Do you know your law firm’s current collection rates? Firms that have mastered their collections processes may see numbers in the 90th percentile. On the opposite end of the spectrum, some legal practices grapple with collection rates in the 50th to 60th percentile range. Even more disturbing, many law firm leaders have no clue what their collection rates actually are, choosing instead to see these financial losses as the cost of doing business.
The average collection rate for a law firm is reportedly 88%. While that may not seem like such a bad percentage, that 12% of uncollected revenue can account for tens and even hundreds of thousands of dollars. TimeSolv legal billing software collected some data on aged law firm accounts. They found that, of the firms reviewed, the average firm held about $500,000 in unpaid invoices over 120 days old. That’s half a million dollars of outstanding earned revenue.
High Account Receivables (AR) can have a huge impact on the success and profitability of a legal practice – and the unique challenges of 2020 have made these issues even more pressing for small and midsize firms nationwide. As we get ready for the year ahead, it’s time to take a good look at your law firm’s current collection rates and consider strategies to increase payments and decrease AR.
TimeSolv, along with LexCharge legal credit card processing, provides law firms with the tools they need to make 2021 the year of zero AR, and here’s how:
LexCharge E-Payment Integration with TimeSolv
LexCharge specializes in electronic payment processing for law firms. With a vast wealth of expertise in both the processing and legal software industries, their team understands the importance of properly managing law firm payments through operating and (IOLTA) trust accounts.
Though e-payments have become a staple of doing business within the current economy, many lawyers still hesitate to embrace this convenient and modern payment technique. There are two main reasons for this hesitation – cost and complexity.
- The cost factor – Many lawyers shy away from electronic payments because of the exorbitant fees that are often attached. When accepting e-payments, firms may find themselves hit with fees from the credit card company, the bank, and the processing company. All of these tiny fees can add up to significant costs collectively.
LexCharge has met this challenge by developing a flat fee system that is easy to understand and calculate for month’s end expenditures. Their users pay 3.00% + 30¢ per transaction for all card types (including Amex) and $2.00 per eCheck transaction. That’s it. There are no monthly surcharges or other unexpected fees, and users only pay when they use the service.
The complexity factor – The other reason why so many lawyers resist e-payment options is a lack of understanding about the process and the professional rules surrounding these transactions.
LexCharge has implemented state IOLTA trust accounting rules into its platform in order to take this burden off of attorneys’ shoulders. Their payment solution ensures that no processing fees ever come out of a client’s trust account.
TimeSolv includes LexCharge among its valuable integration options in order to provide its users with a seamless credit card and ACH payment process that is built right into the platform. Using the systems together, law firms can benefit from the efficiency and convenience of collecting payments immediately.
Using TimeSolv and LexCharge to Reach Zero AR
Let’s take a closer look at using TimeSolv and LexCharge to lower your law firm’s AR in 2021.
- Step #1 – If you haven’t done so already, start accepting electronic payments. As stated previously, there are companies and resources out there to help law firm leaders address concerns about cost and complexity. Rely on TimeSolv and LexCharge to seamlessly implement e-payments within your firm.
- Step #2 – Establish clear payment terms and methods with your clients right from the start. Use your initial engagement meeting and fee agreement to clearly outline when invoices will be sent and how payments will be collected. For example, if your firm will send invoices on the 1st and 15th of each month, make that clear to the client.
- Step #3 – Collect and store client payment information. Many firms require, or at least encourage, clients to store a payment method with the firm for payments. This benefits the client by taking away the burden of manually paying their bills for each payment cycle. It benefits the firm because is provides a tool for more timely and complete payments.
TimeSolv offers a highly secure environment for storage of sensitive client payment info, so lawyers can feel confident that they are taking sufficient measures to safeguard client data. Don’t forget to include the schedule and payment terms around using these payment methods within your fee agreement (See Step #2).
- Step #4 – Run payments to the stored payment method as stated in the fee agreement. For example, if your fee agreement says that payments will be run three days after invoices are sent, make sure you follow that schedule.
TimeSolv Streamlines the Process
With a continued commitment to serving law firms of all sizes, TimeSolv has streamlined the e-payment process, even offering an innovative batch payment option. Here are some of the highlights:
- The platform makes it easy for law firms to get started with LexCharge. Subscribers can apply for an account right through the TimeSolv dashboard. Once approved the two platforms integrate for an efficient invoicing and payment process.
- Users can view the status of client payments on the Sent Invoice This screen includes a list of all sent invoices, along with information about which ones have been paid and which ones remain outstanding. Users can then click on an individual unpaid invoice and with a few clicks of the mouse run the provided payment method.
- Users can save even more time with TimeSolv’s batch payment option. Upon viewing the Sent Invoice screen, users can utilize the filter to identify the clients with payment methods on file. They can then choose all of those invoices and run payments for each with a single click of the mouse. In seconds, an entire batch of unpaid invoices can be paid to get a firm’s AR down as close to zero as possible.
Achieve Zero Law Firm AR in 2021
TimeSolv and LexCharge are helping lawyers seamlessly complete e-payments for increased revenue and decreased AR. While other legal payment platforms may offer payment method storage and individual invoice payment, only TimeSolv is leading the way with the innovation of batch payment processing.
To start working towards zero AR within your law firm, click this link for a free trial of TimeSolv legal billing software. Start the year off right for a more profitable 2021.