts receivable process, Tratta’s embedded payments feature will be advantageous.